A-shares are at 2,900 points, where are the investment opportunities after the Third Plenary Session?

The readings are unique

2024-07-24 21:18Published in Beijing

The successful convening of the Third Plenum is expected to raise market reform expectations, enhance the market's risk appetite from a medium and long-term perspective, and some industries related to the reform of the Third Plenum may be catalyzed

Text: Zhang Xinpei

Edited by Lu Ling

On July 24, A-shares continued the downward trend of the previous trading day. As of the close, the Shanghai Composite Index held 2,900 points and closed at 2,901.95 points, down 0.46%; The Shenzhen Component Index closed at 8493.10 points, down 1.32%; The STAR 50 Index and the ChiNext Index both fell more than 1%. On the same day, the Shanghai and Shenzhen stock exchanges traded a total of 627.2 billion yuan.

"In the past two days, A-shares have continued to fall, mainly due to the impact of sentiment and capital. When the market does not have large funds to continue to buy, the market lacks incremental funds to maintain the market, and investors' expectations for short-term positive expectations are disappointed, which has led to the recent decline. Mingze investment fund manager Hu Mohan said.

The just-concluded third plenary session of the 20th Central Committee of the Communist Party of China is the focus of recent market attention, a number of industry insiders said that the short-term dimension has a limited impact on A-shares, but the history of the Third Plenary Session is usually based on medium and long-term reform issues, and puts forward a forward-looking guiding framework for the development of key areas, which has a far-reaching impact on the long-term development of the macroeconomy and capital market.

"Judging from the communiqué of the meeting, we have made systematic arrangements for further deepening the reform in an all-round way, and clarified the goal and time for comprehensively deepening the reform to promote Chinese-style modernization, and put forward different reform directions from the supply side and the demand side." Zhang Chi, chief strategic analyst of the Guojin Securities Research Institute, told Caijing.

A-shares held at 2,900 points

On July 24, after the opening of A-shares, important indices gapped. The Shanghai Composite Index has been on the downward trend since the open, briefly falling below 2,900 points during the session. However, the decline has since narrowed. At the close, the Shanghai Composite Index fell 0.46% to close at 2,901.95 points, holding 2,900 points.

Other indices saw steeper declines. After the opening, the Shenzhen Component Index fell unilaterally and finally closed at 8493.10 points, down 1.32%. The STAR 50 Index and ChiNext Index fell by 1.08% and 1.23%, respectively. The BSE 50 index fell by 2.46%.

From the perspective of plates, the differentiation is obvious. Utilities led the gains with a 1.50% increase. In addition, the four industries of national defense and military industry, coal, building decoration, and petroleum and petrochemical have also risen to varying degrees.

Household appliances led the sector with a decline of 2.86%. Real estate fell by 2.59% and automobiles by 2.51%. Light industry manufacturing and comprehensive fell by more than 2%.

Xia Fengguang, manager of Rongzhi Investment Fund, believes that the main negative factor at present is the lack of funds, indicating that the market's sentiment and risk appetite are at a very low level. "This is also one of the important characteristics of the bottom, and the A-share market may still be repeated, but in the medium term, it is a period of high cost performance."

The performance of the A-share market in the past two days may be unexpected by some investors. On July 18, 2024, the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) has just ended. The meeting focused on the issue of further deepening reform and promoting Chinese-style modernization, and made overall arrangements for further deepening reform around Chinese-style modernization.

Some investors expect this important meeting to bring direct benefits to the A-share market, but in fact, looking back at the impact of the Third Plenary Session on the A-share market, it can be found that the short-term impact is very limited.

"Specifically, after the previous important meetings, A-shares have risen significantly in the medium and long term, and the upward trend is relatively clear. In the past four years, three years, and five years after the Third Plenary Session of the Central Committee, Wind All A rose by 29.53%, 49.47%, and 45.23% on average. Dong Zhongyun, chief economist of AVIC Securities, said.

"Usually the role of the Third Plenum is to study economic reform, and it is not directly for the stock market." Liu Hong, investment manager of Tongwei Investment, believes that "there is no short-term strong stimulus policy at this meeting, so market expectations are disappointed." In addition, the rise and fall of the stock market is affected by many factors, and the economy is only one of them. So investors shouldn't have expected the meeting to pull the stock market up immediately. ”

Huafu Securities said that the impact of the Third Plenary Session on the stock market as a whole was neutral, and the structural style of the A-share market did not show particularly obvious regular changes in the short term. The impact on the industry level is relatively more significant, and some industries related to the reform of the Third Plenum may be catalyzed.

"Combined with the current market environment of A-shares, the successful convening of the Third Plenum is expected to raise market reform expectations and enhance the market's risk appetite from a medium and long-term perspective." Haitong Securities said.

