Trillions of transactions reappeared: the national defense and military industry and chemical sectors led the rise, northbound funds bought net for seven consecutive days, and the national defense and military ETF (512810) rose more than 11% in two days, and the upward inflection point was established?
Today (February 7, 2024), the market continued to rise, and the three major indexes collectively closed in the red. At the close, the Shanghai Composite Index rose 1.44%, the Shenzhen Component Index rose 2.93%, and the ChiNext Index rose 2.37%. The full-day turnover of the two cities reached 1,021.933 billion yuan, exceeding one trillion yuan for the first time since 2024, and 95.608 billion yuan more than the previous trading day. Northbound funds bought a net of 1.684 billion yuan throughout the day.
On the disk, the national defense and military industry sectors led the two cities, and the pharmaceutical, non-ferrous metals, basic chemicals and other sectors also rose first. In terms of popular ETFs in the market, the price of the national defense and military ETF (512810) closed up 5%, the price of the chemical ETF (516020) closed up 4.57%, and the price of the non-ferrous leading ETF (159876) and medical ETF (512170) closed up more than 3%!
Image source: Wind
In the past two days, the market has risen sharply, which may reflect the recovery of investor sentiment. At present, multiple factors may help the market continue to stabilize:
1. The macro economy has stabilized
Since 2023, the macro economy has been showing signs of stabilization. The recently released Caixin services PMI, Caixin manufacturing PMI and Caixin composite PMI for January are still in the expansion range, although they were flat or decreased compared with the previous month, showing that China's economy has maintained a certain growth momentum in the new year.
2. Central Huijin has increased its holdings many times
Yesterday, Central Huijin announced that it will continue to increase the intensity and scale of its holdings of ETFs and resolutely maintain the smooth operation of the capital market. Some institutions said that the continuous implementation of a series of policy measures is conducive to stabilizing the market, avoiding systemic financial risks, and protecting the interests of investors. At present, the value of A-share market allocation is highlighted, and after some industries are cleared, driven by the endogenous momentum from the bottom up, they may gradually enter a new upward cycle.
3. Northbound funds continue to flow in
Recently, A-shares have been frequently net bought by northbound funds. Following yesterday's net purchase of 12.605 billion yuan by northbound funds, a new high since December 2023 in a single day, today, northbound funds bought 1.684 billion yuan again. It is worth noting that this is the seventh consecutive day of net buying by northbound funds.
Looking ahead, CSC believes that A-shares are expected to show a small bull market in 2024, mainly due to two major factors, one is the significant improvement of global macro liquidity, and the other is that the domestic steady growth may exceed expectations. This may drive positive A-share earnings growth in 2024 and valuation recovery. Among them, valuation repair may be more critical.
Today, we will focus on the trading and fundamentals of the chemical, national defense and military industry, and the leading sectors of entrepreneurship and entrepreneurship.
Chemical ETF (516020) closed up 4.57% on the daily line of Sanlianyang, Xinfengming and many other stocks!
Following yesterday's sharp rise, today, the chemical sector rose again. As of the close, the price of the chemical ETF (516020), which reflects the overall trend of the chemical sector, closed up 4.57%, and the daily line was three consecutive yang!
Image Credit: Snowball
In terms of constituent stocks, many stocks such as Xinfengming, Taihe New Materials, and Sanmei Shares closed up 2.39%, and Wanhua Chemical closed up 1.45%. All 50 constituent stocks closed in the red again!
Image source: Wind
It is worth noting that when the prosperity of the chemical industry continued to decline and the chemical sector refreshed new lows one after another, the chemical ETF (516020) rose sharply for two consecutive days, which may indicate that some market participants realized that the prosperity of the sector may have bottomed out and began to lay out the dip. The sector's two-day rally may also significantly boost investor confidence.
From the perspective of plate fundamentals, at present, the prosperity of the chemical industry may have reached the bottom. The data shows that since the third quarter of 2021, the growth rate of construction projects in the chemical sector has begun to rise, and will begin to turn downward in the first quarter of 2023. The agency said that there is a transmission cycle of about one and a half years from construction in progress to fixed assets, and when the growth rate of fixed assets enters a downward channel (indicating that the release of production capacity has come to an end), the profitability of the chemical sector is expected to usher in a new round of upward movement.
