Whenever it comes to the Spring Festival, A-shares always have an inescapable topic: whether "spring restlessness" can be staged. Judging from the recent performance of A-shares, the large index has been sunny for three consecutive weeks, and this year's Spring Festival came relatively early, and now those holding stocks are thinking about whether to fall into the bag, and those who are short are looking forward to the index pullback to increase their positions. So today I will give you a plate, is it better to hold coins or stocks before the Spring Festival?
1. Review of the A-share market after the Spring Festival in previous years
First, let's look back intuitively from historical data. Some securities firms have counted the 11-year historical data of A-shares from 2010 to 2020, of which the Shanghai Composite Index fell in 1-2 weeks after the Spring Festival in 2013 and 2020, and the Shanghai Composite Index rose in the 1-2 weeks after the Spring Festival in other years.
If you add to this the 2021-2022 Spring Festival, which is also positive for 2 weeks after the holiday, then it can be seen that only at the index level, the winning rate of choosing to hold stocks before the Spring Festival and waiting for the opening after the holiday has reached 11/13.
In terms of the increase range, some institutions have calculated that the average cumulative yield of Wind All A in the past 12 years in the first 5 trading days of the Spring Festival was 1.9%, the median was 2.6%, and the average cumulative yield in the 5 trading days after the Spring Festival was 1.4%, and the median was 1.8%. Moreover, the market performance during the Spring Festival is significantly more stable than that of the whole year, that is, compared with the overall increase of the whole year, the market red envelopes during the Spring Festival have significant characteristics of low risk and high return.
In addition, some institutions have counted the current premium of stock index futures. It is pointed out that at the current point in time, the quantiles of the four major futures index spreads are below 20%, which continues to be at a low level, indicating that short-term market optimism is more conducive to price upward growth. In addition, the pre-holiday cycle means that the position volume has also appeared in the long market, and the smart funds of the foresight have been laid out in advance.
Historically, the Spring Festival market in the Shenzhen Composite Index and ChiNext Index performed better than the Shanghai Composite Index, and the CSI 500, CSI 1000 and other small and mid-cap stock indexes were better than the SSE 50 and CSI 300 weighted stock indexes.
Second, the current low valuation of A-shares and northbound capital buying
We all know that A-shares underwent a round of relatively deep adjustment last year. In the case of the Shanghai Composite Index alone, it fell from 3639.78 points to 3089.26 points for the whole year, a decline of 15.13%. The ChiNext index, which gathers growth stocks, is even more exaggerated, with a cumulative decline of 28.82% for the whole year.
The continuous sell-off and the decline in stock prices have naturally led to a situation in which bubbles are squeezed and the overall valuation of A-shares is reduced. Some securities firms have counted the valuation of A-shares at the beginning of this year and come to the following conclusions:
The overall PE of A-shares is 16.7 times, which is in the historical 28% decile;
The PE of the SSE 50 Index is 9.3 times, which is in the historical 18% decile;
The PE of the CSI 500 Index is 22.6 times, which is in the historical 15% decile;
The GEM index PE is 38.9 times, at the historical 17% decile;
The PE of the CSI 1000 Index is 28.0 times, which is in the historical 10% decile;
The PE of the China Securities 2000 Index is 40.9 times, which is in the historical 42% decile;
The ChiNext index has a PE of 3.4 times relative to the CSI 300, which is in the historical 26% percentile.
It can be seen that all indices are below the 50% historical decile, and some of them such as the CSI 1000, CSI 500 and ChiNext Index are below the 20% historical decile, showing extremely low historical valuations.
Some institutions believe that A-shares may open a new round of valuation repair market. From the perspective of cyclical positioning, the A-share valuation repair market is generally in the early stage of expansion. From the historical summary since 2009, the winning rate of positive absolute return of A-shares under the valuation repair market is 100%, and the return of the stock market rise is more contributed by the improvement of risk appetite and valuation increase, and the duration is mostly not more than 12 months. Therefore, the valuation repair market of A-shares must be grasped in any case.
According to the agency's statistics, in the pre-expansion valuation repair stage, the rising window since 2009 has averaged 12 months, but the window has shown the characteristics of shorter and shorter, with an average return of 19%, of which valuation contributed 13 percentage points. "Fear of losing opportunities" and "bottom-hunting" are the psychological characteristics of investors at this stage.
