The Spring Festival holiday of the Year of the Rabbit has come to an end, all walks of life have begun to return to work, and the domestic capital market is about to open. Looking back at the historical market, the performance of overseas markets during the long holiday will have a certain impact on the trend of A shares after the holiday.
Recently, there has been good news from overseas markets. Combined with domestic fundamentals, major institutions predict that A-shares are expected to usher in a “good start” after the festival.
01
Good news from overseas markets
This week (January 23-27), the three major US stock indexes collectively rose. On a weekly basis, the Dow rose 1.81%, the S&P 500 rose 2.47%, and the Nasdaq rose 4.32%, recording a four-week winning streak.
In terms of large technology stocks, Tesla rose more than 33% for the week, marking its best weekly performance since May 2013. The company previously announced that its profit and revenue for the previous quarter exceeded expectations. Company CEO Musk expects to produce 2 million Tesla electric vehicles this year.
Affected by the Federal Reserve’s aggressive interest rate hikes, Tesla’s stock price fell by 65% in 2022, causing overall turmoil in the growth stock sector. So far in 2023, the stock has risen more than 44%. In addition, large technology stocks such as Apple, Amazon, Netflix, and Google all have a weekly increase of more than 5%, and since 2023, the increase has exceeded 10% or 20%.
In terms of good news, first, the expectation that the Fed will slow down the pace of raising interest rates has become stronger.
The U.S. Labor Department reported on Friday that the U.S. core PCE price index recorded an annual rate of 4.4 percent in December, slowing to its slowest annual pace in more than a year, while consumer spending fell. Core PCE data for December confirmed expectations that Fed monetary policymakers will further slow the pace of rate hikes. The U.S. PCE price index recorded an annual rate of 5% in December, still well above the Fed’s 2% target, but both are the slowest growth rates since late 2021.
The Fed is widely expected to raise interest rates by 25 basis points next week as inflationary pressures ease. There is little suspense that the Fed will further slow down the pace of interest rate hikes.
Second, the US economic data has grown for two consecutive months.
In terms of macro data, the data released by the Bureau of Economic Analysis of the U.S. Department of Commerce on January 26 local time showed that the first estimate of the U.S. real gross domestic product (GDP) in the fourth quarter of 2022 rose by 2.9% year-on-year on an annual basis. , higher than market expectations. Given the tightening policy adopted by the Federal Reserve and the recession expectations it brings, the data is relatively solid. However, the economic situation in the United States in the first half of this year is still severe, and a recession may occur.
In addition, although risk assets are supported by good news, we still need to be vigilant against the risks of individual stocks.
Next week, the four major technology giants Apple, Google, Amazon, and Meta will all announce their results, and some companies may be at risk of performance explosion. A few days ago, due to the impact of lower-than-expected performance, Intel fell by more than 3% in the week, and fell by more than 6% on Friday.
According to the data, the company’s revenue in the fourth fiscal quarter was US$14.04 billion, the market expected US$14.513 billion, and US$20.5 billion in the same period last year; the adjusted EPS in the fourth quarter was US$0.10, which was estimated at US$0.19.
Meanwhile, Intel gave pessimistic guidance for market performance in the first quarter. It is expected that the adjusted gross profit margin in the first quarter will be 39%, and it is expected to be 45.5%. Wall Street analysts on average expected to close at $10.5 billion to $11.5 billion.
02
Chinese assets are favored by funds
During the long holiday, although the A-share market is not open, Chinese assets are still favored.
First of all, Chinese concept stocks collectively rose sharply, and the Nasdaq China Golden Dragon Index rose 4.79% this week.
On Friday, the Nasdaq Golden Dragon China Index rose 3.63% to 8278.98 points. Tuniu rose 22.75%, while Weibo, Lufax Holdings, and iQiyi all rose more than 10%. Zhonggai New Energy Automobile stocks rose collectively, Weilai Automobile rose 4.73%, Xiaopeng Automobile rose 4.86%, and Ideal Automobile rose 8.89%.
Secondly, Hong Kong stocks ushered in a “good start” for the Year of the Rabbit.
From January 26th to 27th, the Hong Kong stock market opened. On January 26, the Hang Seng Index of Hong Kong stocks closed up 2.37%. On January 27, the Hang Seng Index continued to rise, closing up 0.54%; the State Enterprise Index rose 0.87%; the Hang Seng Technology Index rose 1.04%. Gold and precious metals, software services, general metals and ores, coal and tourism and leisure facilities were the top gainers.
In addition, during the long holiday, overseas giants have successively disclosed their fund holdings, which shows that foreign capital favors Chinese assets.
The flagship fund “New World Fund” of the trillion-dollar long-term investment giant Capital Group disclosed its holdings as of the end of 2022. The latest scale of the New World Fund is US$46 billion. In the last two months of 2022, the fund has significantly increased its position in Midea Group by 31%; it has significantly increased its position in Ping An by 20%; it has also increased its position in Baekje Shenzhou (ADR) and Hengrui Medicine.
JPMorgan Chase’s flagship China fund – “JP Morgan Fund China A-Share Opportunities Fund” has increased its position in Kweichow Moutai on a large scale. As of the end of December 2022, the fund’s heavy holdings include: Kweichow Moutai, China Merchants Bank, Ningde Times, Ping An, Midea Group, Inovance Technology, Mindray Medical, Longi Green Energy, and Wanhua Chemical. In December, the fund added 34.76% to Kweichow Moutai, 8.44% to CATL, 9.14% to Midea, and 9.20% to Wanhua Chemical.
