The stock market picking fruit is getting harder

Investor newspaper (commentator Deng Yan) Why should there be a stock market? What is its role in the end?　　Besides financing, does the stock market have any other effect?　　Through a series of questions, Chen Zhiwu, in this "irrational exuberance" book, attracts readers to extend the various topics of the A-share market. The old question sounds simple, but the answer is not as easy as it seems. For more than more than 10 years, domestic investors have been familiar with the answer: the stock market helps companies (especially state-owned enterprises) to finance. The answer was straightforward, but it misled many, and even misled many of its policies, including the wrong positioning of the CSRC.　　Chen Zhiwu tries to find out the problems of the domestic stock market caused by the wrong positioning and seek solutions through the series of articles in the book. Picking fruit requires a high ladder Chen Zhiwu's article has always been good to read, direction, pointing clear. According to what he said in preface, the origin of the book "Irrational Exuberance", one is that the achievements of reform and opening-up over the past 30 years have come quickly and seem easy; on the other hand, the achievement is too fast and relatively easy to bring about irrational exuberance, easy to draw such as "development is irrelevant to the rule of law", "economic growth is not related to the protection of property rights"　　and other short-sighted conclusions.　　In his view, a closed years, a large population of the planned economy, when it went back to the market-oriented road, to join the globalization order, the backlog of years of post-development potential in the initial period will be quickly played, rapid economic growth. "Just like picking fruit, the place of the fruit is the lowest, and it is a matter of course to pick it up." "Chen Zhiwu will 30 years of reform and opening up the results described as the lowest position of the fruit, stressed that can not because they picked the lowest position, the most easy to pick the fruit, since then decided to pick the fruit does not need a high ladder."　　The reality is that the more high the fruit is, the harder it is to pick and the higher the ladder is needed.　　Most of the articles collected in the book were published before the middle of 2007, although they were not penetrating to any problems, but they tried to discuss the basic role of finance, rule of law and news media in different ways. The more wonderful articles in the book, such as how to evaluate the contribution of the stock market? ", the quality of China's stock market has become worse?" , and so on, are basically related to the stock market. Over the years, the most discussed and exciting topic is the wealth of the billionaires of Gates, Robin Li, and Changjiang Delta Spring.　　Chen Zhiwu that these wealth stories are closely related to the stock market. The role of the stock market is not only financing "with equity trading markets, such as the stock market, the space for wealth growth has changed radically." "This is because, under normal circumstances, the equity price is expected to be the total discounted value of the profit in the future for an infinite number of years."　　When you sell this equity, you are selling the total discount value of the profit stream for an unlimited number of years to come, which is why it is far more profitable to make money on equity than it is to make money from traditional commercial profits. A person on their own daily accumulated profits, rely on their longevity to maximize personal wealth, how can with a stock exchange through the future unlimited years of profitA few days to become more people than it? The sum of the latter's future profits is not limited by the life expectancy of the natural person.　　This is the core reason why gates, Robin Li, and Shi have become billionaires at the age of more than 20 or more than 30, one of the big effects of the stock market. According to the data, the Chinese stock market is not poor in terms of financing ability alone.　　But this is not to say that China's stock market is not a problem, compared to the Chinese stock market system and regulatory practice problems are many. Chen Zhiwu particularly emphasizes the view that "the contribution of the stock market and the work of the SFC cannot be measured by the amount of financing alone.　　"In his view, an important role of the stock market is to help to flatten the distribution of income and wealth in society, so that more people can share in the appreciation of operational property rights, it is conducive to the cultivation of the middle class, so that social income distribution more equitable." In addition, the stock market can provide a value assessment signal for the whole economy and society.　　By allowing stock prices to reflect the information in real time through continuous trading, some sectors ' shares have risen and others have fallen, helping to make a clearer assessment of which sectors and types of projects are more popular and more valuable to investors.　　Judging from the current operating conditions of China's stock market, these roles are clearly not satisfactory.　　Chinese stock market "good or bad"?　　In many people's view, "the fundamental problem of the Chinese stock market is the quality of listed companies", Chen Zhiwu that this is only a problem, because if there is no high-quality stock market, how can there be high-quality listed companies? But the notion of a high quality stock market may only be unspoken. Chen Zhiwu that the core criteria for judging the quality of stock market should include two aspects.　　First, to see whether the contractual rights and interests of investors, legitimate rights and interests have a reliable protection and implementation of the structure; second, whether the information environment of the stock market is enough to let investors distinguish between "good" and "bad" listed companies. The former is to ensure that the stock market is not a place to cheat money and plunder, the latter is to ensure that investors have a judge of the value of the stock of information based on the adequacy of the institutional framework determines a country's stock market will eventually become a "bad currency to drive a good currency" or "good currency to drive the inferior currency" of the trade market often a high-quality stock market will force the company to become better,　　Bring the investors due return; a stock market that is not reward and punishment is unclear and information is cloudy, not only does bad companies continue to get worse, but also makes good companies go bad.　　In addition to the theoretical discussion, Chen Zhiwu also uses the same fluctuation rate among the stock prices to measure the quality of the stock market. Since each stock only rises or falls two possibilities, in the same period of rising stock ratio and the ratio of falling shares should be equal to 100%, if the Chinese stock market with the same volatility of the annual average of 100% from 1991 to the nearer, it shows that the stock market more like gambling market, the more inclined to "bad currency to drive good currency"　　The more the index is approaching 50%, the more like the market, the more inclined to "good currency to drive bad money". Estimates show that from 1991 to 2005, Chinese stocksThe average volatility is 90%, which means that 90% of the shares will rise or fall together in any week, and the Chinese stock market is basically unable to distinguish between good and bad listed companies.　　Compared to other developed country markets, the same rate of volatility was 58% in 1995 for the United States and Canada, 59% in France, 61% in Germany, 62% in Indonesia, 67% in Poland and 82% per cent in the country. Chen Zhiwu pointed out that this kind of good and bad stocks with the rise of the same fall behavior is one of the consequences: the stock price of the company and Bad Company is no different, which is tantamount to rewarding bad companies in disguise, punishing good companies.　　As Nobel economist Akrov says, the result of this adverse selection is that the stock market will eventually close. Chen Zhiwu that under the current institutional framework, the reform direction of China's stock market should be reformed further to judicial independence, supervision independence, media freedom, legislative body hearing supervision, etc., otherwise, it means that the Chinese stock market will continue to be "bad currency driving good currency" place.