Cheng Road Summary: Economic cycle shortened by four quarters or recession

On the morning of September 25, the 2013 Annual Pharmaceutical Investment Conference, which was held by security securities, continued to be sought after, with nearly 200 large conference rooms overcrowded.　　Cheng, a renowned analyst with the recent "leaving Storm", has a relaxed look at the venue and delivered a speech on the theme "Winter Warm". The following is a summary of Cheng speeches: The economy is a quarterly cycle, a quarterly recovery, a two-quarter recession, a three-quarter recovery, and a four-quarter recession, a fast-changing economic cycle and a difficult season to figure out. The reason for the shortened economic cycle was a severe decline in the perception of all the two quarters, with most investment banks slowing their growth and fear of breaking seven.　　Their intuitive feelings and the actual situation is not consistent.　　The reason for the perceived difference is that the Bureau of Statistics publishes nominal GDP Ba, and the 10 high of 17%, almost half cut, except for the lowest in the financial crisis, the lowest quarter. It would be very dangerous to stand in the government's shoes. If the financial point of view, the central government revenue growth rate of nearly 0, local revenue growth rate is very low, not receive money.　　In the last year or two the past has been taxed too much, and central revenue growth is still close to zero. Investors will also feel bad, as companies have rebounded markedly since the four quarter of last year.　　But back to the bad, from the business single quarter net profit margin to see one or two quarter profit margin mainly because of low net profit, about 4.5%. The new government said that the transformation and other are false, only one is true, that is, the economic growth rate to 7% is decided to take a new road or the old way, 7% is the 18 political Report talk about the data, to 7% from the central to place all feel unbearable.　　At that time feel down wear Seven is the Beidaihe meeting collective investigation make, the structure of confidence by the various kinds of people cry and shake confidence. The reason for the second half of the year is that the economic growth rate would not have broken seven because: 1 the infrastructure is at a high level and plans to accelerate, the average of the past decade will not be much higher than the current, from 08 to now, this year is one of the highs. That's why steel and cement stocks are low but the price level is good. In the second half of the railway, power grids, squatter reconstruction, pipelines are in a very high growth (20%); 2 of real estate investment growth forecast 13% last year, and more than 20% in the first half, real estate investment growth rate is far more than expected, both together means that the overall investment growth in a very high position　　If the Beidaihe meeting is not guaranteed growth, the second half of the real estate investment will not soon fall, infrastructure will not be, so will not fall through seven. The question now is why this year's housing and infrastructure investments have been good but the two-quarter economic slowdown has been terrifying.　　It's about their own fooling around. The reason for the illusion: most of the cyclical industry inventory in the course of last year's economic downturn accumulated high inventory, to inventory will be strong. Inventories fell unexpectedly this year in the two quarter, such as the two-quarter iron ore port inventory (the reverse-season decline), and the absolute level of crude inventories as historically very low (2010 onwards), and seasonal inventories are also very low compared to previous years. Manufacturing Production InventoryAlso very low, steel sheet stock level is very low, because the new government to adjust the structure, so deal with inventory.　　It looks like the economy is going down badly but that's not the reason for the demand. The new government began to sing steadily in July, and it was a delusion before everyone began to find it. The same situation in the real estate market, last year, property sales good but do not take the land, inventory down, three quarters found wrong direction, so need to buy land. Recent iron ore imports have grown very fast, as are crude oil and copper. After all the people found the mistake, the output will rise, such as steel, stock go to the more stringent industry began to rise, the place began to produce. The land was sold well in the first quarter and four quarters last year, and all the money was spent in the three quarter of this year.　　Economic growth began to rise in August.　　The most important question now is whether the increase is reliable and how much time can be played. In the four quarter of this year, the overall economic growth and platform will be higher than the overall level of the second quarter, but not higher than 10.4% (two quarter of the sharp), the most important reason is that real estate sales far less than the first quarter, 234-line cities sell not fire. Desperately paying for the land but selling the cash back is not good. The 234-line city is more difficult to sell because the supply is too large, Chibi to see it. If it has not been heavy to the first quarter of next year, the company will have an inflection point so the real estate is very cautious. If property is no longer strong, it will be difficult to surpass the August highs. The second reason is that local government infrastructure is now up for months. The audit results will not be too good or too bad, but the actual situation will not be published, the recent visit to local governments, the very big problem is that now the local government to transfer the debt platform to private, fast is unable to audit platform (the private sector platform, BT is only one of them). Simple way such as the Gold Mantis (002081, stock bar) and Oriental Garden (002310, shares bar), private enterprises become local government financing platform, accounts receivable up to 4 billion, the local government has no money to let you get the project commitment after giving you money. Local government zoned to you, whether to do real estate does not matter, private enterprise I give you a piece of land, and then go to the trust, will be half the money to the local government, the other half of development, if the development can sell, money you, otherwise do not know how to do ....　　