In the past week, A-shares have fluctuated and weakened, with the Shanghai Composite Index closing at 3,019 points, close to the 3,000-point integer mark. The market divergence continued as we expected, with the high-dividend sector moving stronger, and growth stocks represented by the TMT sector continuing to generally pull back. As the A-share annual report season approaches, the market divergence is likely to continue. At present, A-share valuation, risk premium and other indicators still have good investment cost performance, and the sustainability and elasticity of the future market depends more on the verification of subsequent economic data.
First, the new "Nine Articles" have been released, pointing out the direction for the construction of the capital market system.
This Friday, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which is the third "National Nine Articles" of the capital market, and is a guiding document for the capital market issued by the State Council again after the two "National Nine Articles" in 2004 and 2014, with the main purpose of further promoting the high-quality development of the capital market.
Historically, the "National Nine Articles" in 2004 and 2014 not only improved the institutional construction of the capital market, but also opened a magnificent bull market. In 2004, the "National Nine Articles" redefined China's securities market from the perspective of marketization and operating mechanism, solved the problem of equity division, and laid the institutional foundation for the great bull market from 2005 to 2007. In 2014, the "National Nine Articles" proposed to actively and steadily promote the reform of the stock issuance registration system, accelerate the construction of a multi-level equity market, strengthen the confidence of the capital market, and boost the bull market in 2014-2015.
The new "Nine Measures" highlight the concept of "investor-oriented", from "strict access" for issuance, to "strict supervision" for listing, and then to "strict standards" for delisting, to jointly promote the high-quality development of the capital market; comprehensively strengthen the investment and research capacity building of fund companies, enrich the types and portfolios of investable assets in public offerings, and change from scale-oriented to return-oriented investors; promote fee reform, steadily reduce the comprehensive fee rate of the public fund industry, and benefit the market.
The new "National Nine Articles" highlight strong supervision and risk prevention, and ensure that supervision is "long teeth and thorns", with edges and corners. In terms of direction, it is not only the continuous supervision of the whole process of listed companies from listing to delisting, but also the supervision of securities and fund institutions, equity investment of insurance funds, international securities, and transactions, especially high-frequency quantitative trading.
The new "National Nine Articles" emphasize long-term investment and equity investment, and propose not only to cultivate a long-term money ecology, but also to improve the long-term investment system and build a "long-term money and long-term investment" policy system. These include vigorously developing equity public offerings, speeding up the approval of ETFs, optimizing the policy environment for equity investment of insurance funds, enhancing the flexibility of enterprise annuity and personal pension investment, and encouraging bank wealth management and trust funds to actively enter the market.
On the whole, the new "Nine Articles" provide a clear direction and guidance for the institutional construction of the mainland's capital market. For investors, the new "National Nine Measures" make all-round norms for the development direction of listed companies and securities and fund institutions in the A-share market, and is expected to provide a higher expected rate of return for the majority of shareholders and basic citizens in the medium and long term.
Second, the release of price, foreign trade and financial data in March showed that the foundation for the economic recovery still needs to be consolidated.
Price data released on Thursday morning showed that mainland CPI rose 0.1% year-on-year in March, lower than the expected 0.3% and previous value of 0.7%, and mainland PPI fell 2.8% year-on-year in March, lower than the expected decline of 2.7% and the previous decline of 2.7%. On a month-on-month basis, the mainland CPI fell by 1.0% month-on-month in March, compared with a 1% increase in the previous month, and the mainland PPI fell by 0.1% month-on-month in March, compared with a decrease of 0.2% in the previous month. The month-on-month weakening of the CPI was mainly affected by the Spring Festival holiday. Structurally, weaker-than-expected CPI was mainly dragged down by food prices and declines, while the decline in PPI was mainly dragged down by weaker prices of domestically priced commodities such as coal and steel.
