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Haitong strategy 荀玉根: A shares of US stocks ice and fire two days of reason geometry?

November 09, 2018 07:49
Author:Yu Yugen
source: Stock market decision

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A-shares and US stocks are the two largest stock markets in the world. Since this year, the trend has been diverging, and the market performance has been on the rise. According to the distribution of listed companies' market capitalization industry, the A-share cycle category is 33%, the technology category is only 12%, and the US stocks are 14% and 27% respectively. The upgrading of the industrial structure and the launch of the Kechuang Board will boost the structure of the A-share company.

Core conclusions: 1 China's securitization rate (including overseas Chinese stocks) is only 73%, far lower than the US's 149%. The shareholding ratio of A-share individual investors was 40.5%, institutional investors were 31.5%, and US stocks were 4.1% and 93.2% respectively. 2 The listed companies' market capitalization industry distribution shows that the A-share cycle class is 33%, the technology class is only 12%, and the US stocks are 14% and 27% respectively. The upgrading of the industrial structure and the launch of the Kechuang Board will boost the structure of the A-share company. The top 10% of the 3A stock market value, 30% of the company's turnover accounted for 38%, 64%, while the US stocks were 46%, 72%. If the delisting system is not perfect, the proportion of A-shares with low turnover will continue to increase.

  Comparison of market structure between A shares and US stocks

A-shares and US stocks are the two largest stock markets in the world. Since this year, the trend has been diverging, and the market performance has been on the rise. This paper will compare A-shares and US stocks from three dimensions: investor structure, listed company structure and transaction structure, and discuss the current A-share market structure and its future development trend.

1. Investor structure: A-share retail investors and US stocks

China's asset securitization rate is only 46%, which is lower than that of developed markets. From the perspective of economic volume, the United States and China are currently far ahead, including the United States in 2017.GDPIt is 19.39 trillion US dollars, accounting for 24.0% of global GDP; China's GDP in 2017 is 12.24 trillion US dollars, accounting for 15.2% of global GDP; third place Japan's 2017 GDP is 4.87 trillion US dollars, accounting for only global GDP The total amount is 6.0%. As of November 7, the total market value of A shares was 5.6 trillion US dollars, ranking third in the world, accounting for 7.5% of the total market value of countries and regions around the world. Even with the stocks in the Hong Kong stock market and the stocks in the US stock market, the total market value is 8.8 trillion US dollars, accounting for only 11.8% of the total market capitalization of the global market capitalization. The top countries or regions also have US$30.1 trillion (40.1%), Japan's US$5.7 trillion (7.6%), and US$3.3 trillion (4.5%). In contrast, the position of A-share stocks does not match China's economic status. We measure the current level of asset securitization in the country by calculating the indicator “Currently the total market capitalization of the stock market after the local company/2017 GDP”. As of November 7, China’s asset securitization rate is only 46% (only considering A-share listed companies). Even considering overseas Chinese stocks, China’s securitization rate is only 73%, far lower than the US ( 149%), Japan (117%), and lower than the United Kingdom (100%), France (92%), South Korea (91%), India (75%) and other countries. From the historical grading level of P/E ratio, the current P/E ratio of the Shanghai Composite Index is 11.63 times, which is located at 13.2% since 2000. The current price-to-earnings ratio of the S&P 500 is 19.42 times, and the historical quintile since 2000 is 63.4%. The current US stock valuation is high and A shares are low.

Compared with the global, A-share individual investors account for a high proportion and high turnover rate. Compared with the global, A shares have obvious structural differences with other major capital markets. From the perspective of turnover rate, the A-share turnover rate is much higher than other major capital markets in the world. 2017GEMThe number, SME board index, and Shanghai Composite Index turnover rate (calculated by market capitalization) are as high as 920%, 745%, and 532%, respectively.NasdaqIndex (352%), FTSE 100 Index (256%), S&P 500 Index (214%), Nikkei 225% Index (200%), French CAC 40 Index (114%), Taiwan Weighted Index (66%),Hang Seng Index(56%), of which the annual turnover rate of equity public funds is 297%, which is also much higher than the 26% turnover rate of US equity funds. From the perspective of investor structure, the share of market value of A-share individual investors is significantly higher than that of other developed capital markets. According to the data disclosed in the 2018 Interim Report, the free market capitalization of A-share individual investors accounted for 40.5%, while in other major capital markets, individual investors in the US, Japan, Hong Kong, UK, and France markets held The market capitalization ratio is only 4.14%, 4.59%, 6.82%, 2.74% and 1.97% respectively. US institutional investors (including investment advisers (mainly funded by public funds), government,bank,InsurancePrivate equity, pension funds, hedge funds, venture funds, and endowment funds accounted for 93.2% of the market capitalization, compared with 31.5% of the free float market capitalization of Chinese A-share institutional investors. In addition, as of 2017, China’s tracking index fund (passiveExponential+ETFThe scale accounts for 28% of equity funds, which is only equivalent to the level of US stocks ten years ago. It can be seen that compared with the “configured” market of US stocks, China is mainly “transactional”.

