The Shanghai Composite Index rose for 7 consecutive days, and coal led the rise again

Edited by: Xiao Ruidong

On February 22, the Shanghai Composite Index closed up 1.27%, winning seven consecutive gains, setting a record for the longest consecutive rise in three and a half years. The Shenzhen Component Index rose 0.76% to 9,043.75 points, and the ChiNext Index rose 0.31% to 1,757.87 points. In terms of capacity, northbound funds bought a net of 3.69 billion yuan throughout the day, including a net purchase of 2.551 billion yuan in Shanghai-Hong Kong Stock Connect, a net purchase of 18 consecutive days, and a net purchase of 1.138 billion yuan in Shenzhen-Hong Kong Stock Connect.

In terms of industries, the coal sector led the gains, in addition, Nvidia's performance guidance exceeded expectations, which boosted market sentiment to a certain extent, and TMT sectors such as communications and computers also rose well.

Source: WIND

Overseas, the Federal Reserve (Beijing time) released the minutes of its January 2024 interest rate meeting in the early morning of February 22, in which Fed officials generally acknowledged that the policy rate had peaked, but were relatively cautious about cutting interest rates.

Overall, the Fed is slightly more cautious in its policy rate decisions. After the release of the minutes, the market slightly lowered its expectations for the probability of a Fed rate cut, with the Fed Watch data showing a 94% and 6% probability of the Fed keeping interest rates unchanged and cutting interest rates by 25bp in March, respectively.

Although the timing of the interest rate cut may be postponed, the Federal Reserve is expected to start cutting interest rates within the year, and the trend of loosening overseas liquidity remains unchanged, which is expected to bring some benefits to the equity market from the denominator side. In addition, we can also pay due attention to gold, which is good for loose liquidity. At present, the market has returned to the dominant logic of macro fundamentals, and fundamentally, the market's expectations for the Fed's interest rate cut have continued to decline recently, and short-term negative factors are gradually landing.

Although gold prices may remain high in the short term, in the medium and long term, the Federal Reserve is expected to start an interest rate cut cycle, the global central bank demand for additional gold purchases, and the global trend of "de-dollarization" make gold expected to become a new round of pricing anchor, these three factors make precious metals are expected to have upward momentum, you can consider the dip layout gold fund ETF (518800).

The coal sector continued to rise sharply on February 22, with the coal ETF (515220) rising 4.99%.

Source: WIND

On the news side, Shanxi Province's special rectification work on the "three supers" of coal mines continues to advance, and the rigidity of the coking coal supply side is becoming more and more prominent. In 2023, safety accidents will occur frequently, and the policy side will increase the safety inspection of coal mine production for the sake of ensuring life safety.

On February 8, the Shanxi Provincial Emergency Management Department issued the "Notice on Carrying out the Special Rectification of the "Three Supers" and Hidden Working Faces in Coal Mines. Strictly assess the over-capacity production of coal mines, and clearly examine "whether the annual raw coal output exceeds 10% of the approved (designed) production capacity and whether the monthly raw coal output is greater than 10% of the approved (designed) production capacity".

According to the statistics of Everbright Securities Research Institute, from 2021 to 2023, Shanxi Province's raw coal output accounted for 29.3%, 29.1% and 29.1% of the country's total, respectively, and Shanxi's coking coal output accounted for 52.6%, 53.9% and 54.6% of the country's total, accounting for about half. The remediation involves a wide range, tight time, and severe penalties, and the scarcity of coking coal resources is once again highlighted, and the current coking coal inventory of steel mills is at a low level in the same period, with the gradual recovery of consumer demand for finished products after the Spring Festival, if the downstream steel and coke operating rates rebound, the main coking coal price may be expected to open up upside.

In terms of thermal coal, the trading activity of the domestic coal market decreased before and after the Spring Festival, and the price of thermal coal remained stable. In terms of demand, the recent cooling in many parts of the country is expected to promote the recovery of daily consumption of power plant terminals and slightly boost the demand for thermal coal. In addition, with the resumption of work and production after the holiday, power plants and non-power downstream may also have a certain demand for replenishment.

Looking ahead to 2024, coal prices may "bottom" due to relatively tight supply. In terms of thermal coal, considering the stagnation of production capacity growth in recent years, the new production brought by the commissioning of new coal mines is relatively limited. In terms of imports, the growth rate of global coal production will slow down in 2024 due to insufficient capital expenditure, and it may be difficult for major exporting countries such as Indonesia and Russia to increase their output significantly in the short term.

