Reprinted from the Financial Associated Press
The long-lost surge! With the accumulation of multiple favorable factors, the A-share market ushered in a "turnaround" battle on the last day of July.
As of the close of trading on July 31, the Shanghai Composite Index rose 2.06% to return to 2,900 points, the Shenzhen Component Index rose 3.37%, the ChiNext Index rose 3.51%, and the Science and Technology Innovation 50 rose 4.7%, the largest one-day increase since March. Wind data shows that 28 of Shenwan's 31 primary industries closed in the red, and more than 5,000 stocks in more than 5,300 stocks in the whole market rose, making significant money.
Behind the general rise in the market is the active market trading, the Shanghai and Shenzhen stock markets today turnover of 903.3 billion, 303.8 billion more than the previous trading day, the first time since May 20 to rise above 900 billion. In terms of foreign investment, northbound funds bought nearly 19.58 billion yuan, ranking among the seventh largest single-day net purchases since the opening of Stock Connect.
A-shares swept away the previous downturn with a sharp rise, why did the market rise sharply? Can there be a relay in August? What changes have taken place in the style of the market? And in terms of specific industry sectors, what areas are worth looking forward to? More than 10 funds and securities companies brought first-line interpretation.
Positive factors continue to accumulate
In the early stage, the market adjusted more under the influence of negative factors such as weaker short-term economic data and overseas United States elections, and from the perspective of institutional analysis, catalyzed by positive policy factors, superimposed valuations are attractive, and positive factors continue to accumulate, the market has stopped falling and rebounded.
First of all, at the policy level, the Politburo meeting release a positive signal, and the relevant statements have a positive effect on changing the pessimistic expectations of the market.
Chen Xianshun, chief equity strategy analyst of Bosera Fund, pointed out that the Politburo meeting released more positive signals and effectively boosted the confidence of the equity market. The meeting objectively and soberly made a judgment on the current situation. In view of the current situation, the meeting mentioned that "macroeconomic policies should continue to be vigorous and more powerful". After recognizing the situation, the meeting made an effective and timely response. "It is necessary to strengthen counter-cyclical adjustment, implement a proactive fiscal policy and a prudent monetary policy, accelerate the full implementation of the identified policy measures, and reserve and launch a number of incremental policy measures as soon as possible." Such a combination of policies will help ensure that the overall economic operation is stable, steady and progressive, and continue to rebound.
Li Chao, chief economist of Zheshang Securities, said that the Politburo meeting also emphasized the overall risk prevention, strong supervision, and promotion of development, boosting investor confidence, and enhancing the internal stability of the capital market, especially the macro control policy focusing on "unswervingly achieving the annual economic and social development goals", "macro policies should continue to work harder, more powerful" and "to expand domestic demand with a focus on boosting consumption", and many other positive directions, market expectations are further clarified.
At the level of industrial policy, the industrial policy proposed by the meeting is more targeted, which is conducive to the cultivation of new momentum and new advantages, and forms a strong synergy to promote high-quality development.
Huang Runan, co-chief macro analyst of Guotai Junan Research Institute, said that on the one hand, the meeting called for "vigorously promoting high-level scientific and technological self-reliance and self-reliance", especially naming gazelle enterprises and unicorn enterprises, indicating that industrial policies should also "move forward" and increase investment in early, small and hard science and technology; On the other hand, there is "involution" vicious competition in some industries, which compresses the profitability of enterprises, which is not conducive to the healthy and sustainable development of the industry.
"Under the requirements of the relevant measures of the Politburo meeting, investors expect that the implementation of the total support policy is expected to accelerate and continue to increase, and at the same time, the policy will boost consumption as an important starting point for expanding domestic demand and promote the overall performance of the consumption sector." Li Zhan, chief economist of China Merchants Fund, pointed out.
It is worth noting that the important meeting also once again emphasized the need to boost investor confidence, enhance the internal stability of the capital market, and inject a "shot in the arm" for investors in the capital market.
Huang Runan said that the "Decision" adopted by the Third Plenary Session of the 20th Central Committee of the Communist Party of China, which has just ended, proposes to "improve the capital market function of coordination between investment and financing", and proposes specific measures to promote the healthy and stable development of the capital market from many aspects such as supporting long-term capital entering the market, improving the quality of listed companies, and improving investor protection mechanisms; The Politburo meeting further clarified the basic requirements, objectives and tasks of the capital market reform, and the reform policies represented by the new "National Nine Articles" are expected to continue to provide impetus for improving the internal stability of the capital market.
Tianhong Fund said that last week, the central bank lowered the 7-day reverse repo rate and LPR quotation by 10 basis points, the SLF interest rate by 10 basis points, and reduced the MLF interest rate by 20 basis points.
