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Insights: Finance | Toil and trouble - but companies needn't worry about China's volatile stock market

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Sector Insights: Finance
By Anatole Pang
Sector Lead for Financial and Professional Services
China-Britain Business Council

The recent market turmoil in China has for the first time led to a vast amount of foreign commentary, reflecting the increased consciousness about the country. After the first round of scare stories about the potential crash, not least its size compared to the concurrent Greek crisis (also here), we have begun to see the counter-narrative emerging. It is being pointed out how few people are actually directly affected by recent events; how little impact this would have on the real economy; and from the perennial China bear the Wall Street Journal, how little this affects the rest of the world. So what is going on?

First, an unapologetic inundation of statistical context. At its lowest point, the Shanghai index had fallen by 36%, although this has since recovered a little to a decline of 29%. Even at its lowest, this represented a 13.5% gain since the beginning of the year – still one of the best performing stock markets in the world.

Source: Yahoo Finance

It is widely publicised that equity-related investments account for around 15% of the Chinese household balance sheet, in contrast to 32% in the UK and more than 60% in the US[1]. These are disproportionately concentrated amongst 20m – 30m largely upper-middle-class urban households, representing 6.5% of the total. 6.5% also happens to be the proportion of the population which the widely-touted 90m brokerage accounts constitute. Margin trading has grown exponentially, but still represents only around 4% of the market, or 3% of total household bank deposits. Likewise, the stock market accounts for just 5% of corporate capital-raising (albeit this proportion has recently grown) and a lower proportion of GDP[2] compared to elsewhere. Financing for the bull market accounts for around 1.5% of total banking assets.

As a consequence the hard outcomes might be as follows:

  • The crash will likely affect a narrow strand of urban speculators in the stock market, many of whom have been reported as trading on margin
  • An unwinding of this could lead to some impact on higher end urban consumption and potentially on select urban house prices as some households liquidate property to meet their debt obligations
  • For corporates, the volatility may dislocate some capital raising planned for this year, which will also have a knock-on effect for brokerages and professional advisors
  • It is unlikely to impact the real economy or most foreign firms

So then we move on to what Paul Krugman calls the “confidence fairy”, perhaps important in this period of slowing economic growth. Yet most Chinese investors will see almost zero connection between the stock market and economic performance, both because the market trades mostly on rumours and not fundamentals, and because corporate reporting leaves something to be desired – most people have little guidance on real corporate performance, and do not trade on it. And given that most people have no exposure to equities through pensions, insurance or mutual funds, the stock market is central to very few people’s lives. Indicators like PMI should be unmoved, not least because gains made and lost within a three-month period have not had any time to be digested into economic planning and strategy.

And what about political confidence? Since few people were aware of the bull market in the first place, and fewer still of the government’s supposed attempt to create one, it seems likely that awareness of the government’s stabilisation policies are equally marginal in the public consciousness. Furthermore of those who are aware, the prevailing social perspective is that stock markets are a casino and would not deserve any more bail-out than a night out at the Grand Lisboa in Macau.

Negative implications for the government’s reform programme have also been widely reported. Assuming that this intervention does not succeed – something which, to date, seems questionable – many fear that a poor precedent has been set for the Xi administration’s attitude towards change (see also here and here). Yet this assumes that the concept of both “reform” and even of “markets” can be interpreted through the same paradigm as elsewhere. One only needs to look at Beijingers’ attitudes towards house pricing to understand that “market pricing” often stretches beyond demand and supply equilibrium. What is clear is that the government often prioritises “prestige” matters filling their in-tray, of which currently both the IMF’s SDR and MSCI / FTSE indices inclusions are very prominent.

In the meantime, British companies probably do not need to be as worried as some seem to think. As with the inflation crisis in 2011, the Chibor crisis in 2013 and the debt crises reported in 2014, this may yet end up as but a footnote in recent history.

