The market in June has come to an end, and the market in July has kicked off, and Monday is the first trading day in July and the first trading day in the second half of the year. In the first half of the year, the market has repeatedly adjusted, and the Shanghai Composite Index has also fallen below 3,000 points twice, especially before the Spring Festival, when the market fell sharply, and the Shanghai Composite Index fell to more than 2,600 points at its lowest.
At that time, on the one hand, I suggested that everyone should stick to value investing, not lose high-quality chips at the bottom of the market, and wait patiently for the market to pick up. On the other hand, I also actively call on the national team to increase its efforts to enter the market, not only to support the bottom, but also to pull up, not only to increase the holdings of large-cap index ETFs such as CSI 300, but also to increase holdings of small- and medium-cap index ETFs. Subsequently, after the national team increased its efforts to enter the market, the Shanghai Composite Index returned to 3,000 points through Balianyang, and once rose to more than 3,100 points in the first half of the year, and by the end of June, the market fell back again, and the Shanghai Composite Index fell below the 3,000-point integer mark, and once again there was a lack of market confidence.
In the first half of the year, the new "National Nine Articles" were issued, laying a solid foundation for the construction of a high-quality capital market in the mainland, and then the China Securities Regulatory Commission launched a series of measures to deepen reforms, and gradually formed "1+N" supporting regulatory measures, through strict control of IPO entrances, through strict supervision of listed companies, cracking down on violations of laws and regulations, increasing the implementation of the new delisting regulations, achieving survival of the fittest, and encouraging listed companies to pay cash dividends. This series of measures has laid an institutional foundation for the long-term development of the capital market, and the China Securities Regulatory Commission has recently further clarified the direction of our deepening reform through a series of investigations on deepening the reform of the capital market.
From an economic point of view, the PMI in June, like in May, was below the 50% watershed, which shows that the lack of short-term economic demand is still a prominent contradiction. In July, the Third Plenum of the CPC Central Committee will be held, and it is likely that the policy of stabilizing economic growth will continue to exert efforts to promote the economy out of a round of recovery. Once the property market can stabilize, investment can start, and consumption can pick up, the capital market will likely rebound in the second half of the year.
The A-share market has always had the saying that "five poor, six absolutely seven turn over", and after the in-depth adjustment in May and June, the market is expected to rebound sharply in July. The early callback has fully reflected a variety of pessimistic expectations, and the current central bank's monetary policy is still relatively loose, low interest rates, easy liquidity, the newly released central bank in the second quarter monetary policy report also shows that the next stage of the central bank in monetary policy will remain relatively loose to support economic recovery. At the same time, low interest rates have also laid the foundation for the rebound of the capital market, although the Fed's first interest rate cut has been postponed, and it may not be able to cut interest rates until the end of the year, but the central bank must maintain the stability of the RMB exchange rate on the one hand, and on the other hand, it must also choose the opportunity to cut interest rates and RRR to support the economic rebound, so as to break the deadlock and rebound.
A thriving capital market is also an important aspect of economic recovery, which is not only a barometer of the economy, but also a real economy. Now there are 200 million shareholders, 600 million people, the capital market is strong, so that the majority of investors can make money through the wealth effect of the capital market, consumption is possible, once consumption rises, the intensity of economic recovery will gradually increase, thus bringing recovery growth opportunities in all walks of life, which is also very important.
Last week, I attended two important meetings. One is to Liuzhou to participate in the Shanghai Securities News Summer Director Forum, on the development of new quality productivity and new consumption had an in-depth discussion, I also expressed my opinion, the development of new quality productivity is our established goal, but also the direction of future economic transformation, including new energy, new materials, AI, low-altitude economy and other aspects, we have been working hard to develop. It is worth noting, however, that in developing new quality productive forces, we must adhere to the principle of establishing first and then breaking down, and we cannot develop new quality productive forces in isolation from the traditional economy; otherwise, traditional enterprises will have no funds to carry out scientific and technological research and development.