Secondly, at the level of confidence, the capital market reform is expected, and the market sentiment is restored.
Guo Lei, chief economist of GF Securities, said that the Third Plenum of the CPC Central Committee made it clear that it was necessary to "improve the capital market function of coordination between investment and financing", which represents an important idea for capital market reform at the current stage.
He further explained that from the perspective of the policy framework, it includes supporting long-term funds to enter the market; strengthen the delisting system; improve the code of conduct and restraint mechanism for major shareholders and actual controllers; Improve dividend incentives and constraints. The relationship between investment and financing is indeed a key issue in the capital market, and committing to the coordination of investment and financing will be conducive to the improvement of the endogenous stability of the capital market. On July 30, the Politburo meeting once again emphasized that "it is necessary to coordinate risk prevention, strengthen supervision, promote development, boost investor confidence, and enhance the internal stability of the capital market", showing the importance of capital market expectations.
Wells Fargo Fund also paid attention to the capital market and mentioned "boosting investor confidence and enhancing the internal stability of the capital market". With the arrival of the inflection point of the policy increase, the market stabilization signal has gradually emerged, and investor sentiment and confidence have been greatly boosted. In the current environment of low valuations and continued recovery of risk appetite, it is still worth looking forward to in the future, and the A-share market is expected to start the autumn offensive.
"Putting the boost of domestic demand at the forefront of the work in the second half of the year has undoubtedly contributed to a significant recovery of market confidence." Cheng Qiang, director of the Debang Securities Research Institute, said that from the perspective of the order of policy documents, it may mean that the macroeconomic control ideas of heavy investment and light consumption in the past will change, especially the proposal of "increasing residents' income through multiple channels", which is also in line with the idea of "continuously enhancing the people's sense of gain, happiness and security" put forward by the two sessions this year. It is worth noting that the capital market is an important channel to increase residents' property income, so the market sentiment has been significantly repaired after this meeting, and the market activity has increased significantly.
Huang Cendong, an analyst at Guojin Securities, said that the main reason for the current strong rise in the market is that favorable policies have boosted market sentiment, and the boost effect is obvious. Recently, favorable policies have been continuously introduced, such as the suspension of refinancing securities, the delineation of the "red line" of programmatic transaction monitoring, and the reduction of frequency and speed of high-frequency trading, all of which have further improved the fairness of market transactions and fully ignited market confidence. At the same time, the meeting of the Political Bureau of the CPC Central Committee mentioned that it is necessary to further mobilize the enthusiasm of non-governmental investment and expand effective investment. Compared with the same level meeting in April, boosting investor confidence has been raised to a new height this time.
Li Guanying, director of the Northeast Securities Research Institute, interpreted the fund holdings, he pointed out that the current active redemption demand for public active equity funds has been basically cleared, and the willingness to subscribe has been at a low level, the willingness to invest has bottomed out, the pessimism of the market has reached the extreme, the trend of subsequent scale reduction will be relatively slow, and the market transaction atmosphere will tend to be stable.
Third, in terms of valuation, after the recent continuous market adjustment, valuations are once again attractive. Invesco Great Wall Fund said that the current 10-year treasury bond interest rate fell below the 2.2% mark, and the CSI 300 dividend yield reached 3.08%, which has exceeded 0.92 percentage points compared with the 10-year treasury bond yield, implying enough pessimistic expectations and improving the attractiveness of allocation.
Fourth, at the overseas level, global mobility is likely to improve. Li Zhan said that the July Fed FOMC meeting is imminent, the recent United States economic and employment data have slowed down, the market is expected to cut interest rates, and the global liquidity easing is good for the performance of non-US equity assets.
The A-share market is at a critical stage of sentiment recovery
Whether the general market rally can continue is the focus of many investors, and a number of institutions and industry insiders pointed out that the A-share market is in a critical stage of emotional recovery.
A number of industry insiders mentioned important meetings, pointing out that macro policies should continue to work harder and more forcefully. In the second half of the year, macro policy support is expected to be further increased, and follow-up incremental policies can be expected. Li Zhan said that after the market continued to fall in the early stage, the transaction structure was cleared faster, but the upward trend of stock prices still faced the constraints of weak economic demand, and the subsequent upside still depended on the policy increase and implementation efforts.
Yan Xiang, chief economist of Huafu Securities, pointed out that the recent macro policy has begun to increase its strength, which is expected to promote the sustained recovery of the economy. A few days ago, the National Development and Reform Commission and the Ministry of Finance issued the "Several Measures to Support Large-scale Equipment Renewal and Consumer Goods Trade-in", and arranged about 300 billion yuan of ultra-long-term special treasury bond funds to support large-scale equipment renewal and consumer goods trade-in.
