Standing at the door of the "savage Money": The global surge of liquidity hit a shares again?

According to the China Securities Regulatory Commission, June 5, the early release of the "on the further reform and improve the new issue system guidance (draft)" of the request for comment time is coming to an end.　　And after the official release of the document, the silent one-year issue of the IPO is about to begin. However, the recent trend of the market is showing a different style. In the first 4 trading days of June, the Shanghai-Shenzhen 300 index even pulled 4 yang lines, the cumulative increase has reached 7.03%.　　And in supporting the market expansion of key volume indicators, the four trading day of China's a-share Shanghai and Shenzhen cities daily turnover of up to 245.14 billion yuan, reclusive has long been the investment boom finally bloom.　　In the face of such a booming trading market, the restart of new offerings appears to be no longer dire. According to the list of potential IPOs that have been disclosed, the 33-2008 IPO plan and 53 refinancing plans that have been in the pipeline since 2008 have been more than billions of dollars in demand.　　On the other hand, the credit blowout, triggered by the early bail-outs of the European and American central banks and the Chinese government's economic stimulus, is enough to gobble up the shortfall.　　Even in the latest report released June 4 by CICC's chief economist, Ha Jiming, he is clamouring for "an early resumption of IPO offerings to ease the pressure to rely on bank lending alone".　　Clearly, everything has changed in the face of potential bubbles. The savage money that broke through the door for the past 2 months, the cheap money from the central and western banks has crept into the periphery of emerging markets, including China, for the same profit-driven purposes.　　Recalling the 1990 's emerging markets past, this scene familiar. "The likelihood of a recurrence of emerging market bubbles is increasing." "Ha said in the report, the financial crisis has battered the economies of the developed world into a deep recession, with emerging markets such as China and India not fully decoupled from the developed world, but hit significantly lower than the latter, maintaining relatively rapid positive growth, with GDP growth of 6.1% and 5.8% per cent in the first quarter, respectively,　　Far above the same period in the United States-2.6%, Japan-9.7% and Germany-6.7% (both year-on-year growth), the two sides of the economic growth gap has widened recently. In the most sensitive international hot money spreads, the United States, Japan and other developed countries in the crisis in the sharp rate cut (has reached or close to 0 interest rates), and India and other emerging markets, such as spreads have further increased. In addition, despite the recent sharp setback in the U.S. dollar index, and on May 29 to pierce the 80 mark, but it seems far from the end-the Federal Reserve's recent study that the Taylor law implied that the current reasonable rate of the United States should be 5%, to achieve this reasonable rate,　　The Fed also needs to expand its quantitative easing (further purchases) of 1.15 trillion of billions of dollars, a conclusion that also reflects the Fed's tendency to expand its quantitative easing, printing and buying debt, and the dollar will still face downward pressure. In contrast to the Asian emerging market asset bubble that was caused by Japan's interest rate cuts in the early 90, he said the monetary easing in the financial crisis brought globalA broader effect of relaxation. At present, the United States, Japan and other countries, the growth of money supply faster than nominal GDP, providing investors with more abundant liquidity ammunition. "If global liquidity were to be likened to a bowl of water, the water level in the early 90 was not much higher, but it was tilted towards emerging Asian markets, but now it is a big increase in water levels and a tendency for emerging markets to push up the risk of asset price bubbles in the latter." The fund tracker, EPFR Global, said that only May January, 12 billion of billions of dollars of new funds poured into emerging market equity funds, the size of the emerging market funds of 3.5% of total assets.　　Since 2001, emerging market equities have only seen such a huge influx of capital in February 2006. The wood shows in the forest.　　According to this logic, China's capital market is bound to become the first choice for hot money, but hindered by monetary control, the huge amount of money eventually circled in the Chinese window of the Hong Kong market. The crisis originated in the financial system, where the relatively healthy financial assets of emerging markets naturally became the first choice for profit-seekers, and with the influx of capital, the Hang Seng Financial index (Hsifin) rose 16.47% and 18.38% respectively in the past two months, winning other emerging markets for two consecutive months, and leading the index up by 14.33%　　and 17.07%. No one has given a clear idea of how much money has been poured into the market, but the descriptions are staggering.　　