Yang Delong: The Shanghai Composite Index will only enter a bull market if it rises 20% on the basis of 2,800 points

Source: Phoenix.com Finance "Cover Live"

Moderator: Lu Jinghan

When talking about the overall performance of A-shares at the beginning of 2024, Yang Delong said that the market fell relatively sharply throughout January, which was lower than previously expected, which shows that although the new year has come, the market trend has not changed, and the downward trend in 2023 has continued.

He believes that the current market trend has become irrational and far from economic fundamentals. "The decline in the market is largely a reflection of investor pessimism, and there has been panic selling in the market. There is a saying in the outside world that 'the risk rises and the opportunity falls out', but in the A-share market, the risk often falls out. Because the continuous decline in the stock price will lead to the forced liquidation of the financing order. ”

Yang Delong also pointed out that the national team plays a significant role in supporting the market at a critical time, but it will take time for market confidence to recover. He called for greater policy favors and financial support to reverse the current situation.

In view of the rescue strategy, Yang Delong suggested that the national team should not only pay attention to large-cap stocks and mid-cap stocks such as CSI 300 and CSI 500, but also buy ETFs such as the ChiNext index to boost the overall confidence of the market. He believes that it is a good time for the national team to increase its efforts to rescue the market, and it is necessary to prevent stampedes caused by the liquidation of financing orders.

"At least from the point of view of the dividing line, the Shanghai Composite Index will have to rise by more than 20% before it is considered to have broken through the bull-bear dividing line and entered a bullish trend. Once the market forms a bull market trend and there is a money-making effect, external funds come uninvited, and the market engine starts automatically. Yang Delong said.

When talking about investment opportunities in 2024, Yang Delong said that the main line of the market in 2024 will be the valuation repair of high-quality stocks. He advises investors to focus on the leading companies in the three major sectors of consumption, new energy and technology, which still have sustainable growth potential in the future.

The following is the essence of the content of "Cover Live" dialogue with Yang Delong:

Yang Delong: It is recommended that the national team bail out the market and buy ChiNext index ETFs

Phoenix Finance "Cover Live": Since the beginning of 2024, the trend of A-shares has received widespread attention from investors. In your opinion, how did the A-share market perform as a whole in the first month of 2024, what are the distinguishing features, and is this performance in line with your expectations at the beginning of the year?

Yang Delong: The market in 2024 has been going for a month, and the market fell relatively sharply in January, which is lower than the previous expectation, which shows that although the new year has come, the market trend has not changed, and the downward trend in 2023 has continued.

This month, the market has accelerated to the bottom, and the national team has also made frequent moves. According to statistics, the total amount of ETFs bought by the national team reached hundreds of billions of yuan, which played a good role in supporting the market at several key points in time, and the market once rebounded sharply, recovering the two important integer thresholds of 2800 and 2900 in the Shanghai Index.

As it took time for market confidence to recover, the broader market fell sharply again in the last few trading days of January. The ETFs that the national team focuses on buying are mainly CSI 300, and some stocks with Chinese prefixes, high dividends, and low valuations have performed strongly, and small-cap stocks have fallen relatively sharply, especially the ChiNext index has hit a new low in the past few days, which has affected market sentiment.

In addition, most investors do not buy mid-cap large-cap stocks, but buy more small-cap stocks. Therefore, in the recent trend of market divergence, investors have felt more severely than the index decline. Many investors lost 20-30% in January, some even more.

This also gives us a certain enlightenment, that is, the national team should not only buy CSI 300, CSI 500 large-cap stocks, and mid-cap stocks, but also buy ETFs such as the ChiNext index, so that the overall confidence of the market can be boosted. And for small-cap stock indexes, it doesn't take too much money to play a backing role.

Yang Delong: The current trend of the A-share market has become irrational, and the risk is falling out

Yang Delong: The current market trend is irrational and far from economic fundamentals. Much of the market's decline is a reflection of investor pessimism, and there has been panic selling in the market. There is a saying in the outside world that "the risk goes up, and the opportunity falls out", but in the A-share market, the risk often falls out. Because the continuous decline in the stock price will lead to the forced liquidation of the financing order.

