Editor's Note: Recently, along with the U.S. economic recovery, U.S. stocks well, how will the U.S. economy's performance this year? Level of U.S. corporate profits? Securities Times reporter interviewed the president of the United States Rowe Price Group, Dr. Lin Yi Greater China, he made a profound correlation analysis.
Securities Times: The recent past, U.S. stocks performed well, how do you comment on the U.S. economic recovery?
Lin Yi: Review 2010, the market has been in turmoil, the micro and the macro to the good of uncertainty in sharp contrast. In fact, the micro fundamentals very well over the past year, but the bad news of the macro side, the European debt crisis, high unemployment and other issues the United States, investors worried that the world economic recession. In Japan, the debt-GDP ratio reached 200%, 100% of Europe, the United States close to 90%, is indeed worrying. Countries have adopted different coping methods, adopted a tightening policy in Europe, the United States adopted a policy of quantitative easing, which increases the complexity of the global economy, making investors even more confusing, not clear direction. In addition, U.S. regulators issued a series of medical and health, energy and financial aspects of the new policy, its impact is still being assessed, but also increased the complexity of macroeconomic. So that we face the problem of macro appears irrational pessimism, a lot of money from stocks to join the fixed income assets, end of last year back to the stock investment.
micro-enterprises face the situation, but optimistic, U.S. corporate balance sheet cash reserves reach highest level in history, particularly the balance sheet of some multinational companies from storing a lot of cash, because the economy uncertainty, enterprises do not know how to invest in capital spending under control is very strict, very large stock of cash.
in the listed company level, there have been many encouraging signs, the first increase for three consecutive years of productivity, corporate profitability is growing, there is almost reached record levels of cash stocks, the situation not only in the United States, the world's blue-chip company fundamentals are very good. Therefore, in volatile markets, the underlying a lot of investment opportunities on a global scale, many companies are very attractive valuation.
very high stock of cash to stimulate the U.S. economy an important factor in the development of future enterprise development, is bound to increase capital spending, updated equipment, mergers and acquisitions, recruitment of employees. Of course, from the Government, the consumer's point of view, there will be resistance, because the government and consumers to reduce debt, reduce spending, which slowed down the pace of economic recovery, but the U.S. economic recovery trend is irreversible and will not a secondary economic crisis or recession. Overall, the consumers, government expenditure, the recovery is still relatively fragile, more vulnerable to external macroeconomic factors against, if the Irish crisis, a huge market fluctuations may also occur. From the micro perspective, the company will continue to control costs, but in both acquisition and capital expenditure will be relaxed in 2011, corporate profitability will continue to maintain a good momentum, investors expected corporate earnings began to rise.
Securities Times: the ability to predict the performance of the U.S. economy this year?
Lin Yi: In the past five quarters, U.S. GDP growth of around 3%, estimated in 2011 remained at about 2.8, in general relatively weak, but will maintain the momentum of recovery will not occur the second crisis and stagnation, the U.S. unemployment rate dropped to 8.5%, 1 percentage point lower than it is now, there is no risk of deflation. Inflation remains low, CPI is expected to grow 1.75%, after excluding oil and energy, CPI at 1.25% or so.
affect the U.S. economic recovery, the two factors, one real estate, real estate recovery is the greatest driving force of economic recovery in the past year and a half, new housing construction has begun to stabilize, a pick-up signs; Second, labor market, economic crisis, companies are cutting back spending, resulting in a large number of employees laid off, the U.S. unemployment rate is high, and now, the employment rate of the private sector began to rise, health care, financial services, business , transport and so on in increasing employment. However, the Government a lot of debt reduction, including reducing employment in government, reducing the unemployment rate had a strong resistance. Overall, the employment rate rise will affect the slow rebound in consumption over the past two years, the increase in U.S. personal savings rate, the latest two quarters, the average personal savings rate of 6% level, long-term to 7% to 7.5%. In 2007, the average U.S. household debt to income ratio is 125% in 2010 down to 110%, there is not much real estate activity.
Securities Times: U.S. is not possible to quantify the third time?
Lin Yi: There are possible. No significant growth if the U.S. economy, the Fed will not hesitate to use the third time quantitative easing policy, and further stimulate the economy. We expect the unemployment rate will decline this year, core inflation at 1%, but if the Fed was not enough, want to see higher inflation, will take the third time quantitative easing policy.
Securities Times: Wall Street's performance this year, you are optimistic?
Lin Yi: In the past two to three years, the performance of U.S. stocks as stocks or international markets outside the United States in 2011 could be a turning point. The current valuation of U.S. stocks is very reasonable, the dynamic price-earnings ratio in 2012 was 12.89, we forecast from now to 2020, the average price-earnings ratio is 16.9 times the bottom side is now clear, is a good opportunity to stock selection. I believe in the new year will be better invested in stocks in fixed income.
emerging markets than developed markets, past performance is good, but the rapid growth in emerging markets are facing significant inflationary pressures, 2011, the developed market economies, the recovery will continue, there will be a better performance, developed markets performance might be better in emerging markets.
Securities Times: In the specific investment, what strategies you will take?
Lin Yi: We have judged that the developed markets in 2011 will be better in emerging markets, market shares better than the small-cap stocks, growth stocks better than value stocks.
the past 10 years, the market value of the stock's performance better than the broader market growth stocks in 2010 fourth quarter, the market performance of growth stocks, value stocks began to exceed the broader market, the usual situation is that the economic crisis, the value of stocks outperformed growth in the economic recovery, growth stocks will have better performance, while the U.S. is in the early stages of economic recovery. Large-cap stocks than small-cap stocks over the past three years, but recently began large-cap stocks have better performance because the strong performance of emerging markets, multinational corporations benefit from the development of emerging markets, so the performance will be better than large-cap stocks small cap stocks.
volatility of the stock market will give us the opportunity to create more good, but also focus on the fundamentals of asset management companies to provide a good buying opportunity, in a falling market shares a number of high quality also fell, to our selection of individual stocks provided a good opportunity.
(This article Source: Times Online of Securities: Bo)
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