Original title: global stock market danger? Buffett index touches the warning line, financial giant Soros: no longer participate in bubble filled stocks! What is the area of a shares? Source: Data Bank < / P > < p > economic data is declining, stock market is rising, one side is sea water, the other is flame. How far does the current stock market deviate from economic indicators? What is the valuation level of a shares? Under the influence of novel coronavirus pneumonia, the major economies in the US and the UK, which had a history of recession in the two quarter, were not optimistic about the global economic performance in the first half of the year.
At the same time, the global stock market has climbed steadily. The total market capitalization of the listed companies once again exceeds the global GDP level, and the capital market is gradually deviating from the macroeconomic indicators. The Buffett index used to measure the stock market valuation bubble rose to the warning area. The Buffett index measures the valuation level of a country’s stock market by the proportion of the total market value of the stock market to GNP (or GDP), which is also called the asset securitization rate index. In 2001, when analyzing the U.S. stock market, Buffett pointed out that if the asset securitization rate is in the range of 70% – 80%, buying stocks may perform better. If the ratio is close to 200%, it is playing with fire. According to the statistics of the World Federation of stock exchanges (WFE), by the end of June this year, the total market value of global stock market reached 89 trillion US dollars, which exceeded the level of global GDP in 2019 of 87.85 trillion US dollars, which means that the Buffett index has exceeded 100%. Considering the impact of the epidemic on this year’s GDP data, this ratio will be higher. Many market analysts interpret it as one Danger signal, that when the Buffett index rose to more than 100%, it should tend to avoid risk. According to the statistics of the year-end data, the total market value of global listed companies exceeded GDP for 6 times, respectively in 1999, 2000, 2006, 2007, 2017 and 2019. Among them, the peak of the stock market in 2000 and 2007 was broken by the Internet bubble and the subprime crisis. Then the collapse of the global stock market confirmed Buffett’s theory. < / P > < p > however, when the Buffett index again reached the 100% red line in 2017, that changed. Although the global stock markets also experienced a correction in 2018, the maximum reduction of the total market value in the following year was about 20%, and the crash crash did not occur. In 2019, with the global stock market rebounding, the Buffett index stands at 100% again. In fact, since 2014, the global stock market has never dropped by 90% and is always higher than the safe range of 70% – 80% that he thinks. However, the market value of global stock market has increased by nearly 40% in the past six years. < / P > < p > nearly 20 years after the theory of Warren Buffett was put forward, with the expansion of global stock market and the change of stock market structure, the 100% of Buffett index is no longer an unattainable height, and 100% does not necessarily represent the critical value of stock market turning into recession. < / P > < p > according to the forecasts of most international institutions, the global GDP will decline by 4% to 5% in 2020. Based on the 5% GDP decline, the current global stock market’s Buffett index is about 106%, which is still not higher than the level at the end of 2017 and 2019. There is no need to panic too much about the “anomaly” of this data. However, in the short term, there is still a certain risk of market volatility when the stock market is divorced from the economic indicators. The latest 13F reports released by major funds show that in the two quarter, the Chong Chong fund bought heavily technology stocks and gold to hedge against market risks. Soros, a financial giant, said in a recent interview with foreign media that he would no longer be involved in the current bubble market. It is common that the total market value of listed companies exceeds GDP due to the high level of asset securitization in developed countries. Taking the United States as an example, according to the statistics of the world bank on the year-end data, since 1996, the U.S. Buffett index has been maintained above 100% in all years except 2008, and almost never issued 70% – 80% of the safe area. At the end of 2019, the average asset securitization rate of high-income countries is about 120%, while that of middle-income countries is only about 60%. < / P > < p > what is the current level of China’s Buffett index? Vertically, the current total market value of a shares is 74.3 trillion yuan, accounting for 75.8% of the national GDP by the end of 2019, which is relatively high in the past decade, but still within the 80% safety line. Historical data show that the proportion of the total market value of a shares in GDP only exceeded 100% in 2007, and then fluctuated in the range of 40% to 75% most of the time. < p > < p > statistics, if the market value of Chinese stocks listed overseas is included, China’s current Buffett index is about 104%, slightly exceeding the 100% threshold. Horizontally, the proportion of the total market value of a shares in GDP at the end of 2019 is 59.37%, which is only higher than that of Germany and Russia, and lower than that of India and Brazil, which are also developing countries. In Singapore, Japan, Australia, Canada and other markets, the Buffett index has exceeded 100%. Compared with the stock markets of developed economies, China’s asset securitization rate is at a lower position, and there is much room for improvement in the future. In the era of registration system, the expansion of A-share will also inject fresh blood into the stock market and improve the level of China’s securitization rate. According to the statistics of WFE, by the end of June this year, the total market value of global stock market was 89.09 trillion US dollars, 14% higher than that at the end of March, and only 5% of the total market value before the outbreak of the epidemic. The global stock market is gradually recovering the land lost due to the epidemic. Among the major markets, China, the United States, South Korea and Taiwan have recorded positive growth in the year. However, although the global stock market has rebounded from the low point earlier than the economy, the recovery of the market is not unexpected. In fact, most of the stocks have not recovered, and the major global markets have shown significant structural differentiation, and the trend of fund conglomeration has become increasingly prominent. < p > < p > take the four major market indexes of S & P 500, FTSE 100, Nikkei 225 and CSI 300 as examples. Except for CSI 300, the performance of the other three index components fell more than rose. < p > < p > the S & P 500 index rose by 4.4% in the whole year, while only 40% of the stocks with market value increased. The stock market value of the top ten components increased by $2.43 trillion, accounting for 167% of the new market value of the S & P 500 index during the year. In contrast, the market value of 18 constituent stocks, including Wells Fargo, American Airlines and Kohl department store, was cut back in the year, and the market value of the 10 stocks with the largest market value shrinkage decreased by nearly 800 billion US dollars in the year. The Nikkei 225 index has basically wiped out the year’s decline, but only 20% of its constituent stocks have increased in market value within the year, especially in August 28. If we count the performance of individual stocks in the whole market, the phenomenon of market differentiation will be more prominent. In contrast, 65% of the constituent stocks rose during the year, showing a general upward trend. Only eight shares fell more than 20% in the year, with the biggest drop of 32%.