Last week, the market continued to pull back, with an average turnover of about 660 billion yuan on Sunday, an increase; Stylistically, value outperforms growth, with the large market outperforming the small market. In terms of industry performance, agriculture, forestry, animal husbandry and fishery, food and beverage, national defense and military industry and other industries performed well; Light manufacturing, communications, textiles and apparel performance lagged behind.
Market review: Long-term reforms guide the direction, and market expectations may recover
Last week, the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) was held, and the policy stance was relatively positive, mainly focusing on long-term development issues, and did not focus on short-term difficulties. In terms of long-term reform, the status of scientific and technological innovation has been improved, and the fiscal and tax reform has not given a clear direction for promotion and implementation, and new quality productivity may become an important direction for high-quality development. With the release of the full text of the Decision of the Central Committee of the Communist Party of China on Further Deepening Reform and Promoting Chinese-style Modernization last Sunday, market expectations are expected to be restored under more detailed reform guidance. Although the direction of long-term reform is gradually clear, short-term problems still need to be solved: the drag of real estate is still there, resulting in a gradual decline in consumer demand; If the export growth slows down in the second half of the year, the pressure on the demand side will be greater. It is still necessary to pay attention to the tone set by the Politburo meeting at the end of the month or on the current economy and the development of the second half of the year.
With the disclosure of the fund's second quarterly report, the fund's shareholding trends in the second quarter have also surfaced. On the whole, public funds have reduced their positions as a whole, the concentration of positions has continued to rise, and the allocation of Hong Kong stocks has increased significantly, which means that the liquidity impact on small caps is still continuing. In addition, in the process of continuous poor consumption data and the price reduction of a certain brand of liquor, there are obvious signs of switching from consumer industries such as food and beverage to growth industries such as TMT. Combined with the past position reduction process, the consumer industry may continue to reduce positions until the end of the year.
Overseas, in the process of "Trump 2.0" trading, the Fed's interest rate cut cycle may have begun, but it is not appropriate to be overly optimistic. United States economic data released last week was mixed, with better-than-expected data on retail sales and housing starts, suggesting the economy remains resilient, while jobless claims rebounded and the labor market continued to show signs of cooling. In the United States election, candidate Trump currently has the advantage in polls, electoral votes, and transaction data, and the "Trump deal" continues to ferment, US bond interest rates continue to steepen, and the US stock style rotation continues. At present, the market expects a high probability of interest rate cuts in September, and the annual rate cut is expected to be about 2.5 times. In the short term, it is expected that the interest rate cut trade will continue, but it is expected to fall back in the future, the risk of the election will continue to disturb the market, the long-end U.S. Treasury interest rate will still face upside risks, and the U.S. stock and non-ferrous sectors still have room for adjustment. This week, the main focus is on Q2 GDP, S&P PMI, June PCE inflation and consumption.
Market outlook: the effectiveness of economic investment may rebound in the second half of the year
Domestically, judging from the tone set by the Third Plenary Session of the 20th Central Committee of the Communist Party of China, this meeting still focuses on long-term reforms, but what is more unexpected is that short-term macroeconomic issues are mentioned at the end, which indicates that the subsequent Politburo meeting may slightly exceed market expectations on the policy side. In the context of the slowdown in GDP growth in the second quarter, the possibility of monetary policy RRR and interest rate cuts will rise, and the fiscal policy will mainly focus on equipment renewal and consumer goods trade-in this year. Looking ahead, the Politburo meeting and the National Standing Committee may have some economic policies.
Overseas, the policy proposition of the United States Republican Party platform has added three major parts to Trump's previous campaign campaign: removing restrictions on energy extraction, promoting the development of emerging industries such as artificial intelligence and space, and comprehensively deregulating them. In summary, Trump's representative policies mainly include domestic fiscal easing (domestic tax cuts, industrial revitalization) and external isolationism (tariffs, immigration restrictions), etc., all of which tend to strengthen United States' economic resilience and inflation stickiness. Logically, the bearish A-share going overseas, oil and gas resources and other sectors may be good for independent and controllable directions. In addition, under strong pressure within the Democratic Party, the current President of United States, Biden, announced on the 21st that he would withdraw from the 2024 presidential race and expressed support for the nomination of Vice President Harris as the Democratic presidential candidate. At the same time, close to the July Federal Reserve interest rate meeting, Fed Chairman Powell and Fed important governor Waller's speeches are "dovish", more open to interest rate cuts, and the expectation of interest rate cuts in September is heating up, but the market's expectations for interest rate cuts are too high, and they may be expected to return to a reasonable level before the rate cut. On the whole, the external impact pressure on A-shares is still there.
From a market point of view, under the overall market of "maintaining stability" in the broader market, ETF incremental funds may become the main buying force. At present, from the perspective of market style, core assets (leading tickets) have rebounded rapidly during the performance announcement period, the elasticity of dividend assets has weakened, and the market style has begun to converge. Looking forward to the second half of the year, market profitability may switch from a continuous downward trend to a stable profit, and market valuations may show a slight upward elasticity under the interest rate cut cycle, and the effectiveness of economic investment may rebound. Based on the logic of the business cycle, cheap dividend assets and core assets with performance or more cost-effective assets.
Sector Focus: Focus on the reform line, the defense line and the profit line
From the perspective of recent macro important events, it is recommended to focus on the idea of targeted follow-up, mainly focusing on the three main lines of reform line, defense line and profit line, and avoiding the bearish sectors of "Trump trade" such as short-selling and oil and gas resources. Specifically:
The direction of the reform line, the reform direction of the Third Plenary Session of the 20th Central Committee of the Communist Party of China has gradually become clear, but the industry coverage is too wide, and the current market of 5000 ~ 600 billion yuan can not support all the deductions, and you can look for places that are expected to exceed expectations, including: meteorological monitoring (disaster early warning), science and technology highlands (semiconductors, military industry, industrial machine tools), land transfer, tax reform, education, power and other sectors.
In the direction of the defensive line, semiconductor materials and equipment, operating systems, and dividend asset sectors such as state-owned enterprises and public utilities that still have defensive effects are worth paying attention to.
In the direction of the profit line, we can pay attention to the consumer electronics, power grid equipment, precious metals, aquaculture and other sectors that are upward in the second quarter of the boom cycle, and the logic of price increases runs through them.
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