Liquidity helps push blue-chip bubbles

The increase in electricity consumption since April suggests that the demand for economic autonomy is likely to be lower than in March, with real economic growth likely to fall below expectations in the two quarter.　　Although the fundamentals may be lower than expected, new lending growth has fallen, but liquidity remains plentiful, allowing asset markets to remain active and capital market bubbles intensifying. Experience shows that the narrow-sense money supply (M1) growth and the Shanghai index show a clear positive correlation. M1 growth, the stock market rose, such as January 2006 to October 2007, M1 growth from 10.6% to 22.8%, the Shanghai Composite Index rose from 1161 to 5,218 points, M1 growth in September 2007 and October in 22% high to maintain 2 months, The Shanghai Composite Index set a stage high of 6,124 points; when M1 growth slowed, stocks fell, from November 2007 to November 2008, M1 growth slowed from 21.6% to 6.8%, and the Shanghai Composite Index fell from 5,955 to 1871 points.　　In other stages, M1 growth reached a stage near the peak (June 2000, January 1997), the Shanghai Composite Index also reached a stage high, M1 growth near the low point (June 1998, January 2002), the index is also at the stage low point. In March this year, China's M1 growth rate rebounded sharply to 17.04%, the Shanghai A-share composite index rose 13.9%. The latest data show that April RMB new loans 591.8 billion yuan, M1 year-on-year growth of 17.48%. Ample liquidity will keep asset markets buoyant, housing prices will continue to rebound, and the capital markets may have a blue-chip bubble if most of the stock prices are overvalued. (This paper is the author of the Galactic Securities macro analyst Jing Daming)