The "report card" of the global stock market in the first half of the year has been released, will there be a chance for A-shares to "turn over" in the second half of the year?

Guo Shiliang

2024-06-30 10:37Financial commentator, financial columnist

  The stock market in the first half of 2024 has officially ended, and from the analysis of the trend of the global stock market in the first half of the year, A-shares have become one of the few markets in the world that have fallen in the first half of the year, and most of the world's stock markets have shown a volatile upward trend.

  According to a rough calculation, as of June 30, the Shanghai Composite Index fell slightly by 0.25% in the first half of the year, the Shenzhen Component Index fell by 7.10%, and the ChiNext Index fell by 10.99%. In terms of specific market indices, the Shanghai 50 rose by 2.95%, the CSI 300 rose by 0.89%, the CSI 500 fell by 8.96%, the CSI 1000 fell by 16.84%, and the CSI 2000 fell by 23.4%.

  From the above data, it can be found that in the first half of the year, large blue chip stocks played a role in stabilizing the market, but small and medium-cap stocks became the main object of the market in the first half of the year, and the market showed obvious signs of differentiation.

  Looking at other market performances, the Hong Kong Hang Seng Index and the State-owned Enterprises Index closed up in the first half of the year, and the Hang Seng Technology Index fell 5.57%. In the U.S. stock market, the Dow Jones rose 3%, the Nasdaq rose 18%, and the S&P 500 rose 14%. The Nikkei 225 rose 18% and the Indian stock market rose 9.4%.

  Even the Hong Kong stock market, which was relatively sluggish in previous years, still showed an upward trend in the first half of this year. It can be seen that compared with most of the world's stock markets, the trend of the A-share market in the first half of this year was relatively sluggish.

  What will be the reason for the sluggish trend of A-shares?

  IPO and refinancing are not the reason for the downturn in the stock market in the first half of this year, compared with the data of the same period in previous years, the number of IPOs accepted in the first half of this year has dropped significantly, and the amount of stock market financing and refinancing in the first half of the year has decreased significantly, and the pressure on the diversion of market stock funds is relatively small. In the context of the phased tightening of IPOs, the decline in the stock market in the first half of the year is not closely related to IPOs and refinancing.

  Repeated postponement of Fed rate cut expectations may be an external reason for the downturn in the stock market. However, Hong Kong stocks, which are closer to the international market than A-shares, have risen in the first half of the year, so the Fed's expectation of interest rate cuts has not been disappointed, which should not be an important reason for the decline of A-shares in the first half of the year.

  Since the failure of the Fed's interest rate cut and IPO did not constitute the reason for the decline of the stock market in the first half of the year, the decline of A-shares in the first half of the year is more likely to be related to the market investment ecological environment.

  Since the lending of restricted shares was completely suspended on January 29 this year, many major shareholders have begun to focus on the lending of non-restricted shares. On March 18 this year, the refinancing of securities changed from T+0 to T+1, but it did not fundamentally alleviate the pressure on securities lending. The act of short selling of unrestricted stocks is equivalent to adding a large number of counterparties to the market, and the market funds are unable to undertake it, which may also become one of the reasons for the decline of the stock market.

  The decline in the first half of this year is more reflected in small and mid-cap stocks. Compared with large-cap stocks, small- and mid-cap stocks have a more obvious impact on the policy environment and capital environment.

  So far, there are nearly 5,400 listed companies in the A-share market, but the single-day trading volume of the stock market has shrunk to 600 billion yuan, which means that the stock market is still dominated by stock funds. In the context of the stock capital game, market funds are more concentrated in the high-quality assets of leading companies, but the stock liquidity of small and medium-cap stocks is further diverted. In the context of the continuous expansion of stock market capacity, it is easier for small- and mid-cap stocks to get out of the trend of Hong Kong stocks. For small and medium-cap stocks with weak liquidity and inactive trading, once they encounter a large sell-off, the stock price is easy to get out of an irrational downward trend.

  Large shareholders of small- and mid-cap stocks are more willing to sell their shares than large-cap stocks. Some use restricted shares to lend to revitalize liquidity (which has now been fully suspended), and some use non-restricted shares to improve capital utilization, but the latter has not yet been regulated by specific measures.

  In the first half of this year, the performance of A-shares was not optimistic, and the stock market capacity was as high as 5,400 listed companies. In the face of the general environment of the stock capital game, even if the IPO slowed down significantly in the first half of the year, the market still needs to continue to digest the pressure of the rapid expansion of the stock market in previous years.

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Personal opinion, for reference only