After a few months, Yang Mama once again took action against debt bulls.

According to news, the central bank conducted intensive interviews with institutions that have been aggressive in the bond market since December this morning. The institutions interviewed include some banks, brokerage firms, insurance asset management, financial management subsidiaries, funds, trusts, etc.

This time, Yang Ma's tone was clearly heavier than before. Not only did she prompt institutions to pay attention to interest rate risks and invest steadily, but she also pointed out that illegal and illegal acts that may occur in bond market transactions, clearly stating “zero tolerance” for problematic institutions.

The meaning of knocking jumped out on paper.

01

With the opening of the market this afternoon, treasury bond futures dived in a straight line. The main 30-year treasury bond futures contract plummeted from 0.25% to -1% within half an hour, then gradually rebounded, and finally closed down 0.44%.

The news also stimulated the stock market. At one point, A Hong Kong stocks quickly rose by more than 1% in the afternoon, but the follow-up was slightly weak, and they were unable to maintain their gains at the close.

Since this year, the bond bull market has been insane beyond market expectations, leading to a continuous decline in bond yields. By the 16th of this month, the yield on 30-year treasury bonds fell from 2.84% at the beginning of the year to 1.96%, and the yield on 10-year treasury bonds once fell from 2.56% at the beginning of the year to 1.72%.

The price of 30-year treasury bonds rose as high as 118.69 yuan, a corresponding increase of up to 18%. You need to know that playing with treasury bonds is all leveraged. It is possible to use bold leverage up to 20 times. Calculated, the return on principal is as high as 3.6 times. This is simply more scary than trading stocks.

This abnormal situation also caused Yang Mama to take action.

In fact, since the second half of the year, Yang Ma and relevant departments have repeatedly interfered with the abnormal performance of bond transactions, harshly warned China's financial institutions not to invest too much in the bond market, and even warned the market about the bankruptcy of the Bank of America's Silicon Valley in recent years.

In July, Yang Mama changed from shouting to direct action and announced that she would start buying treasury bonds from tier-1 traders and stabilizing treasury bond yields through sell-off.

By August, the Dealers Association issued an announcement stating that in a recent case investigated and dealt with by the Dealers Association, four agricultural commercial banks were suspected of manipulating market prices and transfer of benefits in treasury bond secondary market transactions. The Association of Dealers has been transferred to the central bank to implement administrative penalties, and investigation and processing of other such case leads will be stepped up.

A series of major attacks finally caused the treasury bond yield to rapidly rise from 2.1% to the 2.4% range, but soon, the suppression effect gradually weakened, and treasury bond yields declined again.

Fortunately, A-shares ushered in a “924” market. Massive amounts of capital were quickly transferred from the bond market to the stock market, and treasury bond yields quickly rebounded sharply.

However, as the A-share market began to slow down in mid-November, the trend in treasury bond yields once again accelerated markedly. Obviously, this is a massive amount of capital flowing back into the bond market after a wave of sharp increases in the A-share market, in an attempt to take risks while betting on falling interest rates and making more profit from rising bond prices.

As can be seen, capital's downward expectations for bond yields have always been very clear and firm, and even fought against regulators, including the use of operations that may be illegal (deliberately ignoring excessive leverage of interest rate risks or excessive overallocation of long-term debt, transfer of benefits, etc.).

The fundamental reason why it is so difficult is still the loose liquidity market environment created by the continuous decline in interest rates. In order to better boost the economy, the supervisory authorities are resisting all kinds of external pressure and continuously striving to create a monetary environment with low interest rates in the country. Even now, expectations of easing to continue to “cut interest rates in due course” are still strong.

It is true that various institutions also obtained a large amount of low-cost liquidity during this period, but due to insufficient market confidence in future economic recovery, quite a bit of this liquidity did not go where they should go (operate, expand investment). Instead, they actively poured into the treasury bond market to frantically “idle”, eventually forming clusters and driving up the price of long-term bonds, leading to a crazy boom in rare bonds.

This kind of situation is not what the supervisory authorities want to see. Whether the “idling” of massive amounts of capital will seriously affect the effects of economic stimulus policies, or the risk of thunderstorms that may occur due to excessive leveraged debt speculation by institutions, or the potential risk caused by the short-term decline in treasury bond yields, it is a very serious problem.

The 10-year Treasury yield has now fallen to a rare ultra-low level of 1.72%. It's easy to predict. Next, Yang Mama and relevant departments will probably come out with more and more strict measures.

For example, it is possible to continue to borrow and sell bonds from the primary market, adjust margin, or even adjust transaction rates.

