Abstract: On July 1, the A-share market showed a volatile rebound pattern, with the Shanghai Composite Index leading the gains, rare earths, real estate and other sectors performing strongly, while the technology sector fell into adjustment. From a valuation perspective, the overall valuation of the A-share market is at a relatively low level, which contains investment opportunities, but it is necessary to be wary of the risk of the valuation bubble bursting in the technology sector.
1. Market review: The Shanghai Composite Index opened low and went high, and technology stocks adjusted
On July 1, the three major A-share indexes were mixed, with the Shanghai Composite Index opening low and moving higher, closing up nearly 0.92%, and the Shenzhen Component Index and ChiNext Index rising and falling slightly, respectively. The market sentiment picked up, individual stocks rose more and fell less, and the turnover shrank compared with the previous trading day.
From the perspective of industry sectors, rare earth permanent magnets, real estate, phosphorus chemicals, coal and other sectors rose first, while semiconductors, PCB, Apple concepts, automation equipment and other technology sectors fell first, among which chip stocks fell significantly, and Guoxin Technology fell by more than 10%.
Recently, the A-share market has shown the following characteristics:
- Market sentiment is volatile and volatile. Despite the rebound in the market on July 1, the overall performance of the A-share market has been relatively volatile recently, and investor sentiment has been volatile.
- Cyclical and value sectors performed strongly. Benefiting from favorable policies and the expectation of economic recovery, cyclical sectors such as real estate and coal performed strongly, while traditional value sectors such as banks and electricity were also sought after by funds.
- The technology sector is in a correction and the valuation bubble is at risk of bursting. Recently, there has been a significant pullback in the technology sector represented by chips, and the market's concerns about the high valuation of technology stocks have risen, and the valuation bubble is at risk of bursting.
2. Valuation analysis: The overall situation is at a low level, and there is a bubble in the technology sector
From a valuation perspective, the overall valuation level of the A-share market is at a relatively low historical level.
1. Valuation analysis of major broad-based indices:
- The PE and PB quantiles of blue-chip stock indices such as SSE 50 and CSI 300 are at historically low levels, showing high investment value. For example, the SSE 50 Index has a PE of 10.39 and a PE quantile of 58.88%, which has a high margin of safety.
- Indices such as CSI 500 and CSI 800 representing small and mid-cap stocks are relatively high, but they are still within a reasonable range considering their growth.
- The valuation level of technology stock indices such as the Science and Technology Innovation 50 and ChiNext Index is still high, and the PE quantile is above 80%, and the risk of bubble in valuation cannot be ignored.
2. Valuation analysis of industry indexes:
- Traditional industries such as finance, real estate, and energy generally have low valuations and certain investment value. For example, the PE quantile of the real estate index is only 0.0%, which is at the lowest valuation level in history.
- The valuation of pharmaceutical and biological, consumer and other industries is at a medium to high level, which needs to be judged according to the development of specific companies and industries.
- The valuation of emerging industries such as technology and new energy is still high, and there is a certain risk of valuation bubble, so it is necessary to be vigilant against the risk of a correction.
3. Investment advice: pay attention to low-valuation sectors and be wary of the risks of technology stocks
1. Focus on investment opportunities in undervalued sectors. At present, the overall valuation of the A-share market is not high, and it is recommended to pay attention to investment opportunities in low-valuation sectors such as finance, real estate, and energy, especially those leading companies with good performance and reasonable valuations. 2. Be cautious about investing in the technology sector. Although the long-term development prospects of the technology sector are still broad, the risk of valuation bubbles in the short term is relatively high, and investors are advised to be cautious and avoid blindly chasing higher. 3. Pay attention to risk control and rational investment. The A-share market is highly volatile, and investors need to formulate reasonable investment strategies according to their own risk appetite and investment objectives, and do a good job in risk control, so as to avoid blindly following the trend and chasing the rise and fall.