For more information please contact the author, Anatole Pang, CBBC’s sector lead for financial and professional services in China: anatole.pang@cbbc.org.cn

1 UK statistics from ONS and US data from National Census
2 Shanghai and Shenzhen Stock Exchange websites, NBS data for GDP

 

英国公司无需担心中国股市动荡
 
作者:彭安东
英中贸易协会金融与专业服务商务顾问
 
 

近来,中国股市动荡首次引起国外广泛的评论。这反映出外界对中国的关注正在增加。经过第一轮股市即将崩盘的惊吓之后(有指其规模堪比同时期发生的希腊危机),我们陆续听到有相反观点开始出现。这些观点指出,实际上,很少有人受到最近一连串事件的直接影响,其对国家实体经济的冲击也微乎其微,对历来看熊中国的华尔街日报来说,这对世界其他国家的影响并不足道。那么,发生了什么事情呢? 

 

我们首先拿统计数据来解释。在最低点的时候,上证指数下跌了36%,虽然说现在有所回弹,回弹到了29%。但即使在最低点,自年初以来,上证也有13.5%的收益——仍然是世界上表现最好的股市之一。

 
 
资料来源:Yahoo Finance
 
媒体报道广泛指出,和股权相关的投资占中国家庭资产收支的约15%,而英国是32%,美国则超过60%1。这些投资极不均匀地集中在2000-3000万中上层城镇家庭,占总家庭数的6.5%。而6.5%又恰巧是9000万经纪账户所占人口的比例。融资融券交易虽然呈指数增长,但只占股市的大约4%,或所有家庭存款的3%。同样,股市只占公司所筹资金的5%(虽然这一比例近来有所上升),和其他国家相比,其所占GDP的比例较低2。为牛市所筹资金占到银行总资产的大约1.5%。
 
最终可能会出现以下后果:
  • 崩盘可能会影响一小股股市中的城镇投机者。据报道,他们很多人一直在进行融资融券交易。
  • 平仓可能会对高端城镇消费带来冲击,城镇高端房屋的房价会受到潜在影响,因为一些家庭为了偿还债务而变卖他们的财产。
  • 对公司而言,股市动荡也会打乱本年度的融资计划,而这也会为经纪业务和专业咨询带来连锁反应。
  • 对实体经济和大多数外企不会产生影响。
那么,我们接着来看看保罗·克鲁格曼(Paul Krugman)所谓的“信心神话”,这在经济下滑时期或许很重要。然而,大多数中国投资者几乎看不到股市和经济表现间有什么关系,这是因为股市交易几乎是靠传闻,而不是靠企业的基本面,企业的报告留给了人们他们所期待的东西——大多数人对企业的经济表现并无把握,而且并不据此交易。假如大多人置身于股市之外,只是关注养老金、保险和互助基金,那么股市只对极少人的生活产生至关重要的影响。一些指数,如采购经理人指数,就应该保留,尤其是因为在三个月内得而复失的盈利根本没有时间进入经济规划和战略而被消化掉。
 
那么,政治信心又如何呢?由于很少有人从一开始就意识到牛市的到来,更少有人意识到政府部门试图创造一个牛市,所以,在公众意识里,政府稳定政策的意图也同样被边缘化了,这看起来可能性极大。而在那些意识到的人当中,社会上盛行的看法是,股市就是个赌场,比起澳门新葡京娱乐场的一夜赌博更不值得采取救助措施。
 
政府改革计划可能引起的负面结果已经受到了广泛的报道。假如这一干预没有成功(这一猜测,到目前为止,看起来并不可靠),很多人担心,政府接下来是否能够进行改革。然而,这一问题的假设是,“改革”甚至“市场”的概念,用其他国家的范例进行阐释。只需要看看北京人对房价的态度,就能理解“市场定价”常常游离于供需平衡之外。显而易见,中国政府常常优先处理“影响力大”的事件,这一点在国际货币基金组织特别提款权和MSCI / FTSE指数的结果上显得尤为突出。
 
英国公司不需要像一些人想的那样担心。正如2011年的通胀危机,2013年的中国同业拆借市场利率危机和所报道的2014年债务危机,这些最终都成为近期历史中无关紧要的事件。
 
欲了解更多信息,请联系英中贸易协会金融与专业服务商务顾问彭安东,电子信箱:anatole.pang@cbbc.org.cn
 
1 英国的数据来自国家统计办公室,美国的数据来自国家人口普查局
2 上海和深圳证券交易所网站,国家统计局GDP统计数据
 

 

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