This stuff is now very fast, especially in small and medium-sized places, so the actual debt audit is very difficult. Invest in this if you see only two types of funding, no debt and need to borrow money. No debt is the revenue and sales revenue + profits and depreciation, direct financing of equity financing, the recent two or three-year revenue growth rate of only about 10%, corporate profits and depreciation 8%, equity investment growth rate of 5%, fixed asset investment growth rate of about 20%, indicating that the growth of debt is sure to increase the geometric level.　　The debt has three directions: bank credit + Corporate debt + Shadow bank.　　The bank's cooperation, trust, bank-Certificate cooperation, microfinance, and the slope of bonds are 40-50% growth, so it is the reason why bonds have grown very fast over the past few years. 10 has not learned to fake, 11 audit as a basisNumber, 1. The recent three-year Local reported fixed asset investment growth rate of 2. Revenue growth and land sales growth of 3. The difference is the financing platform.　　If the data is not right, the local government is faking it. The problem of diminishing marginal investment returns: The growth of revenue, the growth of corporate profits and depreciation combined with the growth of investment, showing a frenzied rise in debt. Bond yields are not related to inflation, and two are out of sync because the debt is growing at a geometric level, doubling the growth rate over the past two years. The dilemma is that the economy is good, the interest rate debt does not, will be blown up. If the investment growth rate is significantly lower, the credit debt will be blown up, there is always one to run away. This dilemma is a difficult prospect for debt-making people.　　Sooner or later, the bond fund will not. The real estate inflection point, the basic view of the economic growth of the high (August) will not be achieved, so that cyclical stocks will not move.　　September IP and October IP data will be much better than the second quarter, but do not like the investment, because again into the downward alignment.　　Long-term interest rates on the entire bond have nothing to do with inflation, not inflation. The impact of QE's withdrawal on China: China's reliance on foreign investment is low and QE's withdrawal has less impact on big emerging economies. All of the Fed's exits were affected by the size of his one-fifth, one-tenth of the country, and would not have heard that a change in the sun could affect another sun. China's economy, the amount of money outflow 2 trillion does not matter. But Hong Kong's 300 billion dollar flow will collapse.　　The Chinese M2 is bigger than the United States, who is attracted to who might be. Risk appetite will pass, but there will be no big turbulence such as capital flight.　　China's problems are its own problem, not to blame the United States. Our response predicts that short-term demand highs will remain for a quarter, driven mainly by inventory changes and investment in infrastructure.　　The regularization comes from interest rates and real estate sales. By the cycle of upward impact, cycle stocks short-term stability and drive the market stabilisation or a small rebound.　　The market highs will appear within one or two weeks (fearing September data is lower than August, and the data start to fall).　　The medium-term remains weak, with downside risks shifting to the end of the four quarter (October) with the option of overall lower positions. There is no market next spring, it is difficult to deal with the problem from all angles. The sale of real estate is not up, only up to the north of a wide depth who can not.　　If the government wants to invest, it is now 25% faster, if the 30% growth rate, debt 1.5 doubled the pace of growth, even deflation, the level of interest rates will be five.　　There is no good way to deal with it.　　The current rate of debt accumulation and asset securitization can not match, cannot be solved.　　Unless the real estate 10-15% sales growth can be maintained, it can still drag a little longer. State-owned companies reported monthly earnings growth of total assets growth, in any one month is the asset growth rate of less than the debt growth, each month's debt ratio is on the rise, now the state-owned enterprises basically to 65.1%.　　The leverage of state-owned enterprises has been very high. FTA: The aim is TPP negotiations+ Hong Kong 17 general election.　　The second is more important. The 17 election was out of control, and it would be very difficult if the Government of the general election were to fall to the United States. The Politburo set things, let Li Prime minister to sell human feelings. The central government's approach is to use economic strategy to prepare a copy of Hong Kong in Shanghai. So why are laws and regulations the same as in Hong Kong? See how you behave. If 17 years can control, 28 square kilometers is very small, do some duty-free shop, try to run for two years. If Hong Kong is to turn against the law, the NPC authorizes the repeal of laws and regulations, in addition to doing free zones, financial institutions can go to expand 28 square kilometers to 100 square kilometers, for example, put Hong Kong's Chinese institutions directly to Shanghai. So Shanghai has Disney, free zones, offshore trading ...　　By then, Hong Kong's real estate slump, economic depression, the Government of the general election to get house prices fell, it caused outrage.　　Real Estate, Automobiles: Car limits, the state set the stock target, the annual growth can not exceed 4% per annum, Beijing increases negative, Shanghai license plate will also crazy rise (200,000).　　The reform of state-owned enterprises in Shanghai is not what action, state-owned equity trading platform, the first headache is Shanghai Electric (garbage), the second headache is Shanghai Hundred (garbage too), the third headache is Shanghai building materials, the fourth headache is SAIC (600104, shares bar) in addition to the joint venture part.　　There will be no regulation of real estate.　　Resource reform: water, natural gas, electricity. Export: There is no belief that exports will recover. Europe and the U.S. economy is not good, the renminbi exchange rate is very strong.　　Export growth has been good enough to sustain 5-6%.　　Where is the chance next year? A game of new shares, market capitalization and dividends combined, some stocks can buy, short-term strategy. One is to return to medicine.　　The next GDP growth rate of 5%. Investment direction: Currently not optimistic about cyclical stocks, bonds, small stocks, Hong Kong more than 10 times times the medical unit can also be considered.