Foreign trade data released early Friday showed that in dollar terms, exports were -7.5% year-on-year in March, lower than expectations of -2.12% and 7.1% cumulative in January-February, while imports in March were -1.9% year-on-year, lower than expectations of 0.63% and 3.5% cumulative in January-February. The decline in export data in March was mainly affected by the large fluctuation of the base at the beginning of 2023. From the perspective of two-year compound growth rate, the two-year compound growth rate of exports in March was 1.3%, the compound growth rate of exports from January to February was -0.9%, and the two-year compound growth rate of exports in the fourth quarter of last year was -4.9%, and the trend of export recovery has not changed.
According to the financial data released after the market on Friday, the mainland M1 increased by 1.1% year-on-year in March, lower than the previous value of 1.2%; M2 grew 8.3% year-on-year, lower than the expected 8.61% and the previous value of 8.7%, new social financing was 4.87 trillion yuan, lower than the expected 5.61 trillion yuan, and new RMB loans were 3.09 trillion yuan, lower than the expected 3.21 trillion yuan. Structurally, the growth rate gap between M1 and M2 has converged slightly, but it is still at a high level, which may indicate that social confidence is gradually recovering, but its foundation still needs to be consolidated; RMB medium and long-term loans increased by 451.6 billion yuan, down year-on-year, indicating that the real estate market is still in a period of deep adjustment; enterprise medium and long-term loans increased by 1.6 trillion yuan, a slight increase year-on-year, or benefited from the three major projects, large-scale equipment renewal and consumer goods trade-in.
Judging from the data, the trend of the mainland's steady economic recovery has not changed, but the foundation for the economic recovery still needs to be consolidated. It is worth noting that in January and February, the macro data of the mainland showed a structure of strong economic data and weak prices and finance, and if this structure continues in March, then the economic data released next Tuesday will be more important than the data released this week, and may determine the market trend in the coming period.
Third, the US CPI exceeded expectations again, which could not prevent global liquidity from gradually easing.
Data released on Wednesday evening showed that after seasonal adjustment, the US CPI rose 3.5% year-on-year in March, higher than the expected 3.4% and the previous value of 3.4%, the highest level in nearly seven months, and the US core CPI (excluding food and energy) rose 3.8% in March, higher than the expected 3.7%, unchanged from the previous value, exceeding expectations for the third consecutive month. On a month-on-month basis, the US CPI rose 0.4% month-on-month in March, also higher than the market expectation of 0.3%, and the US core CPI rose 0.4% month-on-month in March, higher than the market expectation of 0.3%. Structurally, non-rent core inflation prices (supercore, mainly services) and energy prices (energy and transportation) rose sharply, pulling up the current CPI and core CPI data, and rent prices fell slightly but remained high.
After the release of the data, the market's confidence in the Fed's interest rate cut fell further. Data from the interest rate swap market showed that bets on the Fed to start cutting interest rates in June have all but disappeared, and the market's expectation of the Fed's first rate cut has been postponed to November, and the number of times it will be cut this year has been reduced to two. Although the Fed's interest rate cut expectations have been further delayed, at the ECB (European Central Bank) monetary policy press conference on Thursday evening, ECB President Lagarde said that interest rate cuts will not wait until inflation returns to 2% and hinted that the ECB is likely to start cutting interest rates in June. In terms of content, although Lagarde hinted that the ECB's monetary policy could not ignore the impact of the Federal Reserve, she also made it clear that the eurozone economy was weak in the first quarter, and the ECB will make independent decisions based on the economic situation in the eurozone.
At this point in time, although there is considerable uncertainty about the timing of the Fed's start of interest rate cuts, the gradual easing of liquidity around the world has become irreversible. In the past period, when the inflection point of the domestic economy and market was not clear, overseas liquidity fluctuations have caused greater pressure on A-shares. As the assets represented by gold and copper begin to "rush" the global liquidity easing, the capital supply of the A-share market is also gradually improving, and the domestic economy is gradually coming out of the bottom of the cycle, it is expected that the Chinese stock market will have better opportunities in the medium term under the superposition of both fundamentals and liquidity.
