2014-04-23

People's Daily on Double Depression in Stocks and Housing: It's A Seesaw

Once again, no panic from the official media. Stocks go up and stocks go down. Home prices can fall. One day they will go up again. The important thing is good reform, which is what the government is pursuing today.

People's Daily Discusses Property & Stock Market: Both Trapped in a Depression, Waiting For The Seesaw
Recently, a quarter of the real estate macro data recently released in stages, some second and third tier cities in the property market volume and price, both signs of a slowdown in growth has occurred; Meanwhile, the stock market remained lackluster. Experts believe that the property market and the stock market has always existed "seesaw" effect, with the transformation of China's reform and development, and 10 years surging property market is expected to usher in the fall of inflection point , while the stock market stumble endlessly over the years is expected to make substantial progress of reform, gradually upward from the bottom.

Downturn in the property market with depression

This year, as Changsha, Hangzhou , Wenzhou, frequent property price news, the national property market also will fall into stagflation situation. National Bureau of Statistics data show that prices rose in March, continuing to reduce the number of cities, 70 cities, only 56 cities housing prices still in the rising channel, prices rose last year, the number of cities hit a new low since February.

While the other end, A-share market is still hard to get rid of decline, is still around 2100 near the repeated shocks, in the upper and lower dilemma. Stock index from 2100 near the starting point at the beginning of this year, after nearly four months, the minimum fell below 2000 points, the maximum rose to 2177 points, after the ups and downs twice again fell below 2100 points, compared to the beginning back to the origin.

"Property and stock markets are very important to people's livelihood event, but also the focus of two difficult problems in China's current social and economic life in recent years, presents a side of the fire on the other side is the state of the sea." Fujian Provincial Bureau of the Census in the center of deputy Director Yao Meixiong It seems that with the development of China's reform and open a new chapter in the transition years surging property market peaked whereabouts phenomenon, is expected to usher in a turning point; while the stock market will stumble endlessly over the years as the housing bubble burst and restructuring and development to make substantial progress, is expected to usher in the spring.

Seesaw effect will be reproduced

Currently, the downturn in the property market and the stock market at the same time, there are different situations: one side is more stressed the more ten consecutive years of rising property prices has been so "mad", the other side is experiencing several years of slowly "bear market" in It is also no market fell down. No goods can only rise, not fall nor rise only market in the peak of the property market and in the bottom of the stock market is beginning to reverse the trend of the future?

"From the perspective of investors thinking arbitrage hedge look, property and stock markets seesaw effect does exist." Finance and Securities Institute, Wuhan University of Science and Technology Dong Teng said that since 年底 2007 A stock bull market end, has more than a full six years, the stock market never get rid of the shadow of a bear market, and has been hovering at the bottom. In contrast, in the six years time, China has continued to inflate the housing bubble, house prices rising, house prices do not fall with market expectations and the enthusiasm of the people store room housing market has been fed into the cloud, the development of the high cost of real estate, highly leveraged big bubble has come to an end, when the stock market is just in the "darkness before the dawn." mark. Once the A shares into a bull market, a new round of market adjustment to the inevitable.

"Capital is a profit-driven, in the top area of ​​investment in the real estate industry, speculative capital will be poured into the stock and property markets will enter a mid-term adjustment." Yaomei Xiong said that the current decline in the Shanghai and Shenzhen stock markets are running the final adjustment, along with various capital market term institution building to improve, the stock market will bid farewell to finance the city has become an important place for the allocation of resources to build the end of history.

Are required to return to a rational development

Over the last decade, the stock market and property investment has become an important channel for the people, but the lack of institutional constraints, rapid development has also brought economic risks. Yaomei Xiong said, on the one hand, due to the imperfections on the stock market positioning errors and system re-light investment financing, packaging market, financial fraud, insider trading and other illegal, the prevalence of bad behavior, making the stock market in recent years, a handful of people made rich machine, destroyed the confidence of investors in the stock market; on the other hand, because of the guiding ideology of the property tax system and lack of bias, so that the property market reduced the investment, speculative instruments, resulting in the property market to function as an auxiliary channel misplaced investment, growing bubble inflated, pregnant financial risks and other issues.

Dong Teng new view, China's stock market "boom" and "fast bull" wealth effect and has a strong demonstration effect, it will attract the brightest social capital into the stock market at the moment, thus boosting the "one step" bull market. However, this "short-cow" or "mad cow" on the stock market and investors is the most serious injuries, make markets battered popularity lax, resulting in long cycle "slow Bear" finale. For serious bubble in China's real estate market, prices fell not conducive to social and economic stability, and may even lead to financial crisis, therefore, the ideal pattern of housing market adjustment should be "time for space," that is trying to make China's housing prices in the coming five to ten years "not up" or "stagflation" in order to wait for the income levels rising, thereby allowing the price earnings ratio back to normal range.

"To this end, China is conducting a series of supporting reform the system." Dong Teng said that from the construction of multi-level capital market system to system and reform IPO delisting system, to build the financial derivatives market, the purpose is through the market, the rule of law , international reform, to provide investors with diversified investment options to improve the investment value and attractiveness of China's capital market.

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