A-share bottoming: The Shanghai Composite Index is holding the 2,900-point mark, and institutions say that the valuation risk has been fully released
While the Dow of the U.S. stock market hit a new high, the A-share market continued to adjust deeply, and the Shanghai Composite Index was facing challenges at 2,900 points.
On December 20, the three major A-share indexes opened flat and went low, closing down more than 1%, and the Shanghai Composite Index fell to 2,902.04 points, a new low in more than a year, and nearly 4,000 stocks closed down.
Institutional researchers believe that the current A-share valuation risk has been fully released, as the overseas dollar siphon effect is coming to an end, the convergence of Sino-US interest rate differentials will promote the reversion of asset pricing mean, and domestic superior assets have a good allocation value.
The Shanghai Composite Index is approaching the 2,900-point mark
"At the end of the year, the market was not very active, and after the market fell below the 3,000-point integer mark, investor confidence was lacking, and the long-short divergence was still large. Yang Delong, chief economist of Qianhai Open Source Fund, told the China Times.
As of the close of trading on the 20th, the Shanghai Composite Index fell 1.03% to 2,902.11 points, the Shenzhen Component Index fell 1.41% to 9,158.44 points, and the ChiNext Index fell 1.36% to 1,802.88 points. Among them, the Shanghai Composite Index hit a new low since November 2022, the Shenzhen Component Index hit a new low since September 2019, and the ChiNext Index hit a new low since March 2020. The BSE 50 Index bucked the trend and closed up 2.52% at 1,055.87 points.
The full-day turnover of A-shares was about 681.9 billion yuan, an increase of about 23.5 billion yuan from the previous day. Northbound funds sold a net of 1.542 billion yuan throughout the day, including a net sale of 140 million yuan in Shanghai-Hong Kong Stock Connect and a net sale of 1.402 billion yuan in Shenzhen-Hong Kong Stock Connect. Wind data shows that northbound funds have shown a net outflow trend on most trading days this month, with a total net outflow of more than 30 billion yuan in December.
On the disk, most of the secondary industries of Shenwan fell, digital media, film and television theaters, education, software development, games, hotels and restaurants and other industries fell first, and a few industry sectors such as precious metals, industrial metals, coal mining, and pharmaceutical business rose slightly.
From the perspective of individual stocks, there were as many as 3,979 stocks falling and only 1,210 stocks rising in the whole market, including 37 stocks with a limit and 17 stocks with a down limit.
The Hong Kong stock market opened sharply higher in early trading, but the gains narrowed significantly in the afternoon. As of the close of trading on December 20, the Hong Kong Hang Seng Index closed up 0.66% at 16,613.81 points, and the Hang Seng Tech Index closed up 0.51% at 3,726.5 points.
Two 100 billion leading stocks fell sharply
Gree Electric Appliances (000651. SZ) and Cialis (601127.SH), two leading stocks of 100 billion yuan, fell sharply, causing market attention.
According to market data, the share price of Gree Electric Appliances plummeted after opening slightly lower, closing down more than 7% to 30.8 yuan per share, and its market value shrank to about 173.4 billion yuan.
On the news side, on the evening of December 19, Gree Electric Appliances announced that it intends to increase its holdings of Gree Titanium New Energy Co., Ltd. by transferring the shares held by existing shareholders, and the shares of Gree Titanium held by Chairman Dong Mingzhu will not participate in this transaction. The company has signed a "share transfer agreement" with 12 counterparties, intending to transfer 24.54% of Gree titanium shares, with a transaction price of about 1.015 billion yuan, and the company will control a total of 72.47% of the voting rights of Gree titanium shares after the transfer of this part of the shares.
Gree Electric also plans to carry out the agreement to acquire 27.53% of the shares of Gree Titanium in the next 12 months at a valuation that does not exceed the valuation of this transaction.
The share price of Cialis closed down nearly 8% at 82.8 yuan per share, and its market value shrank to about 124.8 billion yuan. This Huawei automotive concept stock, there is no obvious negative news on the news, but it has accumulated huge gains in the past few months. Market data shows that despite the sharp decline, it is still up 160% from the low point in late August.
In addition, under the continuous plunge, the popularity of *ST Zuojiang (300799.SZ), known as the "most expensive ST stock", continued to rise. After falling for 5 consecutive trading days, on December 20, *ST Zuojiang closed down 17.66% at 51 yuan per share, with the latest market value of about 5.2 billion yuan. In the past six trading days, its stock price has fallen by 73%, and its market value has evaporated by about 14 billion yuan.
Benefiting from factors such as the market's pursuit of chip concept stocks, *ST Zuojiang's share price has soared by more than 800% in more than a year. However, on the evening of December 12, *ST Zuojiang revealed in the announcement of the reply to the inquiry letter of the Shenzhen Stock Exchange that the company's chip business development is in fact far from market expectations, and there are many doubts. *ST Zuojiang is currently under investigation by the China Securities Regulatory Commission (CSRC) on suspicion of violating laws and regulations in information disclosure.
The value of allocation is gradually emerging
At a time when the A-share market is pessimistic and falling, some institutional researchers believe that the current valuation of A-shares has been low, and the allocation value is gradually emerging.
Wan Kaihang, deputy general manager and chief investment officer of Xingshi Investment, told the China Times that since 2023, the domestic economy has faced many difficulties such as real estate downturn, limited local financial resources, lack of confidence in market players, and valuation pressure brought about by the widening of the interest rate gap between China and the United States. Since October this year, trillions of special national bonds, localized bonds, and a new round of real estate enterprise bailouts have been implemented one after another, and financial efforts have become the highlight of next year.
He believes that mean reversion will be a key driver for A-shares in 2024. On the one hand, the start of profit recovery will support the real value of enterprises. In the third quarter of 2023, the year-on-year profit growth rate of listed companies has turned from negative to positive, and with the counter-cyclical policy and the strengthening of demand-side improvement, the performance of enterprises with stock advantages is expected to improve quarter by quarter. On the other hand, the current A-share valuation risk has been fully released, as the overseas dollar siphon effect is coming to an end, the convergence of Sino-US interest rate differentials will promote the reversion of asset pricing mean, and domestic superior assets already have good allocation value.
Zhao Wei, an analyst at Founder Securities, said in the latest research report that the market has been broken, and the specific lowest point is unknown, but whether it is fundamental factors, emotional factors, or even technical factors, it can be determined that the low point of the market is nearby, and whether 2885 points will fall below is not so easy, after all, the market valuation is at a historical low, and the medium-term upward space is much greater than the downward space. Every time the market breaks down, it will form a gravitational force on the over-the-counter medium and long-term investment funds, which will restrict the market pullback space, but will open up the upward space.
"From the perspective of historical laws, every time the market falls, especially when the market has fallen to the bottom and the market valuation is very low, a new round of rising market is often brewing. Zhao Wei thinks.
Yang Delong said that some high-quality leading stocks that were "wrongly killed" this year may have a more obvious valuation recovery in 2024, and the money-making effect will also be enhanced. Therefore, at the end of the year, investors can invest in some high-quality stocks or high-quality funds that have been "mistakenly killed" and wait patiently for the next round of market to come.
Editor-in-charge: Ma Xiaochao Editor-in-chief: Xia Shencha