Yang Boguang: Last week, the Shanghai Composite Index was four consecutive yang, where is the focus of the market?
Hot spots: Last week, the Shanghai Index was four consecutive yang, repairing the 2900 point mark, big blue chips took turns to become a strong support for the market, some people said that the market rebounded because of the good news of the policy, and some people said that the positive policy has always been, and there are other reasons for the funds to choose to enter the attack at this time. What is your view on the market?
Unscramble:
On the whole, the Shanghai Composite Index closed up 2.75% last week, the Shenzhen Component Index and the ChiNext Index closed down 0.28% and 1.92% respectively, of which the Shanghai Composite 50 performed well, up 3.16%, and the CSI 1000 and CSI 2000 closed down.
Source: Wind
As for why the market rebounded, first of all, the central bank's larger-than-expected RRR cut was a catalyst for market sentiment to improve. On the other hand, the management will include market value management in the performance appraisal of the heads of central enterprises, in addition to improving the efficiency and profitability of business activities, market value management methods such as increasing holdings, repurchases, and increasing dividends will further improve efficiency. Try to refer to the agency system of U.S. companies, business performance and incentive options to drive the development of the market value of U.S. companies. In this way, from the perspective of operation, it is conducive to driving the central state-owned enterprises to strengthen their competitiveness, improving the return on investment from the perspective of investors, and further playing their role in the national economy. Compared with the sector, the valuation advantages of central state-owned enterprises in the fields of petroleum and petrochemical and building materials are significant, so the big blue chips are the first to get the attention of funds. The subsequent wave of reform of state-owned central enterprises cannot be ruled out to continue, spreading from the traditional manufacturing industry to other low-valuation "medium and special valuation" segments.
Furthermore, the current market improvement is also inseparable from overseas positive factors. Last week, the markets of advanced economies such as the United States and the euro area remained strong, but Japan and India in the Asia-Pacific market failed to continue their strength, and A-shares rose with developed markets. At the same time, we find that the call option holdings of iShare China Large Cap ETF (FXI) have risen sharply in the past few weeks, coupled with the sharp increase in the share of CSI 300 ETF last week, which means that RMB assets have attracted the attention of international funds, which is worth pondering for investors.
Hot spots: The first manufacturing PMI indicator since 2024 will be released this week, overseas, the Federal Reserve interest rate meeting is about to be held, and the market will once again focus on Powell's attitude, will this affect the rebound of A-shares?
Unscramble:
This week, in the face of the announcement of the manufacturing PMI, the market is concerned that, first, the past data reflects that it is still at the end of the active destocking stage, at this time the service industry and Caixin PMI are still bright, indicating that the demand for services and small and medium-sized enterprises is relatively good. Therefore, whether this kind of demand can be transformed into new demand in the manufacturing industry at this time will be the key factor for whether the manufacturing PMI data can recover above the boom and wither line. It is worth noting that in the short term, investors should pay attention to the Spring Festival phenomenon to judge its impact, perhaps due to the impact of the Spring Festival shutdown. Second, compared with the purchase price of major raw materials for many months above the boom and wither line, the ex-factory price performance is relatively sluggish. Correspondingly, in the self-price index, the decline in PPI converged faster than that of CPI. Nowadays, the central bank cut the reserve requirement ratio (RRR) to reduce the financing cost of the real economy, and the simultaneous decline in the real financing interest rate in the future needs to be combined with the CPI, and it is advisable to pay attention to the marginal changes on the price side for reference.
In addition, at the Fed's interest rate meeting this week, Powell is expected to continue his earlier expectation management and gradually correct market expectations for interest rate cuts. More importantly, the Fed may provide clearer details on the path to slowing its balance sheet reduction. It is worth noting that the Federal Reserve announced an increase in the interest rate of the Bank Term Financing Program (BTFP) and intends to close this financing window in mid-March this year, which means that US commercial banks no longer have room for arbitrage and will resume using traditional discount window tools to meet daily liquidity needs. Importantly, when using BTFP, collateral such as U.S. Treasuries is calculated at par value, while the discount window is calculated based on the market value of the collateral. At present, the issuance of a large number of U.S. bonds, coupled with the Fed's expectation of reversing interest rate cuts, U.S. bond yields may return to high levels, resulting in a decline in the market value of U.S. bonds, which will strengthen the impact of tightening liquidity of U.S. commercial banks.