We must stabilize traditional industries, stabilize employment, improve the income level of residents, stabilize the property market, and boost the stock market, so that enterprises will have more energy and funds to do research and development and transformation. The development of the new economy is inseparable from the support of the traditional economy, just like the development of new energy, we cannot leave the support of traditional energy. Although photovoltaic and wind power have been developed for many years, but from the current power generation structure of the mainland, 70% still rely on thermal power generation, only 10% less than new energy power generation, if there is no coal power generation as a support, relying on new energy power generation alone is undoubtedly seriously insufficient, so we must develop the new economy on the one hand, but also to stabilize the traditional industry, otherwise, scientific and technological innovation will become a source of water, no wood.
In terms of promoting new consumption, fundamentally speaking, I suggest that we should still raise the income level of residents, because people's current consumption depends not only on the current income level, but also on the future income expectations, if everyone has a high expectation of future income, they dare to consume, which requires supporting the development of private enterprises, creating more jobs, and at the same time increasing the proportion of workers' remuneration in GDP and increasing the salary income of residents. On the other hand, it is necessary to stabilize the property market and boost the stock market, so as to increase the property income of residents. In fact, it is very difficult to stimulate consumption just by talking about stimulating consumption, and it is still necessary to increase the employment rate and income level of residents.
After participating in the forum, I took the high-speed train to Yibin to participate in the shareholders' meeting of Wuliangye, voting on various matters of the shareholders' meeting on behalf of the company, and I was also fortunate to get the first opportunity to ask questions, and the chairman of the company, Mr. Zeng, also gave detailed answers. In my question, I said that there has been a wave of price declines in high-end liquor recently, especially the large price drop in Feitian, will it affect the sales of high-end liquor, and what are the development trends in the future? Chairman Zeng said that now it is not simply a consumption upgrade or consumption downgrade, in fact, it is a spiral development, and the demand prospect of high-end liquor in the future is still broad.
I participated in the Moutai shareholders' meeting, Wuliangye shareholders' meeting and Warren Buffett's shareholders' meeting, in fact, I hope that by participating in the shareholders' meetings of some leading enterprises, more investors can realize that only by doing value investment can we truly obtain good investment results. Because at these shareholders' meetings, we meet hundreds or thousands of successful investors, all of whom are value investors. By holding these high-quality companies for a long time for ten or even twenty years, so as to achieve wealth growth and even financial freedom, it is inseparable from achieving such investment returns and adhering to the concept of value investment.
What shocked me was that although the A-share white horse stocks have fallen by more than 50% or even 60%-70% in the past three years, the questions from the shareholders at the meeting are all about the development of the industry and the company's operation, and no one asks how the company responds to the decline in stock prices, or almost no one pays too much attention to short-term stock price fluctuations. It is believed that the decline in the share price of good companies is temporary, because these long-term investors have been through multiple cycles, seen multiple stock price cuts, and have become accustomed to it.
In fact, in the long run, these good companies have delivered good returns. Therefore, it is recommended that if you have the conditions, you must participate in a shareholders' meeting of this kind of white horse leading stocks, I call them "white dragon horse stocks", and you will see many investors by doing value investment, by growing together with great companies, and achieve huge returns. Value investing is almost the only way for our A-share investors, especially retail investors, to achieve long-term investment and profits.
In terms of investment philosophy, we must make changes in a timely manner, do not pay too much attention to the short-term fluctuations of stock prices, but see that the stock price is a voting machine in the short term and a weighing machine in the long term, which is the famous saying of Graham, Buffett's teacher. If we focus too much on short-term stock price fluctuations, we risk losing ourselves and even losing quality chips at the bottom. We should pay more attention to the long-term investment value of the enterprise and the long-term performance growth ability of the enterprise, so that we can strengthen our confidence and truly achieve a good return on investment by growing together with a great enterprise.
(The author is the chief economist and fund manager of Qianhai Open Source Fund)