At the close of trading today, the Shanghai Composite Index was at 2,930.80 points, down 0.40 percent, the Shenzhen Component Index was at 9,279.39 points, down 1.13 percent, and the ChiNext Index was at 1,820.00 points, down 1.54 percent. The turnover of the two cities was 692.6 billion yuan, a decrease of 40.6 billion yuan from the previous trading day, and more than 4,400 stocks fell. Today, the net inflow of northbound funds was 5.594 billion yuan and the net purchase was 2.727 billion yuan.
Today, under the influence of factors such as insufficient turnover, tight liquidity at the end of the year, and lack of confidence in the lack of money-making effect in the market, the index opened with inertia and fell at a previous low of 2923.51 points in the intraday.
The core problem of the current market is the lack of liquidity, which is due to:
1. Due to the influence of factors such as the year-end settlement of enterprises and bank assessment, there is a year-end inertial liquidity tightness.
2. The market lacks money-making effect and insufficient capital confidence.
3. During the period of repeated market repetition, the Beijing Stock Exchange has reflected good returns, and the number of new shares and the scale of frozen funds have continued to grow.
4. At the end of the year, under the market volatility, the market has a phenomenon of centralized redemption of funds, which forms a negative feedback with the index.
In the case of continuous shrinkage in turnover, the large financial sector collectively closed down, the liquor sector broke down and fell, and the weight fell endlessly, which became the main drag on the index and affected market sentiment.
The only positive signal in the market today is that the northbound trend has flowed in against the trend throughout the day, although CATL's share price has fallen more than 5% throughout the day After all, the current turnover has fallen below 700 billion, and the index has been adjusted from the stage high of 3089 for 20 trading days. For the trend reversal, we can pay attention to two factors, one is whether the central bank will cut the reserve requirement ratio at the end of the year, and the other is the PMI data in December.
Watch for tomorrow
1. Whether the northbound capital can continue to flow in.
2. Whether the central bank has any measures to further release liquidity.
Overview of the broader market
The three major A-share indexes collectively closed down today. As of the close of trading on December 18, the Shanghai Composite Index was reported at 2,930.80 points, down 0.40%, with a turnover of 304.9 billion yuan, the Shenzhen Component Index was reported at 9,279.39 points, down 1.13%, with a turnover of 387.7 billion yuan, and the ChiNext Index was reported at 1,820.00 points, down 1.54%, with a turnover of 162.3 billion yuan. The turnover of the two cities was 692.6 billion yuan, a decrease of 40.6 billion yuan from the previous trading day, and more than 4,400 shares fell.
In terms of capital flow, the net inflow of northbound funds was 5.594 billion yuan and the net purchase was 2.727 billion yuan, of which the net inflow of Shanghai-Hong Kong Stock Connect was 2.830 billion yuan and the net purchase was 1.470 billion yuan, and the net inflow of Shenzhen-Hong Kong Stock Connect was 2.764 billion yuan and the net purchase was 1.257 billion yuan.
The net outflow of main funds in Shanghai and Shenzhen was 34.620 billion yuan, the net outflow of large orders was 14.773 billion yuan, the net outflow of large orders was 19.847 billion yuan, the net inflow of medium orders was 2.701 billion yuan, and the net inflow of small orders was 31.920 billion yuan.
In terms of plates:
Shipping, ports, logistics, and auto parts sectors were among the top gainers.
Shipping ports broke out against the trend, Air China COSCO 30CM daily limit, Jinjiang Shipping, COSCO Marine Energy, Haitong Development, Ningbo COSCO and other shares of the daily limit.
In the logistics sector, Huaguang Guanghai rose 16.81%, Longzhou shares, Zhongchuang Logistics, and Shanghai Yashi rose by the limit, Yuanshang shares rose by more than 9%, and Antong Holdings and Haicheng Bangda rose by more than 7%.
The auto parts sector rose intraday, Shenda shares and Shenglong shares rose by the limit, Junchuang Technology rose by more than 18%, Tide shares rose by nearly 13%, Huguang shares and Anhui Phoenix rose by more than 9%, and Tianqi Mold rose by more than 8%.
In terms of declines, the gaming, battery, tourism and hotel, semiconductor, education sectors, and Huawei's Euler concept were among the top decliners.
Game stocks fell, Wentou Holdings fell more than 7%, Palm Fun Technology, Shengtian Network fell more than 6%, and Yao Ji Technology fell more than 5%.
The battery sector fell sharply, Keheng shares fell more than 8%, Times Wanheng fell more than 6%, Yihuatong-U, Mongguli, and CATL fell more than 5%.
In the tourism and hotel sector, Lingnan Holdings fell more than 7%, Qujiang Cultural Tourism fell more than 5%, and Xi'an Catering and Xi'an Tourism fell more than 4%.
Education stocks fell, *ST Sansheng fell more than 6%, Xueda Education fell more than 5%, Kede Education, Rongxin Culture, Chuanzhi Education, and Onlly Education fell more than 4%.