In this case, the buying and buying of northbound funds since the beginning of the year has become a "matter of course". According to statistics, the net inflow of northbound funds last week was 43.997 billion yuan, which has exceeded the single-week record in 2022. In addition, coupled with last week's net inflow of 20.019 billion yuan, this year has a net inflow of 64.016 billion yuan, which is only 2 weeks, northbound funds before the Spring Festival large net purchase is already an indisputable fact, smart funds can be greedy when the price is underestimated, when others are afraid.
In addition, we can also take a look at which sectors northbound funds have mainly increased their holdings. According to public data, since the beginning of the year, northbound funds have mainly increased their holdings in the brewing industry, banking and insurance, and the main reductions are in traditional Chinese medicine, chemical pharmaceuticals and logistics industries.
CITIC Securities pointed out that at present, A-shares are still in the key long window of the year, the market is in a performance-driven stage, high-frequency data verification and fundamental expectations to improve form positive feedback, strengthen the consensus of all types of investors to increase allocation. The short-term acceleration of foreign capital inflow has become the most important pricing force in the beginning of the year, and domestic investors will also cover their positions around the Spring Festival to form a capital relay with foreign capital, providing a better opportunity to increase positions.
In short, the low valuation of A-shares and the net inflow of more than 64 billion yuan of northbound funds since the beginning of the year alone can provide imagination for the rise of the index throughout the year, and under this, the spring agitation of A-shares is naturally expected.
After talking about the historical review, as well as the current valuation of A-shares and foreign investment, let's look at macroeconomic and monetary policy. It should be said that the steady growth policy that has been continuously released since the end of 2022 has a relatively positive effect on the stability and improvement of A-shares in 2023. Therefore, the gradual receding of the impact of the epidemic has also strengthened the market's expectation of a good basic orientation in the future.
On the one hand, the central bank and the China Banking and Insurance Regulatory Commission have established a dynamic adjustment mechanism for the interest rate policy of the first set of housing loans, and the sales price of newly built commercial residential buildings has decreased for three consecutive months month-on-month and year-on-year, and cities can maintain, reduce or cancel the lower limit of the local first housing loan interest rate policy in stages.
As the market had expected, stimulus policies for the real estate industry continued to be introduced. Until there is a significant inflection point in domestic fundamentals, the policy tone of stabilizing the economy and supporting entities will continue. On January 10, the central bank held another symposium on the credit situation, which will maintain credit support for the real economy, focusing on resolving real estate risks, and at the same time requiring a moderate pace of credit delivery, with the power of credit, monetary easing is still necessary.
Some brokerages even believe that the central bank may cut interest rates again to release liquidity, and the reduction standard may have once in the first half of the year, and the RRR reduction of 0.25 percentage points or the future normal. Overall, the liquidity of the market may show a situation of loosening and tightening in 2023.
On the other hand, the mainland has further optimized the epidemic prevention measures for Hong Kong and Macao, the epidemic situation has "peaked" across the country, production and life are gradually recovering, and the market's expectations for the repair of economic fundamentals are gradually strengthening.
Looking back at the point of time, there are still many positive factors. At present, the upward trend of inflation in the United States has eased, the logic of overseas tightening has also been fulfilled, and the pace of interest rate hikes will basically slow down. Simply put, as the pace of interest rate hikes in the United States slows down, the trend of global capital flow to the United States will also weaken, so there will naturally be more funds to go long in A-shares! The recent appreciation of the RMB exchange rate, and considering that domestic capital is likely to begin to allocate A-shares in the next year, then the market will still operate in a context of abundant liquidity and rising risk appetite in the future, and the spring restlessness is naturally expected.
Above we mainly answered the question page of whether to hold coins or stocks before the holiday, and the answer is to hold shares. So, what direction might be better? There are institutions that have given the answer. BOC Securities said that in the early stage of valuation repair, growth sectors with strong flexibility are still the first choice for funds. Credit recovery is the most important logical thread of A-shares in 2023, and in the early stage of expansion with full recovery of earnings expectations, growth sectors with stronger earnings expectations are expected to gain greater resilience.
In this way, choosing growth stocks in the CSI 500 and CSI 1000 indexes may be a better choice in this spring rage. For the position problem, holding about 70% of the position, leaving 30% of the position to do T or encounter a small pullback to make up, may be a more secure trading strategy.
Finally, I wish everyone good luck, health and happiness in the Year of the Rabbit in advance!
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