China economy is bottomed.However, when will stock rebound?
Stock price mainly driven by four factors:1.risk adjusted required return;2.company expected net profit;3.people's expectation on making money;4.totay money supply in equity market;
In order to judge when stock may risk or fall, we need to review above factors, we should be able to get a better view onstock market situations.
1.Risk adjusted required return: If money is expesive and market is risky, people will ask for higher return on equity investment to compensate the risk they afforded. If money is cheap and market is not risky, people are ok with lower return on equity investment and potentailly more money will come to equity market to play;
Regarding money price, the normal parameter is interest rate. Interest rate is set by central bank of a country.There are also other indicators people use to evaluate the cost of money, these indicators include intra bank interest rate.
When money get into stock market, it will boost the equity price.
评论 (0)