In addition, the chemical sector has seen a series of pullbacks or is also affected by the overall market. However, at present, multiple factors, including the macroeconomic stabilization, the Federal Reserve's interest rate cut cycle is about to begin, and the high-level voices have repeatedly voiced to stabilize confidence, may help the broader market stabilize, which will continue to boost the sentiment of the sector.
At present, the valuation of the chemical sector is still at a relatively low level. Wind data shows that as of the close of trading on February 7, the price-earnings ratio of the subdivided chemical index was 18.90 times, which was at the 33.98% quantile in the past 10 years, and the cost-effective configuration was highlighted.
Image source: Wind
Looking forward to the market outlook, Galaxy Securities said that it is optimistic about the profitability of leading enterprises under the expectation of continuous improvement in supply and demand, as well as high-end new material enterprises that actively carry out domestic substitution, and leading enterprises in the growth cycle that implement scale expansion. Include:
1. Under the expectation of marginal improvement in supply and demand, refrigerants, chemical fibers, and tire faucets
2. Break through the monopoly of foreign technology and accelerate the realization of domestic substitution of high-end new material enterprises
3. Implement the growth cycle leader that brings incremental performance through scale expansion
How to grasp the opportunity of the rebound of the chemical sector? The layout efficiency of the chemical ETF (516020) may be higher. According to public information, the chemical ETF (516020) tracks the CSI subdivision chemical industry theme index, fully covering all subdivisions of the chemical industry. Among them, nearly 5 percent of the positions are concentrated in large-capitalization leading stocks, including Wanhua Chemical, Salt Lake Shares, Enjie Shares, Hualu Hengsheng, Tianci Materials, Rongsheng Petrochemical, etc., to share the investment opportunities of the strong Hengqiang, and the remaining 5 percent of the positions take into account the layout of phosphate fertilizer and phosphorus chemical, fluorine chemical, nitrogen fertilizer, coal chemical, titanium dioxide and other leading stocks in the subdivision, and fully grasp the investment opportunities in the chemical sector.
Second, the national defense and military industry sector led the rise, Guangqi Technology, Dianke Network Security and other stocks connected to the board! National defense and military ETF (512810) rose more than 11% in two days, and the upward inflection point was established?
The national defense and military industry sector continued to rise today, leading the two cities strongly! The national defense and military industry rose first among the 31 Shenwan first-class industries!
Image source: Wind
The popular national defense and military ETF (512810) rose rapidly at the beginning of the session, and then maintained a high level throughout the day, and the price in the market closed up 5% for two consecutive yangs, recovering the 10-day line in one fell swoop!
It is worth noting that on the eve of the continuous rise in the national defense and military industry sector, more than 100 million yuan of net subscription of the national defense and military ETF (512810) was ambushed in advance! In the soaring range of the plate yesterday, there was only a slight outflow of less than 6 million funds in the national defense and military industry ETF (512810), reflecting that the funds continue to be optimistic about the future performance of the sector.
Image source: Wind
In terms of constituent stocks, 74 of the 80 constituent stocks of the National Defense and Military ETF (512810) closed up, and 7 shares closed on the board, including 3 shares of Guangqi Technology, Electric Technology Network Security, and Aerospace Development.
Image source: Wind
From the perspective of valuation, the current investment in the defense and military industry sector is extremely attractive. Wind data shows that as of February 5, the PE valuation of the CSI Military Index was 41.65 times, setting a new record for the lowest valuation in the past 10 years. According to the latest research report of Caitong Securities, the current national defense and military industry sector has been in the over-falling range, and there may be a large excess rebound space in the future.
Image source: Wind
Grasp the opportunity of the rebound of the national defense and military industry, the related product national defense and military industry ETF (512810), the fund tracks the CSI military index, and the constituent stocks fully cover 80 subdivisions of the national defense and military industry, which is a powerful tool for one-click investment in the core assets of the A-share military industry. It is worth noting that as of the end of 2023, the net value growth of the National Defense and Military ETF (512810) since its inception has been as high as 20.99% relative to the excess return of the performance benchmark!
