Andy Xie: China enterprise bankruptcy wave will appear
Oriental Morning Post, a weekly financial news / Wang Cheng Cheng
Xie Sohu blog
many Chinese enterprises are to survive the bubble, the bankruptcy wave of Chinese companies will appear, do not thin, then, the economy is not run the.
crazy stock market last year rose to 6,000 points, he Lengyan the opposite, that a reasonable valuation of A shares down in 2500, that was long called situation, the bottleneck of economic reform, the next round of economic trend, how would he see it?
inflation era of the bond market is not insured
Q: Recently the Chinese government holdings of 30 billion U.S. debt, after you suggested that holdings of U.S. bonds. you think the main reason for the reduction of what?
Andy Xie: The U.S. bond market will eventually come down, and now is a good time to gradually fade out. Now there is a U.S. dollar bond market Special forces in support of, say, the most recent commodities is not good, a lot of money no way out, have flocked to the bond market. Now the U.S. inflation index is very bad, unless you think inflation will be better, otherwise this chain of funds by support of the market is unreliable.
addition to holdings of U.S. Treasuries, the Chinese also need to shorten the average duration of each fund, throw what what to buy is not the most important, most important is the average duration of each fund should be shortened .
Q: As of the end of June this year, China's total holdings of U.S. Treasury $ 503,800,000,000. whether China should continue to reduce their dollar bonds? you think how much more appropriate reduction?
Andy Xie: the recent reduction of the amount of China is still very small. I think the best step by step come, first retreated to long term investment from the center line, center line of retreat to short-term, short-term bottom in the U.S. stock market, when converted into U.S. stocks, index funds are mainly . We have entered the era of inflation, the bond market has no insurance. until the U.S. stock market bottomed out when the investment in U.S. stocks is a better configuration, because the company is behind the asset, the asset is anti-inflationary.
Q: The proposal is to invest U.S. stocks, but investment bank analysts, the trend of the future, the euro, Japanese yen, Australian dollar, Canadian dollar has peaked, is unlikely to sell U.S. dollar assets to buy more than one currency, but should leave Domestic bond funds for infrastructure investment, the establishment of the stock market stabilization fund or investment to Hong Kong or other Asian markets. do you think the Chinese government will do?
Andy Xie: I could not, so that foreign exchange reserves is not understand. foreign exchange reserves are the result caused by monetary policy management. The Government did not want to carry out foreign exchange reserves grow too fast. If the words of the foreign currency into RMB is to expand the currency, would be tantamount to printing money.
reason why there will be foreign exchange reserves, because neither wanted a central bank exchange rate appreciation, the currency does not want to increase too fast, the most important thing is not to exchange rate appreciation, so it bought U.S. dollars, issued in local currency.
Q: You mentioned investment U.S. stock market, do you think the right time is when?
Andy Xie: The U.S. stock market is not cheap, it is now about twice book value in the bear market is generally down to 1.5 times to the financial crisis .1998 When the U.S. stock market also has been below 1 times. Now the U.S. financial sector is actually very cheap, but do not know how to quality. Now the U.S. financial industry funding figures, earnings are unreliable, so it's PE (price-earnings ratio), PB ( book value) are also unreliable. I think the investment in the second half of Wall Street's words may have the opportunity next year.
wave of corporate bankruptcies in China will definitely be
Q: Since the investment banks do not agree with your argument, then you agree that China will relax monetary policy by the end of the argument?
Andy Xie: China's monetary policy easing from the 3.6 trillion yuan, then the loan is raised to 4 trillion yuan it. But I think this is a relaxing space when the policy has been put away the.
policy makers were announced, always announced less than acceptable. and so we told you put a little more time to fight back to the place you want. However, relaxation of credit This is also not save the economy, real estate developers to buy land last year to buy a 30,000 yuan, the scale of how to do?
fact, China's currency does not bear the money each month by 16% to 18% speed increase in the world you go to see which country has such a song? monetary policy tight, as opposed to the crazy real estate developers. Open the original crazy business is to buy the land market, the stock market to misappropriating inside, and now the stock market Quotes worse, there is no money to bank loans, banks have no money, borrow on the black market there. the black market is now very high interest rates rose more than 20%.
Q: Now we compare the economic slowdown fears Do you think what impact will the economic slowdown?
Andy Xie: It mainly exports slow, I guess the next 12 months, exports will likely decline. exports to GDP, pulling in about 5%, 2003 exports are now 20% annual growth rate of the increase.
real estate problems and the relationship between exports and export there is a problem, hot money will be back, real estate finance chain to a problem. real estate on the GDP is driven by 2% to 3%, exports and real estate put together the greatest impact on the economy. the economy is slowing down for sure. Now every quarter, a decline of 0.5 percentage points, I guess, China economic growth in the third quarter will be significantly lower than 10%.
According to my observation, it has not slowed real estate development, real estate development growth in the first half of 30%. However, many real estate developers have no money, should not be so aggressive for the second half.
many Chinese enterprises are to survive the bubble, once the economic tide, many enterprises are not live. I've been to many places, seen many such enterprises. wave of corporate bankruptcies in China will appear. But this adjustment is inevitable, many Chinese enterprises are not value-added is in itself a burden. This adjustment is inevitable, it should be thin and not thin, then the economy is not run .