Therefore, to take effective measures to change the current situation of the market in a timely manner, it is necessary to have greater favorable policies, greater capital support, and even a pull-up to form a money-making effect and reverse investor confidence. If the market is trending upward, the market will form a positive feedback.

At this time, if the market regains 3,000 points and forms five or even six consecutive yangs, there will be over-the-counter funds entering the market. Residents' savings are also expected to become incremental funds in the market by buying funds or directly opening accounts to enter the market.

Reversing the market trend is crucial. This is not only about the market itself, but also about policies that will reverse people's expectations for economic growth. Because the stock market reflects the economy, the improvement of residents' expectations for economic growth can also boost market confidence.

Recently, there have been many favorable policies, including the investor-oriented regulatory concept and the suspension of restricted stock refinancing, which are conducive to the long-term healthy development of the capital market. Listed companies are the cornerstone of the capital market, and improving the quality of listed companies is also conducive to improving the investability of the capital market, so that investors can make money by buying stocks and funds.

Building a financial power is inseparable from a prosperous capital market. The capital market can be strengthened and form a wealth effect, which is the best means to stimulate consumption and stabilize economic growth.

Yang Delong: In 2024, the capital market has the conditions to launch a round of bull market

Phoenix Finance "Cover Live": Looking back on 2023, the Shanghai Composite Index, Shenzhen Component Index and ChiNext Index all fell, will the factors that led to the market decline in 2023 continue to affect the market this year?

Yang Delong: In 2023, the market will see a downward trend for almost a year, and many individual stocks will fall for another year on top of falling for 1-2 years. From the perspective of stock price, many individual stock prices are only 2-3% off the peak price. The factors that will decline in the market in 2023 will change in the new year. There is some uncertainty about the extent of the change, depending on the strength of the policy.

For example, the mainland economy has recovered in 2023, and consumption has also seen a certain growth, but due to the slow growth of many residents' income, consumption growth has encountered certain bottlenecks.

At the central level, investing through the issuance of government bonds can kill two birds with one stone, creating more jobs and directly creating GDP, thereby stabilizing economic growth. At the same time, economic growth will be stimulated through active fiscal policies. The economy has grown, everyone's expectations have improved, and the capital market is in a position to launch a bull market in 2024.

The uncertainty now is the strength of macroeconomic policies and the size of the capital markets themselves. There are many experts in the market who suggest the establishment of a leveling fund to pull the stock market through trillions of real money, not only to support the bottom, but to pull it up, form a money-making effect, and form a positive cycle, so that the capital market may be reversed.

The establishment of a leveling fund is not simply the establishment of a leveling fund, the national team company is a quasi-leveling fund, but the current amount of entry into the market is not particularly large. In the future, if it can exceed expectations, for example, the national team's funds can exceed 1 trillion or even 2 trillion yuan in the market, completely reversing the pessimistic trend of the market, then there may be a round of bull market in 2024.

Yang Delong: The Shanghai Composite Index will only enter a bull market if it rises 20% on the basis of 2,800 points

Cover Live: Do you think now is the right time for the national team to enter the market?

Yang Delong: Now that the market has once again accelerated the bottoming trend, and many small and medium-sized stocks have fallen far more than the index, investor confidence is close to freezing, and now is a good time for the national team to increase its efforts to rescue the market.

It is important to prevent a lot of financing orders from being liquidated, causing a stampede, which may require a larger amount of capital and it is difficult to reverse the downward trend of the market. Therefore, drawing on the experience and lessons of the bailout in the second half of 2015, we should decisively take large-scale capital bailouts when the market has fallen thoroughly and investors' confidence is low, completely reverse the market trend, and form a positive feedback.

To use a figurative analogy, it's like the tractor used in the countryside when I was a child. To start the tractor, it needs a crank handle, manually shake it, let the engine turn up, the machine will start, and after starting, there is no need for manual intervention. The market is the same, it will follow an upward trend.