Note: The annual performance of the defense and military ETF from its inception in 2016 to 2023 is -7.33%, -12.27%, -28.34%, 25.39%, 77.34%, 25.08%, -25.52%, -9.09%, and the returns of the performance comparison benchmark (CSI Military Index) for the same period are -3.44%, -18.37%, -27.25%, 22.02%, 67.91%, 14.28%, -25.74%, - 11.02%。 The composition of the constituent stocks of the CSI Military Index, the underlying index of the national defense and military ETF, is adjusted in a timely manner according to the index compilation rules, and its backtest historical performance does not predict the future performance of the index.
3. The three-day rise of 8.15%! The leading ETF (588330) rose 1.81% in volume, and it was a strong three-day yang!
Today's market continued to rebound, the three major indexes all closed in the red, science and technology + entrepreneurship rose again, with an increase of more than 2%, the performance of the technology sector was outstanding, and medicine and biology, power equipment, and electronics were among the top rises in the 31 first-class industries of Shenwan, with a total net inflow of more than 4 billion yuan from the main funds.
Image source: Wind
In terms of popular ETFs, the one-click Shuangpin "ChiNext + Science and Technology Innovation Board" dual-innovation leading ETF (588330) rose by 1.81% on the market, achieving three consecutive daily yangs, with a cumulative increase of 8.15% in three days, and strongly recovering the 20-day moving average, with a turnover of more than 34 million yuan today.
Image Credit: Snowball
The Entrepreneurship and Entrepreneurship Leading ETF (588330) passively tracks the underlying CSI Science and Technology Innovation and Entrepreneurship 50 Index, including high-profit, high-growth assets on the Growth Enterprise Market and scarce assets in the Growth Enterprise Market, of which the "new semi-medical" concept stocks account for nearly 9 percent: in the pharmaceutical and biological sector, MGI rose by more than 17%, Junshi Biosciences-U rose by more than 12%, Mindray Medical rose by 2.91%, and Zhifei Biotechnology rose by 1.03%; In the new energy sector, Peneng Technology rose more than 9%, and Sungrow rose 1.22%.
On the news side, the new energy, semiconductor, and biomedical sectors are all catalyzed by good news, specifically:
(1) In terms of new energy, on February 2, the three ministries and commissions jointly issued new regulations on green certificates, which included the amount of electricity corresponding to green certificate trading in the "14th Five-Year Plan" provincial people's governments' energy-saving target responsibility evaluation and assessment index accounting, and supported all regions and entities to increase renewable energy consumption. On February 3, the No. 1 document of the central government was issued to promote the development of distributed new energy in rural areas, strengthen the planning and construction of new energy vehicle charging and swapping facilities in key villages and towns, strengthen the comprehensive prevention and control of desertification, and explore the "grass and light complementation" model.
Dongxing Securities said that it continues to be optimistic about the development prospects of renewable energy in China, as well as the role of the industrialization of new wind power and photovoltaic technologies in promoting long-term cost reduction and efficiency increase.
(2) In terms of semiconductors, semiconductors are a cyclical growth industry, with obvious regularity, a complete boom cycle of about four years, two years of prosperity, two years of downward prosperity. From the perspective of historical experience, in the two years starting from the second half of 2023, global electronic semiconductors may enter an upward cycle. Coupled with the replacement consumption boom driven by AI mobile phones and AIPC in 2024, the semiconductor field may usher in better performance improvement opportunities.
(3) In terms of biomedicine, on February 5, the draft of the "Notice on Establishing a Mechanism for the Formation of the Initial Price of Newly Listed Chemical Drugs to Encourage High-quality Innovation" by relevant departments solicited opinions through relevant industry associations, with the main purpose of insisting that drug prices are determined by the market, better playing the role of the government, improving the overall efficiency of new drugs on the network, and supporting high-quality innovative drugs to obtain returns consistent with high investment and high risk.
Donghai Securities said that the pre-disclosure of the 2023 annual report performance is over, and the performance of various sub-sectors of the pharmaceutical and biological industry is affected by industry policies and changes in supply and demand, and the performance is significantly differentiated. Among them, the performance of sub-sectors such as traditional Chinese medicine, medical equipment, hospitals and blood products performed well overall. At present, the plate is in multiple bottom ranges, and the recent irrational rapid decline has further consolidated the bottom of the plate, and the medium and long-term investment value is significant.
