Liu Chenjie: The demand for real estate is declining, and there will be nearly 100 billion wealth transfers in the next ten years

来源：财经ThinkTank

Liu Chenjie, Chairman of Wangzheng Capital Global Macro Hedge Fund

On December 8, under the guidance of the Beijing Municipal Financial Supervision and Administration Bureau and the People's Government of Tongzhou District, Beijing, the "2023 Global Wealth Management Forum" hosted by Caijing, Caijing Think Tank and Caitonghui was held in Beijing, with the theme of "Promoting Growth and Openness with High-quality Financial Development". Liu Chenjie, chairman of Wangzheng Capital Global Macro Hedge Fund, said at the meeting that wealth management and the real economy complement each other, and only with the growth of the real economy will there be an increase in wealth. The process of transforming the old and new drivers of China's economy will also profoundly affect the direction of wealth management allocation, from which we can seize the "wealth code" in the next few years.

From the perspective of real estate, Liu Chenjie talked about the development trend of real estate and other wealth management. He predicts that in the next ten years, the wealth management of Chinese residents will gradually change from the allocation of real estate to the allocation of deposits, bonds, stocks, etc., which will be close to 100 billion wealth transfer.

How to make wealth management better support the development of China's real economy? Liu Chenjie suggested that first of all, from the supply side, it is necessary to increase the supply of good investment and financing channels for enterprises, so that investors can grow together with high-quality enterprises, so as to better serve the real economy. From the demand side, if we want to settle down and make long-term investments, then the real economy will also give long-term and reasonable returns to personal wealth management.

The following is a transcript of the speech:

Yuan Xue: From the perspective of global allocation, please talk about how to consider big asset management from the perspective of global allocation.

Liu Chenjie: Thank you, host, I have three experiences on the management of big wealth:

First, from a practical point of view, at this stage, the largest proportion of the entire wealth in the balance sheet of Chinese residents is real estate. In the future, no matter what kind of short-term macro environment we face, there is a high probability that the balance sheets of Chinese residents, including the large wealth management of Chinese residents, will gradually shift from being allocated to real estate to deposits, bonds, stocks, and overseas assets. The whole scale is close to a trillion wealth transfer for China, which is regular. Therefore, when we make domestic and overseas investments in China, we are convinced of this point, which is basically the law, and this is the first point I want to report to you, that is, which direction is the big wealth management going, and what kind of picture should it be in the future.

Second, focusing on China's real estate, in the past two years, China's real estate has been a topic of great concern to the entire macro environment, including the financial market. We also did some rough research, the first study is our rigid demand forecast for Chinese residents, and found that the past three years have been the highest rigid demand for real estate among Chinese residents, which is from the perspective of rigid demand for demand.

Whether you want to admit it or not, China's real estate demand as a whole is systematically declining, which is calculated based on our country's demographic structure, urbanization rate, household size, future income expectations and other factors, which is the first conclusion.

Looking closer, real estate investment has declined this year, and the data on sales and new construction starts are not good. At present, there is a question, whether it will work next year, whether it will work the year after next, and when will it bottom out, which is very critical to the capital market and wealth allocation, because many people who want to buy a house want to wait a little longer. We made a preliminary conclusion because the supply has been excessive in each of the past six years, from 2016, 2017, The monetization of housing reform in 2018, the real estate demand in the third and fourth-tier cities has been overdrawn in advance, and the real estate demand in the first-tier cities in China in the past few years is also overdrawn, and the annual oversupply in advance for the past six years means that the excessive supply must be filled in the next few years, so from this point of view, in order to fill the pit in the past six years, the real estate demand in the next year and the year after May not be able to rise, when will it bottom out, and it depends on how the policy will further exert force, which is the second conclusion.