Long-term funds such as pensions and foreign capital will enter the market, and the proportion of A-share institutional investors will increase in the future. The reason why the proportion of US institutional investors is much higher than that of A-shares is that the size of US pensions is relatively large. As an important part of institutional investors' funds, nearly half of US public funds are held by pensions. Increasing the proportion of institutional investors and introducing long-term funds such as pensions and foreign investment are key. In China's current pension system, the proportion of the basic pension insurance (the first pillar), which has the largest proportion, continues to decline. The development of enterprise annuity (the second pillar) is late and the participation is low. The personal pension (the third pillar) is still in its infancy. stage. Compared with the proportion of Chinese and American pension assets, the total assets of American pensions reached 31.0 trillion US dollars in 2017, the total assets/GDP of pensions reached 158%, while the total assets of China's pensions were only 1.3 trillion US dollars, and the total assets/GDP of pensions were only 11%. China is constantly striving to increase the scale of pensions. In March 2018, the China Securities Regulatory Commission issued the "Guidelines for Pension Fund Investment Funds (Trial)", and began to implement individual long-term investment funds for the purpose of providing for the elderly. In April 2018, the Ministry of Finance and other five departments issued the "Notice on the Piloting of Personal Tax Deferred Commercial Endowment Insurance", which was used to promote the development of tax deferred commercial endowment insurance. In terms of foreign investment, it is recalled that the Korean capital market is gradually opening to the outside world. After the inclusion of the MSCI index in the Korean market, the shareholding ratio of foreign institutional investors in the market continues to increase. The annual average amplitude of the Korean weighted index has dropped from 55% before 2002 to 33. %, the relative premium rate of KOSPI200/KOSPI has increased from 1 in 1992 to 1.2.A in 2012. At present, efforts are also being made to increase the opening up. On April 11, 2018, the China Securities Regulatory Commission announced that from May 1st, the daily quotas of Shanghai Stock Connect and Shenzhen Stock Connect will be adjusted to 52 billion yuan respectively, and the daily quota of Hong Kong stocks will be adjusted to 42 billion yuan. In June 2018, A-shares were included in the MSCI Emerging Markets Index, with an inclusion factor of 2.5%. In September, the A-shares were increased to 5%. In September 2018, A-shares were included in the FTSE Russell Index System, which was divided into three steps: 19 years 6 Including 20% ​​in the month, 40% in September 19, and 40% in March, while MSCI plans to further increase the weight of A shares. According to preliminary estimates, after the inclusion of the two major index systems, it is expected to bring 100 billion RMB incremental funds to A shares in the short-term. After all the inclusions, the incremental funds will reach one trillion.

2. Company structure: A-share cycle stocks, US stocks and technology stocks

The stock market value of the A-share cycle is relatively high, and the value of the technology stock market is relatively low. Under the current issuance system in China, many leading companies in emerging growth industries are unable to list on A-shares. At present, the four listed technology companies with the largest market capitalization in China are denominated in RMB.Alibaba2.6 trillion,Tencent Holdings2.5 trillion,Baidu0.5 trillion,Jingdong0.2 trillion, of which Alibaba, Baidu and Jingdong are listed in the US, and Tencent is listed in Hong Kong. In the context of China's current issuance system, the listing of cyclical companies has led to an imbalance in the structure of the A-share market. In the traditional profit recovery cycle driven by demand expansion, cyclical stocks tend to perform well and are more likely to meet the profit requirements of the A-share IPO system, resulting in more A-share periodic listed companies and financing amounts. Since 2000, the number of IPO companies in the cyclical industry has accounted for 47%, and the financing amount has accounted for 44%, while the number of financing enterprises in the consumer industry accounted for 29%, the financing amount accounted for 20%, and the number of financing enterprises in the technology industry accounted for 19%. The proportion accounted for 11%, the number of financing companies in the financial industry accounted for 2%, and the financing amount accounted for 22%. Even since 2010, the economic transformation process has accelerated, but the number and amount of listings in the cyclical industry are relatively high, reaching 46% and 38% respectively, while the number and amount of IPOs in the technology industry account for only 21% and 15%. As the cyclical stocks get together, the A-share market structure has begun to become unbalanced. From the perspective of market capitalization, according to the stock price statistics on November 5, the market capitalization of A shares is cycle (33%), finance (22%), consumption (25%), technology (12%),real estate(4%), while the overseas Chinese stocks (including Hong Kong stocks) cycle (22%), finance (17%), consumption (22%), technology (29%), real estate (8%), in the US stock cycle (14%), finance (17%), consumption (36%), technology (27%), real estate (3%), horizontal comparison A-share cycle stock market value is relatively high, technology stock market value is relatively low. From the perspective of profit share, comparing the profit structure of A-shares, overseas listed Chinese stocks and US stocks, the net profit of technology stocks (2018H1) among the three companies accounted for 4%, 29% and 20% respectively, and the net profit of A-share technology stocks. The proportion is only 1/5 of the US technology stocks.