Source: Wind
Therefore, the lag effect of overseas high-interest rate monetary policy may gradually appear, and the need for the Fed to slow down the shrinkage of its balance sheet to cope with the supply shock of U.S. bonds has increased, and the indirect direct impact is to simultaneously raise the value of the dollar. In particular, in the year of the U.S. election, the Fed needs to coordinate with the Treasury in the face of the dilemma of loose fiscal requirements and high interest rates. As a result, the rebound in U.S. Treasury yields will continue to suppress the performance of growth sectors, and in the face of overseas disruptions, the value style of the A-share market is better than growth, and the game of funds around the reform of central state-owned enterprises is expected to continue, so investors should pay attention to structural diffusion opportunities.
Hot Spots: The Bank of Japan (BOJ) continued to "hold its ground" in January and kept interest rates unchanged, but short-end Japanese bond yields rose sharply, what important messages are implied? What measures will the Japanese authorities take in the face of the US dollar-yen exchange rate approaching the 150 mark again, and what are the implications for investors?
Analysis:
The interest rate meeting in January kept the interest rate unchanged, but then the Japanese bond and foreign exchange markets staged a "roller coaster" market. The reason for this is that after the interest rate decision, the governor of the Bank of Japan said that if the price target is in sight, he will consider whether to continue to buy ETFs, indicating that this interest rate meeting is "a hawk among doves", which will increase the volatility of Japanese asset prices, and the market expects that the Bank of Japan's monetary policy may be about to turn.
From the perspective of domestic economic demand, Japan's CPI excluding fresh food and energy in December increased by 3.7% year-on-year, with a total of 2.6%, although it fell from November, Japan's nominal wage growth continued to expand, and the year-on-year decline in real wages narrowed, and the increase in household income will stimulate the expansion of consumer demand, and the phenomenon of wage and inflation spiral has gradually emerged. Consumer demand will help inflation rise, indicating that the upcoming wage "spring fight" will require higher wage growth, and Japan's domestic demand momentum will continue to recover. In terms of exports, exports for the whole of 2023 hit a new high due to the depreciation of the yen against the US dollar in 2023. In particular, the export growth rate accelerated in December, the demand for replenishment in the United States heated up, and the growth rate of Japan's exports to the United States maintained growth for 27 consecutive months. At the same time, Japan and China are active in the field of chip manufacturing equipment, and the semiconductor cycle has entered the bottom range, and the recovery of demand in the future will support the export-oriented Japanese economy.
Source: Wind
In summary, the Japanese economy is in a moderate state of recovery, nominal wage growth, inflation is above the policy target level, and monetary policy may be about to pivot. It is worth noting that, first, if the Bank of Japan's monetary policy normalizes, Japan's interest rates rise, and the interest rate gap with overseas developed economies narrows, or promote the return of Japanese overseas capital investment, the yen will enter an appreciation cycle, and at the same time increase the risk of overseas asset volatility. Second: At the time of monetary policy normalization, the peripheral developed economies have shifted from the discussion of interest rate cut schedules to the schedule mode, inflation is not easy for Japan, and the time and progress of embracing inflation seems to be longer than that of other economies. In the face of turmoil, the People's Bank of China (PBOC) slashed the reserve requirement ratio by 0.5%, demonstrating that monetary policy is centered on China and promoting the healthy development of the economy. At the same time, the offshore RMB overnight lending rate has rebounded sharply, indicating that the attention of RMB assets is increasing, and the allocation value of Chinese assets is increasing.
This article only records the views and experiences of Yang Boguang (license number: S0340619060008), and does not represent the position of the institution he works for, and may not be reproduced in any form without permission. The views and statements published do not constitute investment advice to any person or any organization and should not be relied upon as a substitute for investors' own independent judgment. Investment is risky, and you need to be cautious when entering the market.