The "national team" has entered the market to support the bottom, and the attention to small and medium-cap stocks and growth stocks has increased significantly recently. Soochow Securities said that with the decline of high US interest rates, the A-share style switch is expected to occur, and the growth style may welcome the valuation repair.
It is worth noting that as of the close of trading on February 7, the PE ratio of the CSI Science and Technology Innovation and Entrepreneurship 50 Index tracking the underlying CSI Science and Technology Innovation and Entrepreneurship 50 Index was 24.22 times, which was located at the historical extremely low quantile of 0.74% since the base day of the index, and the allocation cost performance was highlighted.
Image source: Wind
According to public information, the Entrepreneurship and Entrepreneurship Leading ETF (588330) closely tracks the CSI Science and Technology Innovation and Entrepreneurship 50 Index, covering 50 emerging industry stocks with large market capitalization on the Science and Technology Innovation Board and the Growth Enterprise Market, including photovoltaic, energy storage, lithium battery, semiconductor, pharmaceutical and biological industries, among which, electronics, power equipment, and pharmaceutical biology all account for 20%-30% of the CSI Science and Technology Innovation and Entrepreneurship 50 Index, showing a "three-legged" structure. Its heavyweights gather leading companies in subdivisions such as CATL, Mindray Medical, SMIC, and Sungrow. Investors who are optimistic about the growth potential of technology stocks, related products are the leading ETF (588330).
Image source: Wind
Image and data source: Shanghai and Shenzhen Stock Exchanges, Huabao Fund, Xueqiu, Wind, etc., as of February 7, 2024. Risk Warning: The chemical ETF passively tracks the CSI Subdivision Chemical Industry Theme Index, which is based on 2004.12.31 and released on 2012.4.11, the National Defense ETF passively tracks the CSI Military Index, which is based on 2004.12.31 and released on 2013.12.26, the Shuangchuang Leading ETF passively tracks the CSI Science and Technology Innovation and Entrepreneurship 50 Index, which is based on 2019.12.31 and released on 2021.6.11, and the non-ferrous leading ETF passively tracks the CSI Nonferrous Metals Index, which is based on 2013.12.31 and released on 2015.7.13The medical ETF passively tracks the CSI Healthcare Index, which is based on 2004.12.31 and released on 2014.10.31. The composition of the index constituents is adjusted in accordance with the rules of the index, and its backtested historical performance is not indicative of the future performance of the index. The individual stocks mentioned in the article are only objectively displayed and enumerated as index constituent stocks, and are not recommended as any individual stocks, and do not represent the investment direction of the fund manager and the fund. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only, and investors shall be responsible for any investment behavior determined independently. In addition, any opinions, analysis and forecasts in this article do not constitute any form of investment advice to the reader, nor do they assume any responsibility for any direct or indirect losses arising from the use of the content of this article. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement and other legal documents of the fund, understand the risk-return characteristics of the fund, and choose products that are suitable for their own risk tolerance. According to the assessment of the fund manager, the risk level of chemical ETF is R3 (medium risk), the risk level of national defense and military ETF is R3 (medium risk), the risk level of Shuangchuang leading ETF is R4 (medium and high risk), the risk level of non-ferrous leading ETF is R3 (medium risk), and the risk level of medical ETF is R3 (medium risk). Investors should pay attention to the appropriateness opinions issued by the fund managers in a timely manner when the distribution agencies (including fund managers, direct sales agencies and other sales agencies) conduct risk assessments of the Fund in accordance with relevant laws and regulations, and the opinions of the sales agencies on suitability are not necessarily the same, and the risk rating evaluation results of fund products issued by the fund distribution agencies shall not be lower than the risk rating evaluation results made by the fund managers. The risk-return characteristics of the fund and the risk level of the fund in the fund contract are different due to different factors to be considered. Investors should understand the risk and return of the fund, carefully select fund products based on their own investment objectives, horizon, investment experience and risk tolerance, and bear their own risks. The registration of the Fund by the CSRC does not indicate that it has made a substantive judgment or guarantee on the investment value, market prospects and returns of the Fund. Caution should be exercised when investing in funds.