Doubtless there has been for a few years the progressive implementation of policy reforms aimed, incrementally, at supporting the expansion of “wealth products” as a mitigation against retail speculation while at the same time expanding the circuits of household investment in equities. All that said, it’s unlikely that equity financing (via IPOs) will substantially replace debt finance from commercial banks. Cross border wealth products, such as those developed with the Saudi Arabia exchange opens channels to a wider range of enterprises, which is a nice way of internationalising RMB investment at a retail level within strict capital governance environments.
It’s also worth noting that when talk turns to equities as a source of income, this is only the case for higher income households. The concentration of share ownership in the U.S. is testimony to the fact that equities income is asymmetric in structure. The kinds of household consumption that this enables is distinct from the “engine room” of foundation consumption that lower income households enable when wages go up. Lower income households spend a larger proportion of their earned income, and also a large proportion of any increases to their earned income. As such, the focus on boosting household incomes outside of the “tier 1” cities and pushing for ongoing income growth in rural areas is key to aggregate consumption demand growth.
If the objective is to continue to boost household expenditure by way of consumption demand, there is no beating increased wages. And that requires ongoing investment to drive productivity. Let’s not forget that retail consumption expenditure has grown this year to date by 4.6% in real terms.
Doubtless there has been for a few years the progressive implementation of policy reforms aimed, incrementally, at supporting the expansion of “wealth products” as a mitigation against retail speculation while at the same time expanding the circuits of household investment in equities. All that said, it’s unlikely that equity financing (via IPOs) will substantially replace debt finance from commercial banks. Cross border wealth products, such as those developed with the Saudi Arabia exchange opens channels to a wider range of enterprises, which is a nice way of internationalising RMB investment at a retail level within strict capital governance environments.
It’s also worth noting that when talk turns to equities as a source of income, this is only the case for higher income households. The concentration of share ownership in the U.S. is testimony to the fact that equities income is asymmetric in structure. The kinds of household consumption that this enables is distinct from the “engine room” of foundation consumption that lower income households enable when wages go up. Lower income households spend a larger proportion of their earned income, and also a large proportion of any increases to their earned income. As such, the focus on boosting household incomes outside of the “tier 1” cities and pushing for ongoing income growth in rural areas is key to aggregate consumption demand growth.
If the objective is to continue to boost household expenditure by way of consumption demand, there is no beating increased wages. And that requires ongoing investment to drive productivity. Let’s not forget that retail consumption expenditure has grown this year to date by 4.6% in real terms.