Li Chao, chief economist of Zheshang Securities, believes that the capital market is highly related to the economy, and a stable and active capital market is conducive to investors and the whole society to better establish confidence and expectations for economic development. With the further recovery of market valuation and sentiment, the further increase of investment attractiveness, combined with the active resolution of the current major contradictions at the policy level, it is expected that investor confidence is expected to steadily boost in the future.

Where are the long-term investment opportunities?

The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision") has many references to the capital market, mainly including: improving the basic system for promoting the standardized development of the capital market, improving the capital market function of coordination between investment and financing, preventing risks, strengthening supervision, promoting the healthy and stable development of the capital market, supporting long-term capital entry into the market, improving the quality of listed companies, strengthening the supervision and delisting system of listed companies, and establishing a long-term mechanism to enhance the internal stability of the capital market. Improve the restraint mechanism for the conduct of major shareholders and actual controllers, improve the dividend incentive and restraint mechanism for listed companies, improve the investor protection mechanism, promote the docking of regional equity market rules and standards, and orderly expand the opening up of the capital market.

CICC believes that the Decision reflects the full importance attached to the construction of the capital market. The capital market is an important part of "deepening the reform of the financial system", since last year's Central Financial Work Conference proposed to "better play the role of the capital market hub", the capital market has focused on the reform and improvement of the system and mechanism, and launched a series of reform measures represented by the new "National Nine Articles".

"The "Decision" adopted by the Third Plenary Session of the CPC Central Committee and the latest deployment of the China Securities Regulatory Commission have further pointed out the direction for the development of new quality productivity, and also opened up new space for the capital market to better serve new quality productivity, which is of great significance for stabilizing market expectations and effectively enhancing market vitality, efficiency and attractiveness." Li Chao, chief economist of Zheshang Securities, said.

On July 19, the China Securities Regulatory Commission conveyed the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China, saying: closely focus on the central task of promoting Chinese-style modernization, firmly grasp the hard truth of the new era of high-quality development, highlight the strong foundation, strict supervision and strict management, adhere to the reform to help stability, promote development, excellent service, and strengthen the team, and unswervingly push forward the comprehensive deepening of the capital market reform. Among them, it is especially pointed out that "further enhance the inclusiveness and adaptability of the capital market to scientific and technological innovation, cultivate and expand patient capital, do a good job in the "five major articles" of finance, and guide more resource elements to gather new quality productivity. ”

Lu Zhe, chief economist of Founder Securities, said that "new quality productivity", as a response to a new round of scientific and technological revolution and industrial revolution, will cultivate new investment opportunities and growth points in the capital market, brew medium and long-term stock market growth momentum, and boost the medium and long-term risk appetite of funds.

After the blockbuster tone is set, what investment opportunities can be explored in the capital market?

Li Chao suggested paying attention to the three major directions of the capital market. First, "safe" assets with high dividends and dividends; the second is the market of rising upstream resource volume and price; The third is to pay attention to the growth stocks corresponding to the nine tracks of the new quality productivity, especially the "future industry".

"After the Third Plenary Session of the Central Committee of the Communist Party of China, the landing of uncertainty may drive the risk-free rate of return downward, which may be good for the growth sector, which needs to be paid attention to." Li Chao said.

CICC said that the "Decision" highlights the important position of innovation in high-quality development, puts the development of new quality productivity and the promotion of the deep integration of the real economy and the digital economy in a high position, and clearly proposes to attach importance to new scientific and technological fields such as "new generation information technology, artificial intelligence, aerospace, new energy, new materials, high-end equipment, biomedicine, and quantum technology". In terms of the mechanism and system of scientific and technological innovation, the "Decision" proposes to give greater autonomy to scientific and technological innovation, stimulate innovation vitality, and attract more scientific and technological talents.

Galaxy Securities suggests that investors pay attention to eight related thematic investments: first, it is conducive to accelerating the development process of new quality productivity in terms of investment value; Second, the reform of state-owned enterprises is an important part of the reform of the economic system, and the theme of the reform of central state-owned enterprises is expected to benefit; Third, the process of Chinese enterprises going overseas is expected to accelerate, and related investment opportunities will be improved; Fourth, the theme of new energy may benefit from green and low-carbon development; Fifth, the national defense and military industry sector may usher in valuation repair; Sixth, the theme of big consumption or benefits; Seventh, we can pay attention to the leading enterprises in the financial sector; Eighth, pay attention to real estate phased transaction opportunities.

"The Third Plenum formulated China's medium- and long-term economic development plan, which affects the medium- and long-term operation trend of A-shares. We need to analyze more about the future development focus of China's economy, find out the industries that will receive continuous policy support in the future, and then make corresponding investment layouts. Hu Mohan said. In his view, from the Third Plenary Session of the CPC Central Committee, we can unearth the four main lines of investment: new productive forces, state-owned enterprise reform, modern service industry, and national defense and security. Xia Fengguang is more optimistic about the technology sector, because of the high-level tone, policy support, serious overfall, and bright industrial prospects.

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