Overall, the A-share market is expected to continue to rebound under the dual expectations of economic recovery and an inflection point for global liquidity. Before the inflection point is further verified, a "triangle" layout can be adopted, with a dividend strategy of high dividends and low valuations on the defensive side, benefiting from the gradual repair of fundamentals and changes in expectations; on the offensive side, we can focus on the improvement of the supply side of economic growth and the rise of a new round of industrial cycle, and lay out relatively highly volatile TMT technology growth sectors, especially Huawei-related sectors; and the middle layer is mainly stable, with the layout of pharmaceuticals and consumption that benefit from the recovery of market pessimism, as well as pro-cyclical industries that benefit from economic recovery.
directory
◆ 1. Discussion of market outlook
◆ 2. Industry configuration ideas
◆ 3. This week's market review
(1) Market review
(2) Supply and demand of funds
◆ 4. Pay attention to macro events next week
Part 1 市场展望探讨
In the past week, A-shares have fluctuated and weakened, with the Shanghai Composite Index closing at 3,019 points, close to the 3,000-point integer mark. The market divergence continued as we expected, with the high-dividend sector moving stronger, and growth stocks represented by the TMT sector continuing to generally pull back. As the A-share annual report season approaches, the market divergence is likely to continue. At present, A-share valuation, risk premium and other indicators still have good investment cost performance, and the sustainability and elasticity of the future market depends more on the verification of subsequent economic data.
First, the new "Nine Articles" have been released, pointing out the direction for the construction of the capital market system.
This Friday, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which is the third "National Nine Articles" of the capital market, and is a guiding document for the capital market issued by the State Council again after the two "National Nine Articles" in 2004 and 2014, with the main purpose of further promoting the high-quality development of the capital market.
Historically, the "National Nine Articles" in 2004 and 2014 not only improved the institutional construction of the capital market, but also opened a magnificent bull market. In 2004, the "National Nine Articles" redefined China's securities market from the perspective of marketization and operating mechanism, solved the problem of equity division, and laid the institutional foundation for the great bull market from 2005 to 2007. In 2014, the "National Nine Articles" proposed to actively and steadily promote the reform of the stock issuance registration system, accelerate the construction of a multi-level equity market, strengthen the confidence of the capital market, and boost the bull market in 2014-2015.
The new "Nine Measures" highlight the concept of "investor-oriented", from "strict access" for issuance, to "strict supervision" for listing, and then to "strict standards" for delisting, to jointly promote the high-quality development of the capital market; comprehensively strengthen the investment and research capacity building of fund companies, enrich the types and portfolios of investable assets in public offerings, and change from scale-oriented to return-oriented investors; promote fee reform, steadily reduce the comprehensive fee rate of the public fund industry, and benefit the market.
The new "National Nine Articles" highlight strong supervision and risk prevention, and ensure that supervision is "long teeth and thorns", with edges and corners. In terms of direction, it is not only the continuous supervision of the whole process of listed companies from listing to delisting, but also the supervision of securities and fund institutions, equity investment of insurance funds, international securities, and transactions, especially high-frequency quantitative trading.
The new "National Nine Articles" emphasize long-term investment and equity investment, and propose not only to cultivate a long-term money ecology, but also to improve the long-term investment system and build a "long-term money and long-term investment" policy system. These include vigorously developing equity public offerings, speeding up the approval of ETFs, optimizing the policy environment for equity investment of insurance funds, enhancing the flexibility of enterprise annuity and personal pension investment, and encouraging bank wealth management and trust funds to actively enter the market.
On the whole, the new "Nine Articles" provide a clear direction and guidance for the institutional construction of the mainland's capital market. For investors, the new "National Nine Measures" make all-round norms for the development direction of listed companies and securities and fund institutions in the A-share market, and is expected to provide a higher expected rate of return for the majority of shareholders and basic citizens in the medium and long term.
Second, the release of price, foreign trade and financial data in March showed that the foundation for the economic recovery still needs to be consolidated.