Huawei's Euler concept stocks, Tianyuan Dike fell more than 6%, iSoftStone and Kirin Xinan fell more than 5%, and ArcherMind Technology fell more than 4%.
Market analysis
On the whole, the three major indexes closed down across the board, the sector rose less and fell more, and the hot concept of state-owned enterprise reform last week also collectively pulled back, and the short-term sentiment has fallen. CEIBS pointed out that before the index shows an obvious signal of increasing volume, the unfavorable inertia of the shock lower may still continue. Therefore, the response is still mainly defensive, or pay attention to local opportunities in the popular direction
China Europe Fund said that the CSI 300 index has hit new lows this year, and the weakening of domestic demand has once again caused market concerns. The market continues to dig deeper into the varieties that are expected to exceed expectations next year, and the policy implementation is expected to be carried out in an orderly manner. However, it will take time for the negative feedback on the capital side to improve, and the subsequent repair process of the market is likely to be difficult to achieve overnight. It may take longer for the market to return to equilibrium than previous market bottoms. The improvement of fundamentals will be the main tone for a period of time in the future, but there is some uncertainty about the timing of policy introduction.
As the current market has fully priced in downward pressure, and the market consensus expectation in the game of stimulus policy expectations is gradually weakening, although the improvement of liquidity after the market bottom will be relatively slow, the stimulus policy is expected to bring more upside opportunities.
From the perspective of the environment, Sino-US relations have stabilized, policies tend to resonate, and subsequent real interest rates tend to decline, which is conducive to market valuation. The new policy of the first-line property market is expected to promote its volume and price stabilization, and some data in the non-real estate field also show positive signals. The end of the year and the beginning of the year are often a favorable time window for the start of the A-share market, and once it is favorable and catalyzed, A-shares are expected to start a new round of upward trend at any time.
At the level of industry allocation, the 2023 Central Economic Work Conference set the tone for nine key tasks next year, and put science and technology and expanding domestic demand in the first and second places. Looking back on history, the key industrial tasks proposed by the Central Economic Work Conference have provided important guidance for the performance of the A-share industry in the following year, and full attention should be paid to the following three directions in the medium and long term: 1) leading the modern industrial system with scientific and technological innovation, 2) new consumption and trade-in of consumer goods, and 3) equipment renewal.
Judging from the trend of the representative sectors:
▍Shipping:
On the news side, a number of container shipping companies announced the suspension of all container ships in the Red Sea and nearby waters. CMA CGM Group, the world's third-largest container shipping company, said in a statement that it had announced the suspension of all its container shipments through the Red Sea until further notice due to heightened concerns about the security situation in and around the Red Sea. In addition, Maersk, the world's largest container shipping company, has suspended all vessel sailings through the Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden, until further notice.
Guohai Securities said that the shipping artery may be blocked again, and the risk of rising freight rates will increase sharply. In the shipping segment, the supply of oil tankers and dry bulk carriers is tight, and the redundant capacity is insufficient, and any risk event that leads to damage to navigation efficiency may drive the freight rate up rapidly. The container shipping industry is solid and has benefited most from the Suez Canal's inefficiencies. Considering the latest supply and demand situation in the industry, as well as global geopolitical risks, we maintain the "Recommended" rating on the shipping sector.
Everbright Securities said that the impact of geopolitical conflicts has intensified, and a number of ships have been attacked in the Red Sea region, which is expected to catalyze the rise of container and oil freight rates. In terms of container transportation, geopolitical risks and the peak of shipments before the Spring Festival are expected to boost shipping companies to raise prices; in terms of oil transportation, spot freight rates are the most significant response to emergencies, and freight rates are expected to be reversed, with small and medium-sized ships directly benefiting and VLCC indirectly benefiting; oil supply rigidity is highlighted, and if geopolitical events last longer than expected, freight rate elasticity is expected to be fully reflected. In addition, it is also necessary to be vigilant against the sharp fluctuations in oil exchange exchanges, which affect the supply and demand of oil transportation, the cost of shipping companies, and the increase in shipping supply beyond expectations.
▍Automotive:
On the news side, Huawei recently officially announced that it will hold the M9 and Huawei winter all-scenario press conference on December 26. In addition, according to the statistical analysis of the China Association of Automobile Manufacturers, in November 2023, the production and sales of automobiles increased month-on-month and year-on-year, passenger cars continued to show a good trend, commercial vehicles maintained rapid growth, and new energy vehicles and automobile exports led the industry growth.
Donghai Securities pointed out in the research report that the global competitiveness of the domestic automobile industry continues to improve, and follows the trend of electrification and intelligence to achieve the upgrading of the export structure to the high-end. GAC Aion and other independent brands have built overseas factories to gradually realize the localization of new energy vehicles, and the first-mover advantage of the domestic new energy vehicle industry and the advantages of the parts supply chain in terms of cost and response speed are expected to be further released. It is recommended to pay attention to the three main investment lines of intelligent driving, configuration upgrade, and Tesla's industrial chain.