In the off-season of 2023, coal prices will rise more than expected, and the bottom of coal prices or the bottom of prices in the early stage will be strongly supported, which may reflect the upward movement of coal prices. In addition, the marginal recovery trend of economic recovery remains unchanged. With the gradual implementation of relevant policies such as trillions of national bonds and the "three major projects" of real estate (increasing the construction and supply of affordable housing, actively promoting the transformation of urban villages and the construction of public infrastructure for both ordinary and emergency purposes), it is expected to bring about an increase in real estate investment and boost the demand for coking coal and other coals. In the economic recovery, the growth of electricity consumption is expected to boost the demand for thermal coal.

In the process of replacing traditional energy with new energy, the gradual reduction of upstream capital expenditure will bring about a rigid tightening of the supply side, thereby supporting the prosperity of upstream resources. After years of development, the leading domestic coal enterprises have relatively stable operating capabilities and stable cash flows, which support their high dividends and dividends, and have long-term investment value. According to WIND data, as of 2024/2/21, the dividend yield of the underlying index of the coal ETF (515220), the CSI Coal Index (399998.SZ), is about 6.9% in the past 12 months. Investors can continue to pay attention to the coal ETF (515220), but they may need to be wary of the risk of price pullback caused by the switch between off-peak and off-peak seasons.

Source: WIND, as of 2/21/2024.

On February 22, the TMT sector also had a good market performance, with the software ETF (515230) up 3.52%, the computer ETF (512720) up 2.55%, the communication ETF (515880) up 2.55%, and the chip ETF (512760) up 1.44%.

Source: WIND

On the news side, the State-owned Assets Supervision and Administration Commission of the State Council recently held a special promotion meeting on artificial intelligence of central enterprises in "AI empowerment and industrial renewal", and the central enterprises should put the development of artificial intelligence in the overall work of overall planning, further promote industrial renewal, and accelerate the layout and development of intelligent industries. Accelerate the construction of a number of intelligent computing power centers and carry out AI+ special actions. 10 central enterprises signed a proposal, stating that they will take the initiative to open up artificial intelligence application scenarios to the society.

On February 21, Nvidia released its results, and its Q4 results and Q1 guidance exceeded market expectations, which also directly ignited the AI market on February 22.

Kaiyuan Securities said that downstream customers' demand for AI is strong, overseas cloud giants continue to increase investment, AI models accelerate iteration and innovation, AI+ terminals continue to penetrate, the computing power industry chain will maintain a high degree of prosperity in 2024, the demand for training and inference may continue to rise, and the vigorous demand for computing power is expected to continue to drive the construction of computing network infrastructure. It is recommended to continue to pay attention to investment opportunities in the fields of optical modules, optical chips, optical devices, AIDC, AI servers, switches, and liquid cooling temperature control. In the future, you can continue to pay attention to related industry ETFs, such as communication ETF (515880), chip ETF (512760), software ETF (515230), computer ETF (512720) and other related targets.

Risk Warning:

Investors should fully understand the difference between regular and fixed investment of funds and savings methods such as small deposits and withdrawals. Regular investment is a simple and easy way to guide investors to make long-term investments and average investment costs. However, regular investment does not avoid the inherent risks of fund investment, does not guarantee investors to obtain returns, and is not an equivalent financial management method to replace savings.

Whether it is a stock ETF/LOF fund, it is a securities investment fund with higher expected risk and expected return, and its expected return and expected risk level are higher than that of hybrid funds, bond funds and money market funds.

Investors should pay attention to the fact that the fund's assets are invested in stocks on the STAR Market and ChiNext Board, which will face unique risks caused by differences in investment targets, market systems and trading rules.

The short-term rise and fall of the sector/fund is only used as an auxiliary material for the analysis of the views of the article, and is for reference only and does not constitute a guarantee of the performance of the fund.

The short-term performance of individual stocks mentioned in the article is for reference only and does not constitute a stock recommendation, nor does it constitute a prediction or guarantee of the performance of the fund.

The above views are for reference only and do not constitute investment advice or commitment. If you need to purchase relevant fund products, please pay attention to the relevant regulations on investor suitability management, do a good risk assessment in advance, and purchase fund products with the corresponding risk level according to your own risk tolerance. Funds are risky and should be invested with caution.

National Business Daily