Price data released on Thursday morning showed that mainland CPI rose 0.1% year-on-year in March, lower than the expected 0.3% and previous value of 0.7%, and mainland PPI fell 2.8% year-on-year in March, lower than the expected decline of 2.7% and the previous decline of 2.7%. On a month-on-month basis, the mainland CPI fell by 1.0% month-on-month in March, compared with a 1% increase in the previous month, and the mainland PPI fell by 0.1% month-on-month in March, compared with a decrease of 0.2% in the previous month. The month-on-month weakening of the CPI was mainly affected by the Spring Festival holiday. Structurally, weaker-than-expected CPI was mainly dragged down by food prices and declines, while the decline in PPI was mainly dragged down by weaker prices of domestically priced commodities such as coal and steel.
Foreign trade data released early Friday showed that in dollar terms, exports were -7.5% year-on-year in March, lower than expectations of -2.12% and 7.1% cumulative in January-February, while imports in March were -1.9% year-on-year, lower than expectations of 0.63% and 3.5% cumulative in January-February. The decline in export data in March was mainly affected by the large fluctuation of the base at the beginning of 2023. From the perspective of two-year compound growth rate, the two-year compound growth rate of exports in March was 1.3%, the compound growth rate of exports from January to February was -0.9%, and the two-year compound growth rate of exports in the fourth quarter of last year was -4.9%, and the trend of export recovery has not changed.
According to the financial data released after the market on Friday, the mainland M1 increased by 1.1% year-on-year in March, lower than the previous value of 1.2%; M2 grew 8.3% year-on-year, lower than the expected 8.61% and the previous value of 8.7%, new social financing was 4.87 trillion yuan, lower than the expected 5.61 trillion yuan, and new RMB loans were 3.09 trillion yuan, lower than the expected 3.21 trillion yuan. Structurally, the growth rate gap between M1 and M2 has converged slightly, but it is still at a high level, which may indicate that social confidence is gradually recovering, but its foundation still needs to be consolidated; RMB medium and long-term loans increased by 451.6 billion yuan, down year-on-year, indicating that the real estate market is still in a period of deep adjustment; enterprise medium and long-term loans increased by 1.6 trillion yuan, a slight increase year-on-year, or benefited from the three major projects, large-scale equipment renewal and consumer goods trade-in.
Judging from the data, the trend of the mainland's steady economic recovery has not changed, but the foundation for the economic recovery still needs to be consolidated. It is worth noting that in January and February, the macro data of the mainland showed a structure of strong economic data and weak prices and finance, and if this structure continues in March, then the economic data released next Tuesday will be more important than the data released this week, and may determine the market trend in the coming period.
Third, the US CPI exceeded expectations again, which could not prevent global liquidity from gradually easing.
Data released on Wednesday evening showed that after seasonal adjustment, the US CPI rose 3.5% year-on-year in March, higher than the expected 3.4% and the previous value of 3.4%, the highest level in nearly seven months, and the US core CPI (excluding food and energy) rose 3.8% in March, higher than the expected 3.7%, unchanged from the previous value, exceeding expectations for the third consecutive month. On a month-on-month basis, the US CPI rose 0.4% month-on-month in March, also higher than the market expectation of 0.3%, and the US core CPI rose 0.4% month-on-month in March, higher than the market expectation of 0.3%. Structurally, non-rent core inflation prices (supercore, mainly services) and energy prices (energy and transportation) rose sharply, pulling up the current CPI and core CPI data, and rent prices fell slightly but remained high.
After the release of the data, the market's confidence in the Fed's interest rate cut fell further. Data from the interest rate swap market showed that bets on the Fed to start cutting interest rates in June have all but disappeared, and the market's expectation of the Fed's first rate cut has been postponed to November, and the number of times it will be cut this year has been reduced to two. Although the Fed's interest rate cut expectations have been further delayed, at the ECB (European Central Bank) monetary policy press conference on Thursday evening, ECB President Lagarde said that interest rate cuts will not wait until inflation returns to 2% and hinted that the ECB is likely to start cutting interest rates in June. In terms of content, although Lagarde hinted that the ECB's monetary policy could not ignore the impact of the Federal Reserve, she also made it clear that the eurozone economy was weak in the first quarter, and the ECB will make independent decisions based on the economic situation in the eurozone.