In terms of policy, Everbright Securities believes that 1) the economic work conference has mentioned automobile consumption for two consecutive years, and the wording has changed from "support" to "boost", reflecting the country's emphasis on the new energy vehicle industry. 2) Shanghai is a key area to drive the consumption of new energy vehicles, and in the first 11 months of 2023, the retail sales of new energy vehicles in Shanghai accounted for 4.5% of the country, and the penetration rate of new energy vehicles has increased to 54%. Consumers can still flexibly adjust their qualifications by adjusting their application for family members, which can basically stabilize local NEV consumption. 3) From the perspective of outlook, with a clear development orientation of intelligent electrification, we are optimistic about the prospect of new energy sales climbing driven by the further improvement of domestic economy + consumption next year.
Everbright Securities said that the industry's trend of exchanging price for volume + intelligence theme continues: 1) Xiaomi SU7, Wenjie M9 and other models with high market attention have relevant interior pictures and video exposure, and market sentiment is expected to be further boosted, and the short-term catalysis of Huawei/Xiaomi industry chain may depend on the pricing/order performance of new models, and the medium and long-term are related to the channel + delivery situation and the increase in the penetration rate of industry intelligence. 2) In view of the fact that the total demand is still to be recovered in an orderly manner, and the product matrix of Tesla/BYD's main price band has been relatively perfect, it is expected that the growth rate of domestic new energy vehicle sales in 2024E may decline, and it is expected that market competition/price war may further intensify. 3) Continue to be optimistic about Tesla's (especially in North America) industrial chain, as well as Tesla's FSD + Dojo + robot + intelligent theme.
▍Education:
Galaxy Securities said that the internal management problems of Oriental Selection need to pay attention to the opportunities for the callback layout of the education sector. Affected by the intensification of internal management problems, the stock price of Oriental Selection has retraced by more than 20% in the past week, and with the further deterioration of the incident on Thursday and Friday, New Oriental, Good Future, Gaotu and so on have also fallen significantly. In the medium and long term, if this type of company wants to achieve sustainable business growth, it must finally complete the business model adjustment driven by talent to supply chain selection. In the short term, Oriental Selection has limited impact on the parent company New Oriental, and it is expected that the profit contribution of FY2 will be about 15%-17%, and at present, Oriental Selection's online education business has been injected into New Oriental, even if the subsequent sales of Oriental Selection fluctuate, the impact on New Oriental's profit is relatively limited.
Galaxy Securities emphasized that the core logic of the current education sector is that there are positive factors at both ends of supply and demand, and the performance growth of the education sector is highly certain, and the comparative advantage in the large consumption industry is outstanding. It focuses on leading education companies with a high proportion of high school business.
Message-wise
1. The main lithium carbonate contract dived in a straight line, falling more than 2% to 103,000 yuan/ton in a day. According to the data released by Shanghai Ganglian, battery-grade lithium carbonate fell by 2,000 yuan/ton today, with an average price of 105,500 yuan/ton. (Bearish lithium battery sector)
2. Affected by the Palestinian-Israeli conflict, the tension in the Red Sea has further escalated, the four major shipping giants have suspended Red Sea transportation, the Suez Canal, the "main artery" of shipping, is facing the risk of closure, and the shipping cost is facing the risk of jumping in the short term. (Good for the shipping sector)
3. According to reports, the central government will issue an additional 1 trillion yuan of treasury bonds this year, which will be used to support post-disaster recovery and reconstruction and improve disaster prevention and mitigation capabilities. Not long ago, the National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF) in conjunction with relevant departments have established a working mechanism for the implementation of additional treasury bond issuance projects, and the first batch of projects has been determined. It has been learned that the first batch of treasury bond funds budget of 237.9 billion yuan has been issued. (Positive market sentiment)
4. At the end of the year, the wave of mergers and acquisitions of state-owned enterprises was surging. Industry insiders believe that the meeting of the heads of central enterprises and the heads of local SASAC will be held in the near future to make further arrangements for the reform of state-owned enterprises in 2024, the restructuring and integration of state-owned assets is expected to accelerate, and the layout of strategic emerging industries will become a new trend of professional integration of central enterprises. (Good for the concept of state-owned enterprise reform)
5. On December 15, the Party Committee of the People's Bank of China held an enlarged meeting to convey the spirit of the Central Economic Work Conference and study and implement the work of Xi Central Economic Work. The meeting emphasized that counter-cyclical and cross-cyclical adjustments should be strengthened, credit should be guided to grow reasonably and in a balanced manner, and the quality and efficiency of financial support for the real economy should be improved. Promote financial stability legislation, speed up the construction of the financial stability guarantee fund, and firmly guard the bottom line of no systemic risks. (Positive market sentiment)
6. Seven departments including the Ministry of Industry and Information Technology issued the "Guiding Opinions on Accelerating the High-quality Development of the Audiovisual Electronics Industry". Among them, it is proposed to accelerate the cultivation of specialized and special new "little giants" and individual champions in the manufacturing industry in the fields of commercial display, vehicle audio-visual, and audio and video. Support backbone enterprises to become bigger and stronger, and support artificial intelligence enterprises to develop large models of audio-visual applications. (Good for the media sector)
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