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- Market overview: Last Friday, the three major market indexes collectively dived in the afternoon and closed mixed. At the close, the Shanghai Composite Index rose 0.73%, the Shenzhen Component Index fell 0.01%, and the ChiNext Index fell 1.16%. The trading volume of the two cities was 703.3 billion yuan throughout the day, an increase of 76.9 billion yuan from the previous day, and the net inflow of northbound funds was 4.948 billion yuan. In terms of plates, UHV, the Belt and Road and other sectors rose first. Intellectual property, digital currency, Internet finance and other sectors fell first, and on the whole, stocks rose more and fell less, and more than 3,000 stocks in the whole market rose. Judging from the market performance in the first half of the year, the performance of several major indexes was differentiated, among which the Shanghai Composite Index fell 0.25%, the Shanghai Stock Exchange 50 and the CSI 300 Index closed up, the ChiNext Index fell more than 10%, the CNI 2000 Index fell nearly 20%, the CSI 2000 Index fell more than 20%, and the Beijing Stock Exchange 50 Index fell more than 30%.
Market Perspectives
- In the first half of the year, the market style was more extreme, with super large-cap stocks in a bull market, many stocks hitting record highs, and hot topics such as the low-altitude economy were once active. Overall, large-cap blue-chip stocks performed better, while small- and medium-cap stocks generally fell, with less than 800 stocks rising out of more than 5,000 stocks in the market.
- In the first half of the year, the market experienced a window period for the choice of capital direction, and the relationship between policy and capital is a key factor affecting the market trend. In June, as economic data for the first half of the year has not yet been released, it is difficult to roll out new stimulus policies, resulting in a weak market trend.
- Policy factors in July are likely to be an important driver of market movements. Management may introduce new stimulus policies based on the current economic conditions, which will help boost market confidence. At the same time, the rotation of hot sectors will also have an important impact on market trends. Investors need to pay close attention to policy developments and the rotation of hot sectors to formulate a reasonable investment strategy.
Event Spotlight
Purchasing Managers' Index is released
- According to the National Bureau of Statistics, in June, the manufacturing purchasing managers' index (PMI) was 49.5%, the same as the previous month, and the prosperity of the manufacturing industry was basically stable. In June, the non-manufacturing business activity index was 50.5%, down 0.6 percentage points from the previous month, higher than the critical point, and the non-manufacturing industry continued to expand. In June, the composite PMI output index was 50.5 percent, down 0.5 percentage points from the previous month and higher than the critical point, indicating that the production and business activities of mainland enterprises continued to expand overall.
- Comments: Purchasing Managers' Index (PMI) is an index compiled by statistically summarizing and compiling the results of monthly surveys of enterprise purchasing managers, and is one of the leading indices for monitoring macroeconomic trends in the world, with strong forecasting and early warning effects. The composite PMI output index is a composite index in the PMI index system that reflects the changes in the output of the whole industry (manufacturing and non-manufacturing) in the current period. When the PMI is higher than 50%, it reflects the overall expansion of the economy from the previous month; If it is below 50%, it reflects the overall contraction of the economy from the previous month.
Hot spot analysis
rare earth
- On June 29, the "Regulations on the Administration of Rare Earths" was signed, which will come into force on October 1, 2024. The content includes improving the rare earth management system, promoting the high-quality development of the rare earth industry, improving the supervision system of the whole rare earth industry chain, and clarifying supervision and management measures and legal responsibilities.
- Comments: The upstream of the rare earth industry chain is mining, separation and smelting, and the mining is relatively stable by the national quota as a whole, so it will not have much impact. The main impact should be the deep processing of rare earths in the midstream, and now the regulations on the management of rare earths are promulgated, the purpose of which is to standardize the management of the industry, integrate and build several powerful enterprises, and better play the advantages of rare earths. So the next industry is that the strong are stronger, and the weak are weaker, which is an opportunity for the head enterprises. At the same time, rare earth is an important card for us to deal with external challenges, and the promulgation of this regulation may mean that the development of the industry has entered a new stage. The entire rare earth industry may usher in new opportunities after a long period of adjustment.
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Macroeconomic
1. National Bureau of Statistics: In June, the manufacturing purchasing managers' index was 49.5%, the same as the previous month; The non-manufacturing business activity index was 50.5%, with an expectation of 50.6%, down 0.6 percentage points from the previous month and higher than the critical point.
- Comments: From the perspective of output, the mainland economy has generally maintained expansion, but the foundation for continuous recovery still needs to be consolidated.
2. In view of the current difficulties in the utilization, transfer and recovery of real estate stock, the Ministry of Natural Resources, together with the National Development and Reform Commission and other departments, has studied and introduced 18 policies and measures in three aspects in combination with the practice and exploration of various places.
- Comments: Promote the effective disposal of idle stock land in all localities, and earnestly do a good job in the deployment of housing delivery.
Industry Watch
3. According to the data of the Ministry of Industry and Information Technology, from January to May, the business income of Internet enterprises in mainland China was 686.1 billion yuan, a year-on-year increase of 5%. The growth rate increased by 1.3 percentage points from January to April. R&D expenditure was 34.17 billion yuan, a year-on-year increase of 0.8%.
- Comments: In the first five months, the operation of the Internet and related service industries was stable, and the income maintained growth.
