Since May, the market has continued to rebound. Analysts said that many signals indicate that asset prices are expected to rise, and the distribution of funds seems to have begun. Superimposed with sufficient liquidity, A shares have gradually entered a new round of upward cycle.
Market bottom may have occurred
Compared with the market decline in April, the performance of A-shares since May has been very different. According to the data, after excluding new stocks listed during the year, as of May 23, there were 182 stocks that had risen by more than 30% in the two cities since May. These stocks were mainly distributed in industries such as power equipment and automobiles.
The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index hit 2863.6 points, 10087.5 points, and 2122.32 points respectively on April 27. Given the current market rebound, can the low on April 27 be regarded as the beginning of the year? The bottom of the market has been continuously adjusted since then?
Chen Guo, chief strategy officer of China Securities, said that from December 2021 to April 27, 2022 (the recent market low), the major stock indexes fell by 25%-35%, which is close to the extreme value of the previous downturns in the market. Moreover, at the low point of the current round of the market, the equity risk premium of the Shanghai Composite Index and the CSI 500 Index has exceeded the level of the three typical market downturns in 2008, 2011-2012, and 2018.
Xun Yugen, chief economist and chief strategist of Haitong Securities, said that the market has seen a big bottom every 3-4 years. In terms of valuation, risk premium, stock-to-bond income ratio, net break rate and other indicators, the market is significantly different from the past 5 times. Compared with the historical bottom, the current market is already in a large bottom area.
Positive factors continue to accumulate
With the recent market rebound, various positive factors are also converging.
From the perspective of capital, the data shows that the financing balance of the two cities decreased by 146.924 billion yuan in April, and as of May 20, the financing balance of the two cities has increased by 9.942 billion yuan since May, and financiers continue to increase their positions. Last week, the net inflow of northbound funds into A shares was 15.218 billion yuan, of which the net inflow on May 20 was 14.236 billion yuan, a new high in half a year.
The policy of “stabilizing growth” is still increasing, and the central bank has also “cut interest rates” twice recently. On May 15, the central bank announced that the lower limit of the interest rate for commercial personal housing loans for the first home would be adjusted to not less than the market quoted interest rate for loans of the corresponding term minus 20 basis points, but the loan interest rate for the second home remained unchanged; on May 20, the central bank lowered it at one time. The 5-year LRP rate is 15 basis points to 4.45%.
At present, the new crown pneumonia epidemic is gradually under control, and the situation in Shanghai is stable and improving. Shanghai recently announced that from May 22, ground public transport and rail transit will be able to gradually resume operations. From June 1 to the middle and late June, the normal management of epidemic prevention and control will be fully implemented, and the normal production and living order in the city will be fully restored.
A shares gradually enter a new round of upward cycle
Under the circumstance that the A-share market has seen a big bottom and positive factors continue to accumulate, institutional people are optimistic about the trend of A-shares.
Qin Peijing, chief strategist at CITIC Securities, said that local epidemic trends have improved and policy synergy has begun to emerge, and the improvement in fundamental expectations has driven A-shares to start a mid-term recovery that lasts for several months.
“This round of market recovery is characterized by a slow rise. It is still in the early stage of the market. Epidemic prevention and control and resumption of work and production are a gradual process. External disturbances have not been completely eliminated, and market sentiment has recovered. However, institutional positions are still at a low level. The speed of capital inflow is relatively slow. It is recommended to firmly lay out the two main lines of modern infrastructure and real estate throughout the year, continue to focus on the main line of resumption of work and production quarterly, and focus on the main line of consumption restoration on a monthly basis.” Qin Peijing said.
Zhang Xia, chief strategist at China Merchants Securities, said that in May, the 5-year LPR cut by 15BP exceeded expectations; in April, M2 growth continued to rebound by 10.5%, significantly higher than nominal GDP growth. A number of signals point to upward momentum in asset prices. Abundant liquidity has brought important support to A shares. A shares have stabilized and rebounded, gradually entering a new round of upward cycle.
“The darkest moment for A-shares has passed. A-shares that have undergone a full adjustment are beginning to be more sensitive to positives. As ‘steady growth’ continues to exert force, the recent 5-year LPR lower than expected has confirmed the reversal pattern of A-shares.” Zhejiang Wang Yang, chief strategist at Commercial Securities, said.
Wang Yang believes that the “steady growth” market is not finished yet. It is suggested that for semiconductors, national defense equipment, and new energy, we should explore the secondary IPOs represented by the Science and Technology Innovation Board in the past 2-3 years. The industrial distribution of these IPOs has a distinct sense of the times. Difference.
(Editor in charge: Guan Jing)