Everyone likes to put their money in bonds or deposits with a relatively certain return, or in bonds or deposits with a slightly lower return but relatively certain, and residents' deposits are increasing significantly. From the perspective of China's money stock, from the perspective of M2, it is now about 280 trillion yuan, and the annual growth rate of the stock is about 10%, so we estimate that in about 7 years, by 2030, the entire scale of China's M2 will be close to about 560 trillion yuan, which is the entire monetary volume. What does this mean? For ordinary people, your existing wealth or wealth equivalent to cash, after seven years, compared with the total currency of the whole society, the purchasing power will depreciate by about half, if it is only allocated in a few or two points of the product, although the risk is not large, but the probability can not outperform the change or depreciation of the market's stock wealth, when it is moderate, under the condition of safety, you can increase the allocation of some risk assets, this is my superficial understanding.

Yuan Xue: Thank you very much Mr. Li, for sharing a lot on how to do it, and then ask Mr. Liu again, and talk about the asset allocation that everyone is talking about just now.

Liu Chenjie: Since our company was established in 2015, the performance is still good. Some of the benefits of wealth creation may be short-term arbitrage, and some are long-term holdings, but in the final analysis, all the income created by the wealth management industry comes from the real economy, and it may also come from the income of the real economy expected in the future. Just now, some experts said that China is going through a very profound process of converting old and new kinetic energy, and this term was mentioned a few years ago. Our internal discussions also believe that today, the transformation of China's economy from the old to the new is already profoundly affecting our work, life and view of the future economy. Over the past decade or so, growth has been driven by real estate and local government debt.

We found that most of the macroeconomic fluctuations are due to real estate and local government debt, which are in recession from the beginning of this year to the future, so when we do wealth management and investment, we basically don't touch cyclical industries. In the era of China's economic cycle, trading opportunities or long-term holding opportunities are basically coming to an end, so in terms of asset allocation, we are very cautious about cyclical targets or investment objects.

Where is the hope? You can feel the two heavens of ice and fire in the real economy, one is that the cyclical industries are generally under great pressure, and the individual ones are okay. On the other hand, China's high-tech industry is developing rapidly, and in some local areas, it is close to the world level in high-tech or has made some breakthroughs in recent years, and some new things that appear overseas will soon appear on the mainland, such as the domestic substitution of semiconductors, the upgrading of consumer electronics, the development of biomedicine, and the development of China's innovative drugs.

In the process of China's scientific and technological innovation, some emerging formats have emerged, such as the manufacturing of new energy vehicles and the manufacturing of parts and components, photovoltaic and wind power parts, which are far ahead in the world, and the cost control has been achieved to the extreme, which is a new change in China. The process of conversion of old and new kinetic energy will also profoundly affect the direction of wealth management allocation, not to say the overall opportunity, but some structural opportunities, if you have the opportunity, you can investigate different industries, different industries, there will be a deep feeling, so as to seize the wealth code in the next few years.

Yuan Xue: Only with the growth of the real economy will there be an increase in wealth, Mr. Liu.

Liu Chenjie: Wealth management is of course very supportive of the development of the real economy. If you have deposits, a large part of your savings will be turned into loans to companies, which is to support the real economy, if you buy corporate bonds, you are also to support the reinvestment of real economy financing, and if you buy equity in enterprises, especially in the IPO stage, that's even more. Looking back, if the real economy runs well, it will also improve the quality of deposit assets, the bad debt rate will decrease, the bond redemption rate can also be increased, and the appreciation of equity can also make wealth management profitable. Therefore, wealth management and the real economy are complementary and naturally tied together.

I believe that, first, to make wealth management better support the development of China's real economy, we must first increase good supply and have good enterprises to invest and finance. In the past decade or so, China's economy has undergone great changes in the birth and growth of many great Internet companies, but many ordinary people cannot buy the equity shares of these companies, because many companies are listed overseas. China's good business model has developed and increased a lot of wealth, so it is necessary to increase the supply of such leading corporate targets. I suggest that in the future, regulators can increase the supply of high-quality Chinese enterprises in China or other markets, which can give the general public the opportunity to invest and grow together with these enterprises, and better serve the real economy.

Second, from the demand side, many guests have just talked about the key to long-term investment, if you always want to fast in and out, and want to make arbitrage money, the support for the real economy is estimated to be limited. If you can calm down and do some macro, meso, and micro research, I believe that the real economy will also give you a long-term and reasonable return on wealth management.