Therefore, he is optimistic that the positive factors of the stock market will change from quantitative to qualitative changes for three reasons: first, the earnings cycle is expected to bottom out; second, the dividend repurchase of listed companies has increased significantly; Third, the market valuation is at the bottom of history, the investment value is highlighted, and the liquidity environment is relaxed, which is expected to catalyze the market at the denominator end.
In terms of follow-up policy continuity, Li Chao judged that it is expected that there will still be RRR cuts in the future, and the probability of RRR cuts in the third quarter is relatively high, which points to a favorable liquidity environment that opens up upside space in the capital market. In addition, the Fed is likely to cut interest rates in September, and there is a possibility that the mainland will continue to lower its policy rate after that. Just as the Third Plenum proposed to increase the proportion of direct financing, the core of it is to highlight the money-making effect of the capital market. It is recommended to focus on the improvement of risk appetite and the industry interpretation brought about by the continuous net inflow of incremental funds in the future.
At the same time, Li Chao believes that the task of reform, development and stability in the second half of the year is very heavy, and it is expected to increase macroeconomic regulation and control around the promotion of Chinese-style modernization, enhance the sustained economic recovery and improve the momentum, and effectively protect and improve people's livelihood. More importantly, the follow-up monetary policy will continue to focus on the cost of real financing, especially the decline in real interest rates.
The company expects that the policy orientation will be more positive in the second half of the year, and there is still room for monetary policy to be strengthened after the pressure on the exchange rate is weakened, and the future fiscal policy will exert force in consumption, investment, employment, etc., and it is not excluded that the fiscal increase will be made in the second half of the year.
Fund company research and judgment:
Capitalize on technology growth, over-falling rebounds, and high-dividend corrections
Looking ahead, a number of fund companies have given suggestions on the direction of allocation. Invesco Great Wall Fund continues to judge that the market is in a volatile range, and the upward breakthrough needs to wait for more positive signals, especially the incremental information on policy and the repair of fundamentals, but at the same time, the probability of further significant downward movement of the market is low.
Therefore, Invesco Great Wall believes that the market is still expected to be dominated by structural markets, and it is recommended to focus on three directions:
First, the fundamentals may have entered the right growth direction, including semiconductors and consumer electronics;
the second is some medicine, liquor, building materials, etc., which have over-falling rebound and valuation repair space;
The third is the direction of high dividends, there has been a certain correction in excess returns recently, the medium-term risk appetite has not improved, and interest rates continue to fall.
Guotai Fund said that in the short term, the convening of the Third Plenary Session of the Central Committee of the Communist Party of China has deployed to further deepen reform and promote Chinese-style modernization, and the superposition of monetary policy and fiscal policy is conducive to the continued over-fall and rebound of core assets, especially electric new, pharmaceutical, financial, and science and technology can also benefit relatively. However, in the long run, the macro environment will be more complex in the second half of the year, and technology and security will still be the main line of policy.
"Major positions can continue to be skewed towards broad market value, with a focus on tactical opportunities in technology themes." Guotai Fund believes that the long-term industry will focus on three types of directions: first, assets with stable value, including electricity, precious metals, ships, rail transit, etc.; Second, in terms of technology, we continue to be optimistic about the core stocks in the AI chain; Third, we are optimistic about the advantageous enterprises that continue to strengthen their ability to go to sea in Asian, African and Latin American countries.
Qianhai Open Source Fund believes that the current valuation and risk premium of A-shares are still at historical lows, and the downside risk of the market is limited. In the short-term market risk appetite recovery environment, we can flexibly capture the short-term rebound opportunities of the over-falling sectors and policy-driven sectors in the early stage, and it is recommended to continue to focus on the value of the market + technology blue chips in the medium term.
The Golden Eagle Fund suggests that investors can appropriately switch between high and low opportunities, especially in terms of technology, in addition to the trend of the AI industry, continue to pay attention to the military industry (order fulfillment to performance) and new energy (Asia, Africa and Latin America demand, policy anti-involution).
From the perspective of digging out the basis of important meetings, Caitong Fund pointed out that "two new" and "consumption" may be the current direction worth paying attention to. On the one hand, the meeting clarified the high-level attitude towards the development of emerging industries, "to strongly and effectively support the development of gazelle enterprises and unicorn enterprises", that is, to support high-growth, strong innovation, and large track space for fast-growing enterprises. On the other hand, the meeting clearly pointed out that cultural tourism, elderly care, childcare, and housekeeping are the support directions of the policy, which is not difficult to explain the rise in consumption and consumer services. However, Caitong Fund also reminded that service consumption has the elements to form the main line of the market, but the sustainability of the latter remains to be tested and observed by the market.