Q: adjustment is inevitable, but there are policy efficiency. Now a lot of people think that this round of macro adjustment is more efficient out of business, government needs to come forward to save the expense of the larger SMEs. This point of view how do you see?
Andy Xie: China to save a lot of SMEs are not alive. Many of them did not do business, are relying on bargain, fraud, workers, bank fraud, fraudulent suppliers to survive. In addition to bargain price competition in addition, they have no other mode of operation. This business is not the long chance of survival.
only in the economic adjustment process to the low efficiency of the enterprise to survive the bubble should not be squeezed out good business will grow. China is now the situation is that many enterprises will not do business also occupied places not to go, then pull the government, banks pull the relationship between the survival of political pressure. It makes a lot of good lost opportunities for business growth. Chinese companies without replacement, then the economy is not going up.
Q: So now the Government wants to save small and medium investors, you also think it is not necessary?
Andy Xie : SME loans are small, but many companies are in fact not be saved in. Zhejiang is a big problem out, I went to see a little, a lot of play with the real estate business because it was a problem, the main industry do not say no more. This government has to save, how saved shall live? deficit is so big.
I think the Government should do to prevent these companies away, and some money transfer to go abroad, you do not catch. We have experienced more than ten years ago such a thing, people have fled, no Lord of the debt.
Q: So the government should save, you think it is for what consideration?
Andy Xie: The business and local government are of common interest groups.
trade to oil-rich countries is a new necessary condition for economic take-off
Q: slowdown in exports, the international environment is full of uncertainty, stimulate the economy mainly by stimulating domestic demand is not?
Andy Xie: The Chinese Government now needs to do two things, first is to enliven the local finance, local finance driven mainly by land, now because of the money chain problems, there are Many back, the local government does not back the money withdrawn from circulation. China in recent years the central government finances are inclined to this, the central place should be allocated to finance more. invigorate the local finance and economic life up to the first, This solution is a liquidity problem.
Second, when demand is insufficient to stimulate the economy must rely on the .1998 build roads we drive the economy, this time we want to build urban infrastructure, including subway, sewage treatment system , drinking water, railway and so on, these areas will not be wasted.
addition, the Government is to re-thin to start, as did in 1998, accelerating state enterprise reform, public houses for sale and increase efficiency. taxes to reform the financial system have to reform. Now all of our financial system to make money by policy, future interest rates to compete, there is no upward pressure on the exchange rate now, and up floating off to prepare for the next round.
reform requires great courage, the Chinese economy is now already facing great difficulties, and can not shattering, even if mixed in the past, is make up their minds.
Q: You just mentioned that the policy of the financial system depends mainly on earnings, to be more specific about this you?
Andy Xie: China's financial practice is a negative value-added industries, increasing profits all depend on the policy, is dragging the economy back in one industry. For example, bank interest margin is required by the Government, the stock market are also controlled by the Government. companies who are also listed on the government who can not be listed, and you basically do not work.
Chinese stock market there are many places to change the registration system for the first stock market listing, and brokerage firms to open up, we are all state-owned enterprises in the do brokerages, banks do not even state-owned enterprises, but also well broker it? situation in China is equivalent to investment banks on Wall Street are all state-owned enterprises, that is, the concept of bank interest. to open up, can not allow banks the same as printing money to make money. exchange rate should remain open, there is no pressure on the value-added, is to implement a floating exchange rate reform a good time. reform must be pressure, pressure will change, too many vested interests now.
Q: Now at home and abroad economies are slowing, in this double pressure, is not the best time for reform?
Andy Xie: China is the pressure of reform will have significant, depending on how big the pressure next year.
Q: The Olympic Games is energy price adjustments will continue?
Andy Xie: If energy prices all fell, then China has reduced the pressure. but I think this possibility is not very big, the U.S. currency so loose, printed so much money, how energy prices could fall to it? unlikely. Now the U.S. financial system is basically bankrupt, it will be crazy to print money.
Q: In your article referred to in the next round of economic growth should rely on each other Asian countries trade to achieve. can specifically addressed this point you?
Andy Xie: China has no trade is certainly not become developed, the United States now have no money, the money went Where to? have come to the export of energy products, oil country to. Now these countries are made of money, so the trade to find a way make their money. This transition well, is an economic take-off necessary conditions.
However, a prerequisite for economic take-off is the above-mentioned financial reform, corporate downsizing and other measures to increase economic efficiency.
Q: In your observation, there is no transition to these signs?
Andy Xie: It is now more successful in such as Huawei, in the cross (China Communications Construction Company Limited), are in these countries to open up the market. machinery and equipment industry, there are some, basically move in that direction. However, our traditional export sector has not turned, such as textile, electronics and other industries.
we used to do business with the Americans, design and other core areas of all Americans are doing, there is only one factory in China is quite a workshop. enterprises brain, heart are elsewhere.
a complete business system requires you to do the brand, make sales, do the design, which used to do the processing for many businesses that change is not practical . the final analysis, business transformation and the transformation of people, who want to change the words are difficult. to meet new demands require new enterprise.
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