At this point in time, although there is considerable uncertainty about the timing of the Fed's start of interest rate cuts, the gradual easing of liquidity around the world has become irreversible. In the past period, when the inflection point of the domestic economy and market was not clear, overseas liquidity fluctuations have caused greater pressure on A-shares. As the assets represented by gold and copper begin to "rush" the global liquidity easing, the capital supply of the A-share market is also gradually improving, and the domestic economy is gradually coming out of the bottom of the cycle, it is expected that the Chinese stock market will have better opportunities in the medium term under the superposition of both fundamentals and liquidity.
Overall, the A-share market is expected to continue to rebound under the dual expectations of economic recovery and an inflection point for global liquidity. Before the inflection point is further verified, a "triangle" layout can be adopted, with a dividend strategy of high dividends and low valuations on the defensive side, benefiting from the gradual repair of fundamentals and changes in expectations; on the offensive side, we can focus on the improvement of the supply side of economic growth and the rise of a new round of industrial cycle, and lay out relatively highly volatile TMT technology growth sectors, especially Huawei-related sectors; and the middle layer is mainly stable, with the layout of pharmaceuticals and consumption that benefit from the recovery of market pessimism, as well as pro-cyclical industries that benefit from economic recovery.
Part 2 行业配置思路
Sector allocation: Overall, the A-share market is expected to continue to rebound under the dual expectations of economic recovery and the inflection point of global liquidity. Until the inflection point is further validated, a "triangle" layout can be used. On the defensive side, we can focus on the improvement of the supply side of economic growth and the rise of a new round of industrial cycle, and lay out relatively highly volatile TMT technology growth sectors, especially Huawei-related sectors, and the middle layer is mainly stable, with the layout of pharmaceuticals and consumption that benefit from the recovery of market pessimism, as well as pro-cyclical industries that benefit from economic recovery.
Defensive side: Allocate dividend assets as a base asset in the era of low interest rates
In the short term, in the context of weak economic recovery, the dividend strategy matches the needs of investors for prudent allocation, and in the long run, in the macro context of moderate economic growth slowdown and downward risk rate, it can provide sustained and stable high-dividend assets suitable as a base asset.
In addition, to find truly high-quality high-dividend assets, dividend yield is not the only indicator, and the strategy idea should include fundamental analysis, the current overall dividend yield level and PE valuation trend, and the judgment of long-term fundamentals in the future. Based on this logic, we should pay attention to industries such as coal and public utilities: 1) for coal and other resource industries, supply constraints and demand resilience will support resource prices, and 2) for state-owned monopoly basic industries such as power and water utilities, it is expected to usher in a "value revaluation" of production factors in the context of high government debt.
Offensive side: focus on technological growth and benefit from the rise of a new round of industrial cycle
Focus on the improvement of the supply side of economic growth and the rise of a new round of industrial cycle, focusing on consumer electronics, semiconductors, software, embodied intelligence and other sectors. 1) Electronics: Catalyzed by factors such as the release of new products by major consumer electronics giants, the demand for consumer electronics has shown signs of stabilizing and rebounding, and the future listing of smart terminals such as AI PCs and AI mobile phones is expected to further boost demand. Semiconductors are also expected to enter a new cycle when downstream demand picks up and the industry destocking is nearing the end. 2) Software: The overseas AI software application business model has been successfully implemented, and the market's expectations for the implementation of domestic AI applications are also rising. With the issuance and expansion of domestic AI large model licenses, large model products are gradually open to the public, and domestic generative AI-related applications are expected to be gradually realized in 2024. 3) Embodied intelligence: With the acceleration of the construction of the AI industry application ecosystem, embodied intelligence, as the best carrier of AI in the physical world, is expected to lead a new wave of AI. Among them, intelligent cars and humanoid robots are the most typical embodied agents. In terms of smart cars, with the successive launch of high-quality models and the accelerated landing of urban NOA, smart cars are expected to replicate the popularization route of new energy vehicles in the past, from the introduction period into the high-speed growth period; in terms of robots, in the long run, the space is huge, 2024 or will enter the first year of mass production of humanoid robots, the domestic industrial chain is also gradually following up, and with the continuous iterative upgrading of AI large models in the direction of multimodality, the intelligent level of humanoid robots will also be further improved, and the commercialization process is expected to accelerate.
