Gu Wei Column holds your assets because money will become less and less valuable

Reuters, Beijing, November 30-there were many conferences in Beijing at the end of the year. in addition to reporters, we need several financiers. each of them has millions or even tens of millions of dollars in their hands, looking for investment directions. behind them is the world's major fund and investment banks that want to get a share of China's economic growth. if you have an enterprise or a piece of land, do not be tempted by their high prices. because the world has a lot of money, but there are few good projects. hold your assets, because I believe that the price will only get higher and higher.

 

The reason for the flood of funds in the international market is that global interest rates have been low for 20 years. the Fed's last printing ink was not dry and has been held by American investors and companies, preparing to run the printing press again. every time the Fed prints a green banknote, central banks can only follow it; otherwise, the dollar depreciation will fall and cannot be undone.

 

In fact, after the abolition of the gold standard, the international currency bubble has emerged. in recent years, a variety of financial products have emerged in the international market, further increasing the currency circulation. in the past 15 years, the proportion of currency to GDP in the U.S. economic system has increased by 50%, and the proportion of currency to GDP in the Japanese economic system has increased by three times. liquidity flooding can be seen from three core aspects. in 1990, bank assets accounted for 35% of the world's GDP, and now it is 55%. 15 years ago, the bond market accounted for 71% of the world's GDP, and today it is 100%. the stock market accounted for 40% of the world's GDP 15 years ago, and today is 100%.

 

Excessive capital or entry into the real economy, leading to inflation; or entry into the capital market, pushing up asset prices. both problems exist in China. in the international market, it is rare that the stock market and commodity prices are soaring, hitting a new high. for most of the time in history, they often run in the opposite direction. Because of the high commodity prices, enterprise profits will fall, and the stock market will also fall, and vice versa, but this time is an exception. the only explanation is that there is too much money, and they chase for everything that can be obtained and valuable.

 

Use money to make money, and the winner can eat it all.

The world is dominated by economy and finance. now it is the financial, not the real industry. people found that, rather than making money in an honest and honest business, it is better to earn money through money or further use fame to earn money. taking the Hong Kong rich people as an example, they first use the money earned by the industry to create a building and make more money. For example, Li Ka-shing, Chairman of Cheung Kong Industry (0001.hk: quotations), has switched from selling plastic flowers to investing in real estate. the second step is to collect money and make strategic investors everywhere. since new companies want to use their fame to attract ordinary investors, they will be able to share their shares at a low price and be named "Asian investors" by local media? Li zhaoji, president of the base industry (0012.hk: market), is well versed in the process.

 

The game, which cost money, was created by Americans. 20 years ago, a group of private equity funds known as barbarian borrowed heavily to buy companies that thought they were underpriced, and then split or liquidify them to maximize asset prices. indeed, bankers do not make a car or a loaf of bread, but they cannot say they have no value because they can make money for you.

 

Ten years ago, the internet craze turned entrepreneurs into stars, and the expansion of a new round of capital market turned the financial industry into a rising star. cyl. ul: Market), Blackstone (BX. n: Market) among other large U.S. private equity funds are well known in China. asian countries and oil-producing countries in the Middle East have respectively completed the original accumulation process through a large number of exports of shirts and oil. now they understand the rules of the game and join the money-making team.

 

One premise is that someone wants to sell it. the international market is the buyer's market. after the collapse of the asset-bond bubble, European and American financial institutions urgently need capital injection. In addition to China and oil-producing countries, who else can make a huge deal? Two major deals this week: Citi (C. n: The market is in urgent need of blood transfusion. The Arab team spent $7.5 billion to buy 5% of Citi's shares, and also locked a high return. belgian Fortis group (. as: Market) share price pressure, Ping An China (2318.hk: market) (601318.ss: market) to buy its 4.2% stake, become a single largest shareholder, an important step to achieve global investment diversification.

As we can imagine, with the participation of Chinese and Arab people, there will be more funds to chase assets in the international market in the future, and asset prices will continue to be bullish. What can be preserved in this market? Only hard currency: land and commodities. The fastest appreciation in the past 10 years is these things. Will the capital continue to flood in the future? Looking at the interest rate chart, we can see that the long-term interest rate and short-term interest rate are almost a straight line. That is to say, low interest rates will become the norm and global funds will continue to be abundant.

 

Who are the winners and losers of this capital game? Losers rely on the labor-selling proletarian, because their wages certainly do not have house prices, food prices, and stock prices rising fast. winners are those who have the most capital to make money after raising the asset price. even if the asset price falls, they can earn assets. assets are always limited, while capital can be unlimited. just like the last banker in a casino, the last winner of this game must be the most well-funded person.