Today China is in an industrial structure upgrade period, and the proportion of future consumption and advanced manufacturing will increase. China's current economic situation is in the same period of economic transformation as the United States in the 1980s, and the industrial structure upgrade is divided into two parts: manufacturing upgrading and consumption upgrading. In the manufacturing sector, the proportion of secondary industry in GDP between 1978 and 2012 has been stable at around 45%. At this time, China is in the stage of industrialization, traditional manufacturing.Industrial added valueThe proportion of GDP in 2012 was 30%. After 2012, the proportion of secondary industry began to decline gradually. When China entered the late stage of industrialization, the proportion of traditional manufacturing in the economy also dropped by 3 percentage points from 2012 to 27 in 2017. %; at the same time, advanced manufacturing has begun to emerge, with computer and electronic equipment manufacturing, electrical machinery and equipment manufacturing, andPharmaceutical manufacturingThe added value of the three industries in the industry has gradually increased from 5.7% in 2012 to 6.2% in 2017, and the market share of the technology industry in the corresponding A-shares has increased from 6.4% in early 2012 to 2018. 12.7% of the month. In terms of consumption, we analyzed in the article "The causes of consumption upgrading and the promotion of localization - -20170503", the per capita GDP has passed the turning point, the consumption effect of infrastructure appears, the channel sinks and the industry shifts, and the flow of people and consumption tends to change. With the influence of big power, China has entered a period of consumption upgrading. The proportion of the tertiary industry in the economy has been rising, reaching 51.6% in 2017. The contribution rate of consumption to GDP has also increased, reaching 77.8% in the first quarter of 2018. From the proportion of service industry's added value to GDP, in recent years, the proportion of industrial added value in the high-end service industry (information technology, business services, residential services, education, medical and entertainment industries) in GDP increased from 11.3% in 2012. By 13.2% in 2015 (the Bureau of Statistics stopped updating this data after 2015), the market share of the consumer sector in the corresponding A-shares rose from 19.9% ​​at the beginning of 2012 to 24.0% in October 2018. The US high-end service sector accounted for 13.1% of GDP in 1970 and 23% in 2000. Taking the United States as a reference, the added value of China's healthcare, information technology, and entertainment industry in 2017 is only 20%, 38%, and 40% of the US, while the manufacturing industry is 150%, which is much larger than the US emerging industry. .

