Financial Lianliankan | Stock Market Weekly Review: A week of shock leads to overcast in July, is there still a show in the market?Fly into the homes of ordinary people
This week, the A-share market fluctuated sharply and the market plummeted for 3 consecutive days. The Shanghai Composite Index once hit a new low this year. The subsequent rebound has not been able to change the pattern of this week’s sharp decline, making July closed a big Yinxian. However, the ChiNext index is very strong, higher than the Shanghai Composite Index for the first time in history. Will this divergence continue? Is there still a show on the market?
The Shanghai Composite Index hits its biggest monthly decline in 2 years
The turbulence of the market in July occurred in the last week, which is this week. Before that, the market was generally stable. This Monday, the market suddenly gapped and opened lower and plunged. The Shanghai Composite Index fell below the 3,500 point mark to close at 3,467.44 points, and fell 82.96 points on the same day. Points, a drop of 2.34%. On Tuesday, the market continued to plummet, and the Shanghai Composite Index fell another 86 points to close at 3381.18 points, falling below the 3400 point mark, a drop of 2.49%. The decline has exceeded 2% for two consecutive days, and this is the first time this year. On Wednesday, the decline continued, and the Shanghai Composite Index fell to 3,32.72 points. Fortunately, the 3300-point mark was still held. It finally closed at 3,361.59 points, down 19.59 points, or 0.58%. The Japanese K-line closed the cross star and the small Yang line was issued. Down signal.
Caption: Monthly K-line chart of Shanghai Composite Index
Sure enough, after three consecutive days of plunging, the market rebounded strongly on Thursday. The Shanghai Composite Index closed at 3,41.72 points, up 50 points, or 1.49%. However, because the 3-day decline was too large, the rebound was not enough to change the decline pattern. On Friday, the Shanghai Composite Index fell 14 points to close at 3,397.36 points, a drop of 4.31% this week. This week’s K-line, big Yinxian, is the second largest weekly decline this year.
Before the sudden plunge this week, there was no sign and no special bad news. Although there was unfavorable news for the education sector, the education sector had very few A shares and its weight was very low, which was not enough to affect the market. It can be seen that the plunge this week is mainly a market adjustment.
This week is the last week of July. As a result of the plunge, the K-line closed in July. The Shanghai Composite Index fell 5.4% in July, the largest monthly decline this year and the largest monthly decline in two years since June 2019. This is a very bad signal.
The ChiNext Index is higher than the Shanghai Composite Index for the first time
Looking at the Shenzhen Stock Exchange Index, it is very different from the Shanghai Stock Exchange Index, especially the ChiNext Index.
The Shenzhen Component Index fell more than 2% in the first two days of this week. However, it basically did not fall on Wednesday. It rose by 3.04% on Thursday and fell slightly by 0.29% on Friday to close at 14,473.21 points. In this way, the Shenzhen Component Index closed one point this week. Zhou Yinxian, which has a very long lower shadow, has a weekly decline of 3.7%. July’s monthly K-line is also a long lower shadow line, with a monthly decline of 4.54%. This week’s weekly K-line and July’s monthly K-line both fell less than the Shanghai Composite Index.
Caption: Shenzhen Component Index Monthly K-line Chart
The Growth Enterprise Market has strengthened its momentum. It fell 2.84% this Monday, plummeted 4.11% on Tuesday, but rebounded 1.61% on Wednesday, and surged 5.32% on Thursday. Due to the strong rebound, the GEM index fell slightly by 0.56% on Friday to close at 3440.18 points. In this way, the GEM index closed a small cross star with a long lower shadow this week, and the weekly decline was only 0.86%. The monthly K-line is also a doji with a long lower shadow, with a monthly drop of only 1.06%. Looking at the weekly K-line, the ChiNext index closed this week at 3,440.18 points, and the Shanghai Composite Index closed at 3,397.36 points. The ChiNext index was higher than the Shanghai Composite Index for the first time in history.