03
Spring market is expected to continue
Historical data shows that the rise and fall of Hong Kong and US stocks, commodities, foreign exchange and other assets during the Spring Festival will have an impact on the opening price of A shares after the Spring Festival.
From the statistical results, there is a strong correspondence between the rise and fall of Hong Kong and US stocks during the Spring Festival and the rise and fall of A shares on the first trading day after the Spring Festival. In view of the pre-holiday performance of A-shares and the rise of Hong Kong and US stocks during the holiday, the market generally believes that the probability of a “good start” for A-shares in the Year of the Rabbit is relatively high.
In fact, most A-shares have a spring market at the end of the year and the beginning of the year, and the start time is often related to the market in the third and fourth quarters of the previous year: if the market in the third and fourth quarters is weak, the spring market will start earlier; if the market in the third and fourth quarters is better, The spring market starts later, in mid-to-late January or even early February.
The performance of A-shares from July to October 2022 is relatively weak. Therefore, institutions generally believe that the spring market in 2023 has been gradually brewing since the end of October 2022.
Reviewing historical data, in the past 33 events in which foreign capital inflows exceeded 20 billion yuan, 20 times A-shares rose in the following three months, and the average increase of CSI 300 was 8.8%. Since 2000, A-shares rose one month after the Spring Festival. The probability of rising is 74%, and the average increase is 2.5%.
The superposition of the above two types of events, coupled with the support of overseas markets, the spring market of A shares after the holiday is expected to continue. The agency predicts that after the Spring Festival, under the background of strengthening economic recovery expectations and continuous improvement of corporate profits, the A-share market may face further valuation repairs.
04
The four major institutions predict the trend after the festival
Regarding the post-holiday trend, many leading brokerages also made predictions.
China Securities Construction Investment has made ten predictions for major asset classes in 2023:
①A hard landing and deep recession of the U.S. economy may be inevitable;
② China’s domestic demand economy repeats the independent resilience of the United States in the 1990s;
③ China’s monetary policy will remain neutral and loose;
④ A-shares may go out of the independent market in the global recession;
⑤ The Federal Reserve will suspend interest rate hikes, but it will only bring about a bear market rebound and cannot reverse the downward trend of US stocks;
⑥Gold is the most recommended product among major assets, with a target of US$2,000 in the first half of the year, and may continue to rise in the second half of the year;
⑦The CRB commodity index has only completed half of its downward cycle, and may have a rapid decline in the first half of the year;
⑧Crude oil fluctuates and falls, and will still fall below $60 in the medium term;
⑨U.S. debt is a bull market, and the ten-year U.S. bond yield may drop to 3%;
⑩China’s bond yields first fluctuated and then fell, and the center was higher than in 2022. There are two waves of long opportunities in the rhythm.
CICC predicts that the Chinese and foreign cycles will be misaligned again, and the Chinese market will “open a new chapter”:
① The pressure of recession in the United States is increasing, and China is expected to achieve the world‘s first recovery in 2023;
② A-shares and Hong Kong stocks are expected to achieve significant positive returns in 2023, and Hong Kong stocks will outperform A-shares in stages;
③As demand recovers after the epidemic, domestic inflation may face periodic pressures;
④ China’s monetary easing is declining, the interest rate center is rising, and major asset stocks are stronger than bonds;
⑤ The real estate sales area rebounded and turned to positive growth, and housing prices were partially facing upward pressure;
⑥Under the U.S. recession and the active destocking cycle, China’s exports may still be under pressure;
⑦The impact of the epidemic is gradually fading out, and the pan-consumer industry may be an important area of excess returns in 2023;
⑧the InternetAnd the pharmaceutical industry is expected to usher in a reversal in 2023;
⑨ The capital of A-shares and Hong Kong stocks has improved as a whole, and overseas funds have gradually returned;
⑩The inflection point of the US dollar trend may wait for the second half of the year, and the RMB will fluctuate and strengthen.
In addition, CITIC Securities and Haitong Securities have given directions that can be paid attention to:
Haitong Securities believes that driven by positive changes in policies, fundamentals, and capital, A-shares will usher in a good start in 2023, igniting the spring market offensive. At the same time, the continued increase in the policy of stabilizing growth will promote the recovery of macro and micro fundamentals, and A shares have entered an upward channel in the early stage of the bull market. Judging from the three dimensions of policy, technology and market,[digital economy]deserves more attention. In addition, there are structural bright spots in[low-carbon economy]and[consumption].
CITIC Securities issued a research report saying:
① In terms of long-term strategic configuration, it is still recommended to focus on the “four major security” areas of energy, science and technology, national defense and agriculture.
②In terms of medium-term tactical increase, it is recommended to focus on the digital economy in technology, pharmaceutical consumables and equipment in medicine, wind and storage in manufacturing, subdivided materials and equipment in the machinery and military sectors, and building materials, home furnishing, and home appliances in the real estate chain. Wait for post-cycle categories.
③ Select short-term varieties that are expected to have explosive power after the Spring Festival holiday, including medicine and medical treatment and Xinchuang.
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Original title: Just now!Sudden good news overseas