A-Share Market at 5,000 Points: Achievable with Zero or Negative Interest Rates
Abstract: In fact, the interest rates of the Chinese yuan are already quite low! It's just that the market may want them to be even lower. Hangzhou and Xi'an lifted purchase restrictions on the same day, leaving only the four first-tier cities and Hainan with purchase restrictions.
Main Text:
As we enter May, more and more cities across the country are lifting purchase restrictions on real estate. Particularly, Hangzhou's comprehensive lifting of purchase restrictions signals that, aside from Beijing, Shanghai, Guangzhou, and Shenzhen, basically all other cities are expected to lift restrictions.
Home purchases are mainly for investment purposes, and in the past, they were also for the sake of children's education. However, with the continuous decline in birth rates and the number of school places already exceeding the number of births, it indicates that school district housing will no longer be as important.
If houses lose their speculative value, then the phenomenon of large capital speculation will disappear, and leveraged funds will also recede, subsequently seeking other investment directions.
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At present, aside from the stock market, there are basically no other high-liquidity investment channels discovered. High liquidity refers to channels that can be quickly cashed out. From a global perspective, aside from financial markets, there are basically not many other choices. Warren Buffett prefers to hold cash rather than over-invest in fixed assets.
The likelihood of future funds choosing the stock market is high.
A-shares are currently lacking confidence, and also due to the reasons that the performance of listed companies is not very trustworthy. Buffett only dares to invest in the U.S. stock market; he doesn't even dare to study other stock markets, including his previous investments outside the U.S., mainly because of Charlie Munger's instigation and stimulation.
The world leader is the United States, so U.S. stocks remain the world leader. If anyone can replace U.S. stocks, they could attract Buffett to fully switch his investments. As a popular joke goes, "My family lacks some talents," and A-shares mainly lack leaders that can rise.
Without the support of a super world-class leader, if A-shares want to reach 5,000 points, there is another way to achieve it. That is to further lower interest rates, or directly implement a zero interest rate, or even a negative interest rate, then A-shares could potentially explode. The full lifting of purchase restrictions in the real estate market, with the focus only on living and not on appreciation, will lead more funds to choose "stock trading." Also, due to zero or negative interest rates, mortgage interest rates will correspondingly decrease, which is overall beneficial for stimulating the entry of first-time homebuyers or attracting foreign investment in real estate.The United States is increasingly resembling the Qing Dynasty.
According to reports, on May 8th local time, US Secretary of Commerce Gina Raimondo claimed that the United States might take "extreme measures, namely banning Chinese internet-connected vehicles from entering the US." The report indicates that this is the first sign of a potential ban on Chinese internet-connected vehicles by the US since the government launched an investigation in February.
Now, in almost every industry, there are indications that Chinese companies are on the verge of surpassing American companies. At least in terms of momentum, it is very evident, with only time and the removal of threshold barriers remaining. If Chinese companies surpass American companies in every industry, what will the future hold for the United States? The world is changing too fast, really too fast. Even the World War II of the past is not far from us, where is the future? It is in rapid development.
Zero interest rates and negative interest rates, do not think they are inappropriate. In accordance with international norms, a market with zero interest rates is not something that can only be encountered by chance. On the contrary, in times of economic pressure, it is a policy that can be introduced at any time, that is, zero interest rates. This is the case in the United States, Japan, and other major developed countries. Therefore, for us now, zero interest rates are actually appropriate and possible. Let's wait quietly for the market to verify.
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