I often hear people born in the 1990s and 2000s sigh, "Our generation has missed out on all the good things. Buying a house is too expensive. Working is too competitive. Buying stocks and funds is often a trap." Many of them choose to stay put. Helpless, but also a bit unwilling. Last time, my friend also talked to me about this topic. Li Chen also elaborated on it this time.

Li Chen believes that the dividends here can be divided into two levels:

The first is the material dividend, which is the growth of personal wealth brought about by the booming stock market in the past few days (and even in the future);

The second is the institutional and cognitive dividend, which is the social soil, cognitive environment and institutional foundation formed by the consensus reached after generations of people’s arduous pursuit of reform and opening up and deepening of their understanding.

Regarding the first level of material dividends, a lot of analysis has recently appeared in brokerage research reports, self-media terminals, etc. This article only makes a brief conclusion. The second level of institutional and cognitive dividends is the focus of this article.

Material dividends: a once-in-a-century bull market

The author is an old practitioner in the financial industry and has experienced many rounds of bull and bear markets in the stock market. The start of this bull market is the one with the most policy support, tool innovation, and capital focus that the author has ever seen. Moreover, the background of this bull market is not a simple equity split reform or a crazy leverage bull market, but it started with the A-share market being in a global value trough, various funds returning, and a huge amount of deposits moving.

This round of bull market was born from the joint statement of the central bank, the China Securities Regulatory Commission, and the Financial Regulatory Commission on September 24, as well as the economic meeting of the Central Political Bureau on September 26, and the subsequent detailed policies of various departments such as real estate.

In addition, it is reported that a more active fiscal policy is on the way. Obviously, this is a systematic project initiated by the state, a set of well-thought-out and long-prepared combination punches, which chose the time after the Fed started to cut interest rates, and the effect was immediate.

In just a few trading days, the A-share market has already surpassed the rest of the world in terms of growth, and this is just the beginning. During the National Day holiday, the A-share market was closed, and overseas markets such as the Hong Kong stock market were in a state of extreme contrast. The stock markets in India and Japan, which had been soaring in the early days, showed signs of fatigue, especially the Indian stock market, which showed signs of peaking.

The Hong Kong Hang Seng Index has strongly broken through its high point in January 2023 in three trading days, up nearly 8% compared to the last trading day before National Day. The China A50 Index Futures listed on the Singapore Exchange have risen by more than 10% in these three days. What's even more exaggerated is that the A-share Southern CSI 500 Index ETF, which was recently listed in Japan, has risen by more than 10 times compared to its closing price on September 30.

It is understood that the brokerage firm did not rest during this period and handled account opening services 24 hours a day, and the number of account openings increased dramatically.

Overall, the current capital market is in a hot state of "global funds moving to Chinese assets, and Chinese residents' deposits moving to A-shares."

It can be said that the negative feedback in the previous three years was as deep as the positive feedback this time. At that time, the market value of a US technology company could once buy a sector of China's A-shares. Judging from the actual profitability and potential of Chinese companies, this is obviously a serious distortion of value.

Li Chen firmly believes that this is not a simple bull market, it may be a bull market that changes the fate of those born in the 1990s and 2000s, and is their first life bonus.

2. Cognitive dividend: Reform and opening up start again

After discussing the material dividend, the author believes that the second level of institutional and cognitive dividends is the dividend that the post-90s and post-00s should pay more attention to and cherish. Without this dividend, our material dividend will not last long, because economic policies have a ceiling, and the marginal effect is also decreasing. International funds will also take profits and leave. Only when our own economic fundamentals are substantially improved can we support a long-term slow bull and big bull.

Improving the economic fundamentals depends on this system and cognitive dividend, which the author summarizes as: reform and opening up to start again. If 1978 was the first year of reform and opening up, when everything was in ruins and the economy was still struggling, this time the reform and opening up to start again has a better foundation, but it still faces challenges from the external environment and requires the two-way efforts of national policies and micro-subjects.

Improving economic fundamentals depends on this system and cognitive dividend. Li Chen summarized it as: reform and opening up will start again.

If 1978 was the first year of reform and opening up, then a lot of work was still to be done and the country seemed to be stumbling. This time, reform and opening up has a relatively better foundation, but it still faces challenges from the external environment and requires the two-way efforts of the central bank's policies and micro-entities.

We might as well summarize the development after 1978 into three stages: 1978-1998, the first twenty years of reform and opening up; 1998-2018, the twenty years after reform and opening up; 2018-2024,

The first twenty years of reform and opening up were a process in which the whole society gradually deepened its understanding of reform and opening up, and a stage for laying the foundation; the second twenty years of reform and opening up, along with the central bank's accession to the WTO, saw rapid economic growth, but also accumulated some problems.

From 2018 to 2024, China is in the process of adjusting to the problems accumulated during reform and opening up. This stage is the most painful. Coupled with factors such as the unfriendly external environment and the epidemic, China's economy has slowed down significantly. People began to feel depressed and confused, and some people chose to lie down and escape.

So, why do we say that now is the time to “restart reform and opening up”?

First, the reform and opening-up policy has institutional guarantees. In July this year, the Third Plenary Session of the 20th CPC Central Committee reviewed and approved the "Decision of the Central Committee on Further Deepening Reform and Promoting Modernization". The "Decision" systematically and comprehensively outlines the specific measures and vision for the reform and opening-up policy.

Secondly, the reform and opening-up policy has the guarantee of military strength. Not long ago, the successful test launch of the Dongfeng intercontinental missile solemnly announced to the world that the central bank has the strength to resist any foreign aggression and any malicious provocation. This provides a strong military guarantee for the reform and opening-up policy.

Third, the reform and opening up have a good public opinion foundation and cognitive environment. In recent years, as some problems accumulated in the early stage surfaced, there were voices questioning the reform and opening up in society, which aroused a lot of discussion.

Finally, after in-depth discussions on practice and rounds of ideological collisions, society has basically reached a consensus: reform and opening up must be further deepened in order to push China's modernization drive to new heights.

In summary, the best time has come for reform and opening up to start again. It is the underlying logic of this round of material dividends and the best guarantee for its sustainability.

Still lying flat?

Back to the people born in the 90s and 00s, I can’t help but ask: If this huge wealth comes easily, are you still planning to lie down?

There are two reasons for lying down: first, financial constraints; second, a depressing environment.

Today, with the wealth effect brought by the stock market and its leverage effect on the economy, the post-90s and post-00s have the opportunity to improve their material foundation. Correspondingly, the social environment has also greatly improved, and the reform and restart have brought more entrepreneurial opportunities and high-paying opportunities to young people.

Li Chen believes that if the first layer of material dividends comes from policy shifts and is one-way, then the second layer of institutional and cognitive dividends is a two-way process that requires both top-level design efforts and the active participation of micro-subjects.

"Bonus" has always been created by initiative. It is not a pie in the sky or a free lunch. Compared with previous generations, the post-90s and post-00s have received better education and have a higher starting point. I believe that after they refuse to "lie down", they will definitely be able to create dividends that truly belong to them in this new era.