However, this one-sided bond bull market from the beginning to the end of the year is also likely to turn into a boxy bull market.

02

Yang Ma's colleague who dealt with the bond cow was also not idle at the State Assets Administration Commission on the other side.

Just last night, the State Council's State-owned Assets Administration Commission issued and issued “Certain Opinions on Improving and Strengthening the Market Value Management of Listed Companies Controlled by Central Enterprises”, which proposed that central enterprises shouldmergers and acquisitionsImprove and strengthen the market value management of holding listed companies in six major areas, including restructuring, market-based reforms, information disclosure, investor relationship management, investor returns, and stock repurchases and increases in holdings.

Today, central state-owned enterprise concept stocks such as “China Special Valuation”, “Central Enterprise Reorganization”, and “Central Enterprise Dividend” opened and surged, contributing to a large number of ups and downs. At one point, the China Securities Central Enterprise Index rose 1.6% intraday, significantly outperforming the Shanghai Index.

Combined with the phenomenon that the supervisory authorities above have begun to take continuous measures against the bond market and at the same time rarely issue various measures to boost the capital market, we can clearly and clearly feel the instructions behind this — the bond market is overheated and needs to be guided to support the stock market.

In order to achieve this goal, the supervisory authorities are now also continuously loosening restrictions on the allocation of equity assets by institutions to guide the entry of various long-term funds such as insurance, social security, and funds. In particular, starting with “924,” support for boosting the stock market has rarely strengthened, and there has even been a shift from supporting reform policies to providing financial support.

Also, this time, the customs department once again called for central state-owned enterprises and controlled listed companies to obtain valuation levels, which is also one of the key measures for the general policy of boosting the capital market.

This series of measures will definitely not be in vain. Just like the advent of the A-share “924” super market, although it may seem like an accident, it is actually a natural result. It's just that people didn't expect the market reaction to be so intense.

Next, the supervisory authorities are likely to make greater efforts to reverse the “weak debt, bulls, and stocks” situation, and the results are bound to be unquestionable.

This lays a key financial foundation for A-shares to continue to usher in a big market in the future.

However, it should also be noted that since “924,” the valuation of all A-share assets, including central state-owned enterprises, has soared by a large round. For example, the current PE point of the Central State-owned Enterprises Index has reached more than 80% in the past five years. Among these, even the market capitalization of many large central and state-owned enterprises has reached new historical regulations or new highs over a long period of time.

ICBC rose 1.23% today, returning to a record high of “10.8” by just 1 cent. This year, ICBC surged 47.31%, making it one of the biggest winners.

At this stage, central and state-owned enterprises, like other big blue chips, are indeed not as high in terms of valuations and cost performance as they were before the big increase.

However, there are still quite a few central state-owned enterprises that are still in a state of low PB and low PE, and even a few are still in a “broken” state.

According to Wind data, as of December 18, there were about 462 A-share listed central enterprises, of which about 60 had PB less than 1 times, but judging from the price-earnings ratio, the latest financial reports of nearly 100 central enterprises are in a state of loss (PE is negative). These companies are generally industrial chains related to real estate and major infrastructure, as well as some manufacturing industries. Their operations or capital chains all have different problems and difficulties.

From the perspective of the capital market, these enterprises currently have little investment value, unless they can improve asset quality and effectively increase investment value through mergers, acquisitions and restructuring or other effective methods as policy guidelines. Otherwise, even if there are policy calls, it will be difficult for the market to recognize and support them for a long time.

However, for other high-quality central state-owned enterprises that are still growing steadily in business and can continue to bring return on investment, the market is still very willing to participate.

The key to judging is whether the current dividend returns are cost-effective enough.

At present, interest rates on long-term bonds and deposit interest rates have fallen below 2%, so if listed companies can continue to provide stable dividend returns of more than 3% or are stringent to 4%, they will still be attractive.

Currently, there are still quite a few A-share companies that have maintained a dividend rate of 3% or more in recent years. They focus on key areas such as banking, insurance, energy (petroleum, coal, electricity), telecommunications, etc., and many also happen to be several central state-owned enterprises or enterprises controlled by them. Of course, they also include many high-quality core private enterprises.

These companies are even treated as “debt-like assets” by the market.

Well, a clear direction for future investment has emerged — in an overall relaxed environment with low interest rates combined with strong supervision of bond market transactions by the supervisory authorities, it is likely that more capital will begin to flow into the stock market from the bond market than before, to allocate “bond-like assets” that can balance safety and considerable investment returns.

In other words, the future investment win rate of these assets is likely to be much higher than that of other assets.