News from this newspaper In the context of the sharp decline in the periphery, A shares staged a “V-shaped” trend, showing strong tenacity. The analysis believes that behind the recent trend of the A-share market being relatively independent is the increase in investors’ confidence in the implementation of policies and valuation repairs. With the further relaxation of macro policies, easing of credit conditions and accelerated resumption of work and production, the upside is also expected to be further opened up. The shock is a good time to plan the market in the second half of the year in advance. As for the securities companies known as “bull market flag bearers”, the agency pointed out that the current sector is seriously undervalued, and there is a large room for repairing the valuation of the sector.
A-shares reproduce the “V-shaped” reversal trend and foreign capital is back
On June 14 (Tuesday), A shares reappeared in a “V-shaped” trend. The data shows that, affected by the sharp drop in the major stock indexes in the external markets overnight, the Shanghai and Shenzhen stock indexes opened lower in early trading and then fluctuated lower. Turning, the Shanghai Index hit a new high for this round of rebound! As of the close, the Shanghai Index rose 1.02% to 3288.91 points; the Shenzhen Index rose 0.20% to 12023.79 points; the Chuang Index rose 0.07% to 2548.31 points. The total turnover of the two cities was 1,099.47 billion yuan, exceeding one trillion yuan for three consecutive days.
Analysts believe that the Nasdaq fell nearly 5% overnight, and the S&P 500 fell nearly 4%. Since then, the S&P 500 has also entered a technical bear market after the Nasdaq; against this backdrop, the Shanghai and Shenzhen stock indexes staged a “V-shaped” reversal yesterday, demonstrating the resilience of the A-share market. Cheese Fund pointed out that recently A shares have gone out of a relatively independent market, mainly because the domestic epidemic prevention and control margins have improved, and economic expectations have also begun to improve.
Guosheng Securities said that in the recent sharp correction of overseas stock markets, the A-share market has been relatively independent and showed strong resilience, and behind the market strength exceeding expectations is the increase in investor confidence in the implementation of policies and valuation repairs. With the further relaxation of macro policies, easing of credit conditions and accelerated resumption of work and production, the process of improving investor confidence has not yet ended, and the room for the index to rise is expected to be further opened.
China Europe Fund mentioned that the implementation of economic stimulus policies may be further accelerated, and the social financing growth rate exceeding expectations in May is also strengthening the market’s confidence; considering the impact of the epidemic and the slowdown in overseas economic growth, if we expect to achieve this year’s economic growth target , it is expected that more stimulus policies will be introduced. China Europe Fund believes that the most certainty of the stimulus policy is often from the investment side, because it has the most obvious boosting effect on the Chinese economy. The process of repeated market fluctuations may be a good time to plan the market in the second half of the year in advance.
The data shows that northbound funds have returned, with a net purchase of 3.944 billion yuan on the day! According to statistics, since June, the net purchase of northbound funds has exceeded 31.6 billion yuan, setting a new monthly high for this year. Behind the substantial inflow of northbound funds is that foreign investors are bullish on A shares. Among them, UBS Securities analysis believes that with the marginal improvement of economic data and the gradual implementation of policy stimulus, the market’s expectations for an economic rebound in the short term will increase, or continue to support the recovery of market risk appetite. According to a recent research report by JPMorgan Chase, the current Chinese assets are a good diversified investment channel.
Zhu Chaoping, global market strategist at JPMorgan Asset Management, said that as China’s epidemic is under control and the policy focus returns to steady growth, China’s economic growth is expected to rebound in the third quarter, which provides support for the fundamentals of Chinese assets. At the same time, after a relatively large adjustment from the beginning of the year to April, the valuation of A shares is more attractive. Policy reversal, fundamental rebound and lower valuations provided adequate support for the performance of A-shares. Overseas investors will continue to regard A shares as an important option for long-term allocation.
The “bull market flag bearer” soaring sector sounded the horn of counterattack?
A few days ago, it was reported that the China Securities Regulatory Commission held meetings in Shanghai and Beijing this year, requiring foreign investment banks to report the details of executive compensation and not to overpay executives. In response, the China Securities Regulatory Commission publicly responded yesterday afternoon that the above-mentioned reports were false news, and that the China Securities Regulatory Commission and relevant securities regulatory bureaus and industry associations had not held the above-mentioned meetings.
The person in charge of the relevant departments of the China Securities Regulatory Commission pointed out that the compensation system is an important part of corporate governance, and the establishment of a scientific and reasonable compensation system is the basis for maintaining the core competitiveness of the industry, as well as the foundation for maintaining the stable and sustainable development of the industry. In recent years, global regulators have paid more attention to the system of compensation incentives, in order to prevent financial risks caused by excessive speculation and excessive incentives.
“In recent years, in accordance with the unified deployment of the country’s financial industry to open up to the outside world, I will adhere to the principles of marketization, rule of law, and internationalization, and relax and abolish the restrictions on foreign shareholding in securities and fund management institutions. 11 foreign-owned securities fund companies have been approved. The overall operation and development of the Chinese organization is good, and I will supervise it in accordance with the laws and regulations, and fully respect the autonomy of the organization’s business decision-making.” The above-mentioned person in charge pointed out.
Affected by this news, the intraday index of brokerage stocks rose in a straight line. As of the close, five stocks, Caida Securities, Hongta Securities, Everbright Securities, China Securities Construction Investment, and Great Wall Securities, rose to their daily limit; Zheshang Securities, Bank of China Securities, Xiangcai Securities, Guolian Securities rose more than 7%; more than 10 stocks including Founder Securities and Industrial Securities rose more than 5%. The sector index rose 5.56%. It is worth mentioning that Everbright Securities has closed 4 daily limits in the last 5 trading days, with a cumulative increase of 53.82%.
For brokerage stocks. Tianfeng Securities pointed out that the current sector has a high margin of safety and significant defensive value; capital market reform policies are frequent, and the loose monetary policy is superimposed, which is expected to become a major positive for the sector. AVIC Securities said that the current PB valuation of the brokerage sector is still near the 10% quantile since 2016, which is seriously undervalued. Stimulated by good news, the low valuation broke out. In the long run, there is also a large room for repairing the valuation of the sector.
Industry-specific benefits. Essence Securities mentioned that, first, recently, the government has introduced a package of policy measures to stabilize the economy, among which it stated that it will improve the efficiency of capital market financing, scientifically and reasonably grasp the normalization of IPO and refinancing; support mainland companies to list in Hong Kong, and promote compliance with laws and regulations. platform companies to go public overseas, etc. The subsequent acceleration of the comprehensive registration system reform will drive the expansion of the capital market and create new opportunities for securities companies to invest in direct investment, co-investment and other businesses. Second, the official implementation of the market-making system on the Sci-Tech Innovation Board will help increase market activity, improve market liquidity and effectiveness. For securities companies, it will bring incremental business and optimize the capital business structure.
The reporter of “Investment Express” noticed that the securities business sector is known as the “bull market flag-bearer”. The market generally believes that the sharp rise of securities companies’ stocks often indicates that the market is in a bull market atmosphere, or that the market is about to usher in a wave of bull market conditions. For example, on November 12, 2014, the brokerage index soared by 5.05%. Since then, the A-share market started the biggest round of bull market since 6124 points. Another example is that in February 2020, brokerage stocks rose continuously, and A-shares began to rise in the slow bull market in March.
Yuekai Securities pointed out that the margin of external disturbance has been eased, the resumption of work and production after the epidemic has accelerated, production and operation have gradually returned to normal, and market sentiment has improved significantly. With the continuous return of funds from northbound capital, the follow-up A shares are expected to continue to go out of the independent market.