The launch of the science and technology board and the pilot registration system will make the A-share market structure more reasonable. On November 5th, President Xi Jinping proposed at the opening ceremony of the Expo that he would set up a science and technology board and a pilot registration system on the Shanghai Stock Exchange. This major reform will undoubtedly have a profound impact on the development of China's capital market. First of all, the launch of the science and technology board is not a simple replacement for the GEM, but an effective supplement is to truly achieve the support of the multi-level capital market for the real economy, especially to support the development of small and medium-sized enterprises. At present, China's new economic and technological enterprises do not have a smooth listing channel, and the launch of the science and technology board meets the financing needs of the new technology enterprises in different life cycles, providing a local way for China's new economic and technological enterprises to seek financing. At the same time, the implementation of the registration system of the Science and Technology Board has greatly improved the convenience of the company's direct financing through the capital market. When the person in charge of the China Securities Regulatory Commission set up a report on the establishment of the Shanghai Stock Exchange and the pilot registration system, he said: The science and technology board aims to fill the shortcomings of the capital market service technology innovation, which is the incremental reform of the capital market and will be profitable. Make better and more differentiated arrangements in terms of status and ownership structure, and enhance the inclusiveness and adaptability to innovative enterprises. We expect that Science and Technology Board may refer to the previously introduced CDR system to address the characteristics of high growth, high investment and long-term profitability of innovative enterprises in specific development stages, and appropriate relaxation of the issuance conditions for pilot enterprises, depending on the specific circumstances. New economic enterprises that are temporarily forced to go public by performance standards may enter A shares first. At the same time, the entry barrier for investors will be adjusted according to the new three boards, so that the investment threshold is appropriately lower than the 5 million yuan required by the New Third Board. It can not only meet the original intention of avoiding the retailing, but also enable more people to enjoy the new economy. The benefits of development, while expanding the mobility of the science and technology board. In the future, if the SSE implements the science and technology board, it will have far-reaching significance for the restructuring of the A-share market. The establishment of the science and technology board will open a green listing channel for the unicorns representing the new domestic economy. The policy tilt will guide the inflow and return of fresh blood from technology stocks. It is foreseeable that the proportion of IPOs and market capitalization of technology industries will gradually increase in the A-share market. As more high-growth "unicorns" are listed on A-shares, the A-share market structure will tend to be reasonable.

3. Trading structure: US stock concentration is significantly higher than A shares

The distribution of A stock market value is “spindle shape”, and the turnover is concentrated on large-cap stocks. From the internal structure of the capital market, as of October 31, among the 3,556 stocks in the A-share market, the market value was ranked from large to small, and the market value of stocks with a market value of more than 20 billion yuan accounted for 11.4%, and the market value was at 20- The proportion of stocks in the 20 billion yuan range is 75.5%, and the number of stocks with market capitalization below 2 billion yuan accounts for 13.2%. In general, the market value distribution of stocks in the A-share market presents a "spindle shape" with two small and medium-sized ones. On the other hand, in the US stock market, all 3,921 stocks in the US stock market are ranked by market value from large to small. The number of stocks with market capitalization above 10 billion US dollars is 12.5%, and the number of stocks with market capitalization in the range of 10-10 billion US dollars is 34.38. %, the number of stocks with market capitalization below $1 billion accounted for 53.12. Overall, the distribution of stock market value in the US stock market showed a "pyramid shape". From the perspective of market transaction structure, the A-share market funds are concentrated in the head market-capital companies. The top 10%, 30%, and 50% of the market capitalization turnover accounts for 38%, 64%, and 78% of the total A-share turnover, respectively. The turnover is concentrated in large-cap stocks, which is conducive to high-quality companies to improve financing efficiency and improve liquidity. Compared with overseas, the A-share turnover is more concentrated than Hong Kong and the UK, but there are still gaps compared with other mature markets such as Japan and the United States. The top 10% of the market value of Japan and Euronext accounted for more than 50% of the total market turnover, accounting for 54% and 53% respectively. The top 30% of the market value of the US, Japan and Euronext exchanges The proportion of the shares is above 70%, and the top 50% of the market value of the US and Japanese trading markets accounted for more than 80%.