The middle layer: stability-based, the layout of medicine and consumption that benefits from the recovery of market pessimism
Judging from the current industry comparison, medicine has obvious advantages. First, the valuation level of pharmaceuticals is at a low level, and the downward trend of U.S. bonds is expected to promote pharmaceuticals to enter the upward channel of valuation; secondly, the proportion of fund allocation is low, and in the case of weak economic recovery, the allocation of public offerings to consumption may be undertaken by increasing the allocation of pharmaceuticals; third, with the phased relaxation of medical anti-corruption and the normalization of policies such as centralized procurement and medical insurance negotiations, the market's expectations for pharmaceuticals will be clearer. In addition, as the R&D capabilities of Chinese pharmaceutical companies are gradually recognized by foreign countries, innovation is gradually getting better, and the growth space on the demand side is further opened.
For the consumer industry, after a long period of adjustment, the valuation of the CSI Consumer Index has reached the 25% percentile in the past decade, and it has a cost-effective medium and long-term allocation. However, in view of the current weak market expectations for consumption repair, the market inflection point may still need to wait for the expected improvement and the realization of high-frequency data.
Part 3 本周市场回顾
(1) Market review
In the past week, the Shanghai Composite Index fell 1.62%, the ChiNext Index fell 4.21%, the CSI 300 fell 2.58%, the CSI 500 fell 1.81%, and the STAR 50 fell 2.42%. In terms of style, the stable and cyclical performance is relatively good, while the consumption and growth performance are poor. From the perspective of Shenwan's primary industry, the relatively high performance is public utilities (2.26%), coal (1.86%), non-ferrous metals (1.56%), textiles and apparel (-0.53%), and banks (-0.55%), while the relatively low performance is real estate (-7.13%), agriculture, forestry, animal husbandry and fishery (-6.05%), non-bank finance (-5.7%), food and beverage (-5.66%), and national defense and military industry (-5.05%).
In the past week, A-shares have fluctuated and weakened, with the Shanghai Composite Index closing at 3,019 points, close to the 3,000-point integer mark. The market style continued, with the trend of high-dividend sectors being stronger, and growth stocks represented by the TMT sector continuing to generally pull back. From the perspective of Wind's popular concept sectors, the relatively top performers are gold and jewelry (9.31%), iron ore (3.41%), excavators (3.03%), coal mining (2.89%), and thermal power (2.88%), while satellite Internet (-8.13%), stock trading software (-7.63%), smart medical care (-7.61%), liquor (-7.6%), and chicken industry (-7.51%) are relatively low.
(2) Supply and demand of funds
In terms of capital demand, the scale of the primary market increased this week, and the pressure on restricted shares to lift the ban increased. This week, the amount of funds raised in the primary market totaled 4.421 billion yuan, a change of 41.82% from last week, in terms of structure, IPO raised 1.574 billion yuan, a week-on-week change of 113.54%, and additional issuance raised 2.847 billion yuan, a week-on-week change of 19.61%. This week, the total scale of restricted shares is 52.606 billion yuan, a week-on-week change of 114.24%, according to the current disclosed data, it is expected that the scale of lifting the ban next week will be about 38.326 billion yuan, and the pressure to lift the ban will decrease.
In terms of capital supply, there was a net outflow of northbound funds this week, and fund issuance cooled down. This week, the net inflow of northbound funds was -11.468 billion yuan, and the net outflow accelerated, of which the net inflow of Shanghai-Hong Kong Stock Connect was -6.744 billion yuan, and the net inflow of Shenzhen-Hong Kong Stock Connect was -4.724 billion yuan. This week, the total number of newly established equity and partial stock hybrid funds was 1.069 billion, an increase of -3.92% month-on-month, indicating that fund issuance has cooled. This week, the share of open-end public funds decreased, of which the share of equity increased by 2.451 billion, and the share of hybrid decreased by -1.37 billion.
Part 4 Focus on macro events next week
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