4. China Index Research Institute: In the first half of 2024, the total sales of the top 100 real estate companies will be 2,083.47 billion yuan, a year-on-year decrease of 41.6%, and the decline rate will continue to narrow by 3.8 percentage points compared with the previous month, and the year-on-year decline will narrow for 4 consecutive months.
- Comments: As the industry enters a period of adjustment, more and more real estate companies are pursuing more stable development by actively controlling the scale of sales.
Global vision
5. Apple's AI function is equipped with models that require 15pro and above, which is expected to stimulate users to change phones and boost sales, and the Apple chain is expected to gradually form.
- Comments: Apple artificially stimulates users to form a wave of replacement phones through this "binding sales" in order to obtain greater commercial profits.
financial market
6. In the first half of the year, a total of 28 A-share listed companies disclosed plans to repurchase the upper limit of more than 600 million yuan, and 4 shares including Yili shares were to be repurchased and cancelled.
- Comments: The buyback of listed companies reflects the confidence in the operation of enterprises and is conducive to boosting market sentiment.
7. Some institutional investors believe that starting in the second half of this year, the pharmaceutical industry will face a relatively good growth rate in the past four years, among which they are more optimistic about the direction of innovative drugs.
- Comments: The pharmaceutical industry has been corrected for a long time, and it is currently gaining more and more financial attention.
Share today
A simple investment strategy is more likely to succeed. This "simplicity" is based on fundamental frugal virtues, independent thinking, financial discipline, realistic expectations, and some common sense. – John Borg
Message plane
1. The Prime Minister signed an order of the State Council to promulgate the Regulations on the Management of Rare Earths
The Premier of the State Council recently signed an order of the State Council to promulgate the "Regulations on the Management of Rare Earths", which will come into force on October 1, 2024, with a total of 32 articles. A few days ago, the heads of the Ministry of Justice and the Ministry of Industry and Information Technology answered questions from reporters on rare earth-related issues.
Comments: The most important news of the weekend comes from rare earths, and the "Rare Earth Management Regulations" was released on Saturday, and it was also on the news broadcast! The new regulations strengthen the protection of rare earth resources, which is undoubtedly a big positive for the plate.
Due to the important role of rare earths in the electronics, national defense and military industrial system, it has become an important resource that countries are vying for! Although the mainland is a big country with rare earths, there was vicious competition in various places before, and the price of cabbage was sold, but it was cheaper than the Western bloc. This time, it is clear that rare earth resources are clearly defined as owned by the state, and no organization or individual can encroach on or destroy them. This has risen to the height of strategic materials, and we have the right to speak in the future exports, and we can sanction individuals and enterprises that do not comply with the regulations! This reflects the high importance attached to the rare earth industry.
As the last blockbuster government document released in June, can rare earths be the first shot for the seven turnovers? You can pay attention to the changes in rare earth low-level varieties: Zhenghai Magnetics, Jinli Permanent Magnet, China Rare Earth, Longci Technology and other individual stocks.
02. Technical Analysis
Last Wednesday, the index fell back and adjusted, during which it rebounded twice, then rose and fell, and rebounded again on Friday, and the market obviously wanted to close the red weekly line. However, some of the weights on Friday, including brewing real estate brokers, etc., have been smashing, and some are smashing in the afternoon. As a result, the market was affected in the end and did not stand back above 2985, so the weekly yin line closed down.
How should the index go this week?
The broader market should continue to bottom out and rebound, once again hitting around 2985, provided that it gains a firm foothold in the 2950-2960 area at the beginning of the week. In the first two weeks of July, I personally think that it should be a bottoming out, turning into a shock, and falling slightly. (Hand-drawn, there is no point high, just a general trend)
03. Operational ideas
- In terms of short-term operation strategy, the position of activist investors can increase their positions on dips, the risk-return ratio is appropriate, it is worth the game, and there is not much room for decline below 3,000. When trading stocks, don't be afraid as long as the risk is controllable. Prudent investors can continue to wait for the bullish candlestick and the short-term trend to show signs of change, and then consider increasing their positions. After this wave of adjustment, we still have to be bullish, nothing more than a little uncomfortable and tossing in the short term, I feel that the medium and long term can be completely ignored, in 2024 for the market our tone is: first suppress and then rise, I think the next market will begin to go well, why do we say bullish? We use [policy will, from the flow of funds, the interest rates of various countries, the international situation (the world has begun to re-align), international funds (individual countries have begun to cut interest rates), domestic policies (the process from quantitative to qualitative changes), and the valuation depression of A-shares (near historically low levels). Once the U.S. dollar enters the interest rate cut, the central government will take action, and the securities investment market will begin to slowly pull the stock market, the economic recovery cycle, and the funds will fully enter the market. Policy signals are actively long. The regulator has released a clear signal of longs, and there is still room for the market to rise in the future, and the position is always ready to be appropriately heavy. The stock market is likely to become the next savings pool for residents to replace the property market, which is a once-in-a-decade opportunity!
Key Directions:
- Moderately growing low valuation, high dividend value stocks - state-owned central enterprises, fundamental valuations have improved
- Scientific and technological innovation supported by policies - Kete estimate, new quality productivity (semiconductors, new materials, high-end manufacturing)
- Cyclical sectors under reflation - energy, people's livelihood, raw materials sector
- Valuations have been significantly revised – well-managed consumer segment leaders or globally competitive manufacturing leaders