Therefore, at present, we must increase the intensity of funds in the rescue of the market, and we must be very decisive to change the downward trend of the current market, and turn it into an upward trend. At least from the perspective of the dividing line, the Shanghai Composite Index must rise by more than 20% before it is considered to have broken through the bull-bear dividing line and entered a bullish trend. Once the market forms a bull market trend and there is a money-making effect, external funds come uninvited, and the market engine starts automatically.

Phoenix.com Finance "Cover Live": So you think that the national team's funds should pull the Shanghai Index above 3,500 points in order for the market to stabilize?

Yang Delong: According to the current 2,800 points, it will rise by more than 20%, so that investor confidence can be effectively boosted. This will let everyone see that the national team is very supportive of a new round of bull market. In addition, it will also form a strong money-making effect. Because the index rose by 20%, many individual stocks rose by 50%. This will attract many investors to add to their positions.

The market is never short of money, just lack of confidence. Once investor confidence is mobilized, the market's money-making effect will be greatly improved, over-the-counter funds will accelerate the entry, investors who were short before may quickly increase their positions, and those who have low positions before will also increase their positions, and investors who have not entered the market before may also enter the market by buying funds when they see that the market has a money-making effect.

Phoenix Finance "Cover Live": If the Shanghai Index increases by 20%, how large will the capital volume be needed?

Yang Delong: Now there has been a certain panic selling in the market, but the more the market falls, the lower the downward momentum will reduce, which means that the bears have actually reached the end of the strong crossbow, so the amount of capital required to pull up the market at this time is not particularly huge.

If it rises by 20% from the current 2,800 points, it will probably require about 1-2 trillion incremental funds, because once the national team gives the market a clear signal, it is necessary to increase the efforts to rescue the market, such as making a statement to buy ETFs or stocks of more than one trillion yuan in the downward trend of the market. The national team will spend 1 trillion yuan, and the funds bought by following the trend will be 10 trillion yuan.

Which A-share investors have made money since the second half of last year?

Phoenix.com Finance "Cover Live": Since the second half of last year (2023), A-shares have been continuously declining, judging from the data on your side, have any investors in the market made money during this period?

Yang Delong: From the second half of last year to the present, the market has repeatedly bottomed out, there has been a certain rotation between plates, most of the plates have fallen, and there are relatively few people who really make money in the market. Because the sectors that have risen in this half year are mainly low-valuation blue chips with high dividend yields, but most investors do not allocate these stocks, so there are relatively few people who can make money. The growth stocks, traditional white horse stocks, consumer stocks, and new energy stocks preferred by investors fell relatively largely. Therefore, in the past six months or so, the market's money-making effect has been relatively poor, which is also the reason for the lack of confidence of investors.

Phoenix Finance "Cover Live": Based on the current market changes, which industries or sectors are you optimistic about investment opportunities?

Yang Delong: I think the main line of the market in 2024 is the valuation repair of high-quality stocks. When you copy the bottom layout, you must copy a good industry and a good company. What are the good industries? The industries that can still be in the sunrise industry in the future, and the industries that can still grow, are good industries. Many traditional heavy industry industries may have little opportunity, such as real estate, many related industrial chains have passed its peak, and it is difficult to have sustainable growth in the future. From the perspective of economic transformation, the industries that can continue to grow in the future are mainly concentrated in three areas: first, consumption, second, new energy, and third, science and technology.

The leading enterprises in these three subdivided industries have brand value, relatively wide moats, core competitiveness, and good profits, high dividend rates, and stock prices have fallen significantly in the past two or three years, which are the objects that everyone can focus on.

Of course, you can also copy the bottom of the market by copying the bottom of a good fund that was killed by mistake. You can look at the quarterly report, are the top 10 heavy stocks of the fund all good stocks? Because the bottom-buying fund is equivalent to indirectly buying the top 10 heavy stocks. This is also a suggestion for everyone to give for your reference when the market has just finished in January and market confidence is relatively low.