Caption: Monthly K-line chart of GEM Index
The reason why the Shanghai Stock Exchange Index and the ChiNext Index are so different, just compare two stocks: CATL VS Kweichow Moutai, which reflects the current market hot spots and the reasons for the difference in the indexes of the two cities.
Ningde Times set a record high this Friday-after 582.2 yuan, it fell back to close at 550.4 yuan. This week it slightly expanded 0.62% and rose by 2.96% in July. CATL’s current total market value has exceeded 1.2 trillion yuan. It is the largest stock in Shenzhen’s market by market capitalization. It is one and a half times higher than the second-largest stock on the ChiNext market. It has a pivotal position on the ChiNext. The strength of SZSE also contributed to the Shenzhen Component Index.
Looking at Kweichow Moutai, which has the largest market value on the Shanghai Stock Exchange, this week fell 11.63% to close at 1678.99 yuan, a new low this year. The decline in July was as high as 18%, the largest monthly decline since November 2018. The total market value of Kweichow Moutai once exceeded 3 trillion yuan. This Friday’s total market value was only 2.1 trillion yuan. Whether the 2 trillion yuan mark can be maintained depends on next week.
The difference in the performance of the leading stocks in the two cities has led to the difference in the performance of the indexes of the two cities, which is also the reason why the ChiNext index can surpass the Shanghai Composite Index.
Drinking and taking medicine OUT the infinite scenery of the new energy sector
In fact, the different performance of CATL and Kweichow Moutai is the current difference in the performance of the A-share sector.
Although the overall performance of the market in July was poor, 30% of the stocks still rose, and the stock prices of more than 300 stocks hit a record high. The strongest performers are technology stocks, especially the new energy sector. Among lithium battery stocks, except for the Ningde era, Tianqi Lithium and Ganfeng Lithium both set new highs, rising more than 50% in July. In the photovoltaic sector, Shangneng Electric soared 173% in July, and stocks such as Jinlang Technology, Goodway, and Trina Solar rose more than 50% in July, all exceeding record highs. In the wind power sector, Xinqianglian and Yunda shares rose more than 50% in July and reached new highs.
The chip, electronics and other sectors also performed well in July.
In contrast to these soaring sectors, the consumption sector, which has been bullish for several years, has fallen all the way. The liquor sector was in the forefront of declines in July. Except for Kweichow Moutai, Wuliangye fell by 25%, Luzhou Laojiao fell by 27%, and so was the pharmaceutical sector. The sharp decline, coupled with the decline in the banking, insurance, and real estate sectors, is the reason for the poor performance of the Shanghai Stock Exchange Index. At the same time, the decline in these heavyweights caused the Shanghai and Shenzhen 300 Index to fall as high as 7.9% in July, the largest monthly decline since February 2016.
Caption: Monthly K-line chart of Shanghai and Shenzhen 300 Index
From this, we can understand why the Shanghai Composite Index will fall so much when there is no significant negative. In fact, it is caused by the sector adjustment. This sector adjustment is beneficial to the ChiNext index, making the ChiNext Index higher than the first time in history. The Shanghai Composite Index.
So, is there still a show in the market? The answer actually depends on the performance of these sectors. The bull market in the consumer sector has lasted for at least 5 years. There are no stocks that rise or fall. Kweichow Maotai, the leading stock, has fallen by nearly 1,000 yuan from its highest value of more than 2,600 yuan to more than 1,600 yuan this week. If Moutai has been adjusted in place, then the future rebound in the consumer sector will drive the Shanghai Composite Index to rebound. However, if the adjustment of the consumption sector takes a long time and the era of drinking and taking medicine has passed, then the adjustment time of the market will also be longer.
Looking at the ChiNext index again, if technology stocks such as the new energy sector continue to be strong, the ChiNext index will still perform very strongly. However, the stocks such as CATL have already risen a lot and their valuations are also high. Once adjusted, the ChiNext index will naturally support. Can’t help.
Therefore, in the face of uncertainty, it is better to be cautious.
Xinmin Evening News reporter Lian Jianming
Editor: Lu Jiahui
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