Leading companies continue to benefit from the increase in industry concentration and the rise in institutional investors. From the perspective of industry concentration, compared with Japan's economic transition in the 1970s and 1990s, Japan's economy entered the “L” type in 1975-1995, and the GDP growth rate remained at around 4.5%. At the same time, Japanese companies have ushered in a large number of mergers and acquisitions, and the number of enterprises in various industries has gradually declined. For example, the chemical industry has dropped from about 5,800 in 1975 to 5,300 in 1989, and steel has dropped from about 8,500 to 6,100. 11.4 million were reduced to 31,000, the concentration of various industries gradually increased, and the competitiveness of enterprises increased. The overall ROE level of enterprises increased from the lowest 8% in 1976 to 27.7% in 1980, and remained at 19% between 1980 and 1989. Higher level. At present, there are 3,526 A-share listed companies and 334 overseas Chinese-funded shares, while China's individual industrial and commercial households are 65.794 million, and private enterprises are 27.263 million. Relatively speaking, listed companies can be described as one of the best. Most listed companies are in various segments. The leading position in the field. Since 2010, the concentration of consumer and investment industries has gradually increased, including liquor, dairy products, pharmaceutical circulation, air conditioners, refrigerators, washing machines, cement, real estate, coal and so on. Specifically, the consumer industry refrigerator CR5 (sales) rose from 68.9% in 2011 to 79.7% in 2017, air-conditioning CR3 (sales) increased from 57.6% to 72.0%, and cyclical industries such as coal CR9 (yield) from In 2010, 32.1% rose to 38.3% in 2017, and steel CR4 (yield) rose from 19.5% in 2014 to 21.7% in 2017. From the perspective of institutional investors, from 2015 to the present, the share of A-share retail investors' free float market capitalization has generally declined, from 49% to about 40% of 2018Q2, while domestic and foreign institutions accounted for 23.8%. Increased to 31.3%, the proportion of retail investors decreased, and the long-term trend of rising institutional proportions is more obvious. Marginal incremental funds affect market style. Compared with retail investors, institutional investors' investment behavior is more rational, and the increase in institutional investment shareholding will strengthen the leading stock effect. As of 2018/10, the average stock market value of the fund, QFII and insurance in the three quarters was 49.5 billion, 34.5 billion, 39.7 billion, which was much higher than the average value of all A stock market values ​​of 14.5 billion; the fund, QFII, insurance three quarters reported heavy stock PE The median (TTM) was 21x, 20.7x, and 18x, respectively, and was also lower than the median valuation of all A-shares by 25.7x. This also reflects the preference of institutional investors for low valuation, large market capitalization.

The implementation of A-share delisting still needs to be strengthened, and low-volume stocks continue to emerge or become the norm. We analyzed that the stocks with a monthly turnover less than 1/2 of the median monthly turnover of all stocks were defined as low-selling stocks, through the analysis of “Spoofing the New Ways – Sino-US Port Delisting System Comparison -20180821”. The absolute value of low-selling stocks is compared with its relative proportion of all stocks to judge the change of low-selling stocks. It is found that the proportion of low-priced stocks to all listed stocks in the A-share market has increased from 10% at the beginning of 2017 to 23% at the end of July 2018, and the trend has continued to grow. Comparing the Hong Kong stocks and the US stock market, statistics on the monthly turnover data of Hong Kong stocks since 1998, monthly statistics on low-trading stocks of Hong Kong stocks, found that Hong Kong's low-selling stocks have increased year by year, from the monthly average of more than 200 in 1998. By the end of July 2018, the monthly average was 843, and the proportion of low-price stocks to all listed stocks in the Hong Kong market rose from 35% in 2002 to 37% at the end of July 2018. The proportion of low-selling stocks fluctuated but remained Above 25%, it reflects that there are still many low-priced stocks in Hong Kong stocks. The US market and the Hong Kong market are both mature markets, and the historical trend of low-volume stocks is quite different. Statistics on the monthly turnover data of US stocks listed on the New York Stock Exchange since 1997. Statistics on low-priced stocks of US stocks were collected monthly. It was found that the low-priced stocks in the US maintained a steady downward trend, from the average of more than 600 in 1998 to 2018. At the end of July, the monthly average was less than 500. The proportion of low-priced stocks to all listed stocks in the US stock market also dropped from 56% in early 1999 to 25% in 2010, and remained stable afterwards. In terms of trends, the delisting system and execution results of the A-share market are very similar to those of the Hong Kong market. Although the delisting system has been improving, the delisting rate of A-share listed companies is still too low, which is still an unavoidable topic. Since the A-share delisting system was launched in 2001, there have been only 97 companies in the Shanghai and Shenzhen stock exchanges that have been delisted due to consecutive losses in the past 18 years. Compared with the current number of more than 3,500 listed companies, this ratio is significantly lower. . At present, China's stock market is in a period of rapid expansion. With the normalization of IPOs, the value of shells has fallen sharply. Companies without long-term investment value will gradually be marginalized. The number of IPOs in the market has not reached the same number as the number of delistings. Before the situation, low-volume stocks may continue to increase. Previously, due to the large number of A-share retail investors, the speculative nature was strong. Some stocks with small market capitalization but rich subject concepts can be sought after by investors. However, as the proportion of A-share institutional investors continues to increase, the market tends to mature, in the medium and long term. In the A-share market, there may be a trend similar to the differentiation of Hong Kong stocks, and low-volume stocks continue to emerge or become the norm.

Risk warning: The economic growth rate has dropped rapidly, and the rapid inflation has led to tight monetary policy.

(Article source: Stock market decision)

                (Original title: [Haitong Strategy] Comparison of the market structure of A shares and US stocks (荀玉根, 王一潇))

                (Editor: DF078)

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