Some market participants are expected to say that the hot money inflows into Hong Kong's financial markets amounted to HK $538 billion, which is close to its peak of HK $669 billion in October 2007. In this respect, the chief executive of the Hong Kong Monetary Authority, Mr Joseph Yam, said earlier that the port funds had increased to HK $340.4 billion and the HKMA had purchased $43.9 billion.　　The Council also announced June 2 that it would issue a total of $46.1 billion of 3-month, 6-month and 12-month-term Exchange fund bills, of which about 41 billion would be 3 months, to meet the huge demand for Exchange fund bills by banks in terms of liquidity management. In the light of the experience of the last round of asset bubbles in China, Hong Kong, which has yet to regain its vitality, is only a transit destination, and its ultimate goal remains the mainland of China, but the path will be hidden.　　In the past two months, the Hang Seng state-owned Enterprises Index (HSCEI) rose by 12.58% and 14.79% respectively, while the mainland Shanghai and Shenzhen 300 index increased by 4.59% and 5.22% respectively in the same period.　　Will China's cut-rate cycle end? Compared with India, which is the engine of growth in the emerging world, China's monetary control system is largely resistant to overseas liquidity attacks.　　But in the same difficult time around the world, the Chinese government's response is virtually the same as those of developed economies. In the 1 quarter of 2009, China's new renminbi loan volume reached a record 4.58 trillion yuan. After the two quarter, although significantly reduced, but inertia, the single monthly value is still higher than in the past, following the April issue of 590 billion yuan, in the rising increase in the loan increment, the agenciesThe expected May new additions are also between 0.5 and 600 billion. "The rapid growth of credit funds has led to ample liquidity in the market and will allow the market to maintain ample liquidity, while the abundant supply of funds at low interest rates is an important factor in boosting the market."　　"Ping An securities in its June strategy report as stated. Ping An securities that the current a-share technical surface operation is more important than the impact of the fundamentals. In an environment of low interest rates and even 0 per cent interest rates, investors still have to take the first heavy liquidity.　　As long as the liquidity does not tighten--the average daily trading in two markets can be maintained at about 150 billion yuan, the risk of a large market correction is smaller. In the model of Ping an securities, other deposits in the quasi-currency are regarded as the replacement index of the customer margin scale because of the trust deposit, the entrusted deposit and the financial budget deposit and other operating company's deposit scale. The target rose by 833 billion yuan in October 2008 and rose to 1.0686 trillion yuan at the end of the quarter, up 235.6 billion yuan.　　Attracted by the extreme easing of monetary stimulus and the oversold rally of the stock market, capital flows into the stock market, driving the stock market higher. On the other hand, with ample liquidity, the price of capital goods has risen, and the deflation that once worried investors has been solved. According to Nomura, inflation is expected to return in the second half of the year, with inflation rising to 2.1% per cent in the four quarter.　　The bank also said that because of the current liquidity situation has been very loose, loan growth has been very strong, and indicators of economic activity is showing positive momentum, and with the 2010 inflationary pressure, the central bank has no need to further cut interest rates, and will raise interest rates in 2010 81bps. On the rise of current asset bubbles in emerging markets, Ha said the government should learn from the lesson and control the bubble in advance in order to avoid the blow of a future bust. Apart from the earlier mention of an early resumption of IPO issuance, easing the pressure to rely solely on bank lending, Kazakhstan also points out that the government still needs to ensure that monetary policy is moderately loose, prevent excessive monetary easing triggering asset price bubbles, and encourage capital outflows, including encouraging companies to go out and allow listings in foreign companies, To allow domestic investors to participate in foreign equity investment, deepen reform, open up more investment space for private capital, reduce tax incentive consumption, change economic growth model, and increase policy support for new energy investment.