Morgan Stanley: A A-share of the second half into the bubble stage gains will not be low open Hong Kong

Securities Times reporter Jia Gong, Morgan Stanley China strategist Lou just said yesterday in Beijing, driven by factors such as corporate profits recovery and capital participation, the capital markets of Hong Kong and the mainland will enter the bubble stage in the second half of this year, and the index of state-owned enterprises in the Hong Kong market is expected to rise by 40%, while the mainland a-share market will not rise below that of HK. Lou's judgment is based on two considerations, one is that in the second half of the year China's rapid economic growth trend has been determined, performance for the industrial value added and the continued recovery of electricity consumption, the possibility of economic recurrence is very small; second, the easing of the financial situation will continue, in the absence of a comprehensive recovery in the real economy, the central bank is unlikely to raise interest rates,　　Local austerity policies do not have much impact on liquidity at the aggregate level. He also highlighted the impact of hot money on domestic asset prices, the rate of hot money flowing into China is expected to accelerate in the second half of the year, when advanced economies such as the US and Europe remain ultra-low interest rates, the bottom of the economy does not rebound, and emerging economies continue to be active.　　To ease the continuing pressure on capital inflows, Lou just said China could consider channelling capital into the offshore market in an orderly way, such as expanding the size of qdii, enriching existing types of qdii products, and easing foreign exchange controls over foreign investment in individuals. In terms of asset allocation, Lou just suggested a shift from early recovery to growth that could be new in the areas of industrial production and consumption, which are now forgotten, while those with better early performance need to remain vigilant, including banks and real estate.　　In the view of Lou, the banking industry will be plagued by worries about asset quality, usually the bank's share price will be a year ahead of the change in asset quality, while the real estate sector is closely related to macro-control, the most vulnerable to regulatory impact. Despite optimism about the capital markets in the second half, but Lou is still worried about the medium-and long-term development of China's economy, because the process of the bubble has to pay the price, at the end of last year's economy from the emergency deceleration to this year's emergency acceleration process, China has not completed the industrial upgrading and adjustment, in the medium term,　　This will be a problem for China's economy. Another worry is inflation, and Lou just thinks inflation in China is only a matter of time. "From the economic history of the past 100 years, inflation is a monetary phenomenon, and aggregate demand is only a conduction mechanism rather than a mechanism." Moreover, China's inflation over the past 20 years suggests that every new inflation will be higher than the previous one, so China's resurgence of inflation is likely to exceed 10% per cent. ”