Invest in the Z generation, and Brother Z is the most realistic.
This week, the A-share market showed a weak correction, with the Shanghai Composite Index reaching a low of around 3168 points, then rebounding and re-attacking the Shanghai Index's annual line on Friday.
The biggest feature of the current market is the significant reduction in trading volume, with an average daily average of 800 billion yuan in Shanghai and Shenzhen, and the low trading volume also reflects the lack of offensive momentum in the market.
However, it is worth noting that there are still two bright spots in the current market. First of all, the bulls did not give up their adherence to the Shanghai index line, and after closing the long lower shadow on Thursday, they immediately counterattacked on Friday. Secondly, many stocks in the AI sector have reached new highs, which plays a very important role in reshaping market sentiment.
Image source: Daily Economic News Photo by Liu Guomei (data map)
At the macro level, the official release of important economic data on Saturday showed that in January ~ April this year, the total profit of industrial enterprises above designated size in the country was 2.03288 billion yuan, down 20.6% year-on-year. Compared with the previous data, in January ~ April this year, the decline in total profits of industrial enterprises above designated size in China narrowed for the second consecutive month. During the same period, the year-on-year growth rate of operating income of industrial enterprises above designated size turned from negative to positive, with a slight increase of 0.5%.
Xun Yugen of Haitong Securities believes that from a fundamental point of view, although the slope of domestic economic repair in the first quarter is relatively high, the endogenous repair momentum of the economy is still weak, and the slope of economic repair has slowed down since the second quarter.
In addition to economic data, Xun Yugen believes that another factor affecting the market is that the current A-share market is not rich in funds. In the upward trend since October last year, foreign capital has taken the lead in significant inflows, and from the end of October 2022 to the end of January this year, the cumulative net inflow of northbound funds exceeded 230 billion yuan. However, since February, the inflow of funds to the north has slowed down significantly, with net outflows of 4.6 billion yuan and 10.5 billion yuan in April and May (as of May 26, 2023).
In addition, the issuance of public funds is also relatively slow, with the issuance scale of partial equity public funds only 27.8 billion yuan in May, the issuance rhythm is still hovering at a low level, and it will take some time for domestic capital to inflow.
It is precisely because of the above two factors that the A-share market as a whole has shown an adjustment trend since May, and the turnover has been in a low state. However, Brother Z believes that the impact of economic data on the market has been reflected in the market trend, standing at this point in time, the economic data released at the weekend may not have a significant impact on the market.
The two important characteristics of A-shares this week will play an important role in the future market.
First, the Shanghai index briefly fell below the annual line of 3212, but closed a longer lower shadow the next day, rebounded on Friday, and finally closed at 3212. This shows that the bulls have not given up their adherence to the important support line of the Shanghai Index. On Thursday night, Brother Z made it clear in an article that the market is likely to have bottomed out in the short term. Next, it will be interesting to see if the bulls can launch an effective counteroffensive next week.
The second important highlight is the strong return of the artificial intelligence sector. Before Thursday, the A-share artificial intelligence sector performed depressed, mainly because it had to wait for the upcoming release of the first quarterly report of fiscal year 2024 from the US stock AI leader NVIDIA. After the announcement of its better-than-expected quarterly results, NVIDIA's stock price ushered in an epic surge, not only hitting a record high in the stock price, but also the total market value approaching trillions of dollars.
Looking back at the trend of NVIDIA in recent years, in November 2021, it once reached a previous high of $346, but last year it suffered a slash, and the stock price plummeted to $108, until this year's AI explosion, NVIDIA also ushered in a record high.
Huang Jensen once said in an interview that many words can describe me, but resilience must come first. I've been through a lot of tough times, I've been on the verge of bankruptcy many times, and we've faced tough tests from all sides, but you have to rise to the challenge and persevere. I'm constantly moving forward, and although the pace is not very fast, my steps never stop.
This time, NVIDIA's outbreak once again stimulated the enthusiasm of the artificial intelligence sector of the A-share market. Among them, the stock prices of many concept leaders hit record highs. For example, Longke Technology, Zhongji Xuchuang, Hongbo Co., Ltd., etc.
In addition, Inspur Information, Cambrian, Topway Information, Capital Online, Haiguang Information and other stocks have also risen greatly.
Finally, to sum up, the reasons for the early market adjustment have been very clear, one is macro data, and the other is that the capital is relatively not so abundant. But the decline in the market has reflected macro headwinds. When the broader market has returned to relative lows, there is no need to remain pessimistic about the future.
Secondly, there are two bright spots in the current market. First, the bulls have not given up their adherence to the Shanghai index annual line, and once the effectiveness of the annual line support is verified, the future market is expected to use this as a starting point to launch a new rebound. Secondly, through the all-time high of NVIDIA, it has once again injected impetus into the artificial intelligence sector of the A-share market, and a number of leading stocks have hit a new high in this round of the market, which will undoubtedly re-stimulate market sentiment.
Finally, the adjustment range of the "China Special Valuation" sector this week is also more obvious, especially the two major sectors of banking and insurance have been initially adjusted in place. Therefore, if the "special estimate" of the future market rebounds slightly, then the Shanghai Index will easily recover the annual line.
Investing is risky and independent judgment is important
This article is for reference only, does not constitute a basis for trading, and enters the market at your own risk.
Cover image source: Daily Economic News Photo by Liu Guomei (data map)
Per reporter Zeng Zijian Per editor Peng Shuiping