Yang Boguang: How will the market respond to the release of the new "National Nine Articles"?
Hot spots: Last week, the Shanghai and Shenzhen stock markets pulled back slightly, the stock game intensified, cyclical stocks became market support again, and the new "National Nine Articles" in the capital market were introduced, how will this affect the subsequent market?
Unscramble:
Last week, the Shanghai Composite Index, the Shenzhen Component Index, and the ChiNext Index closed down 1.62%, 3.32%, and 4.21% respectively, of which the CSI 500 and CSI 1000 fell deeper than the SSE 50.
After a lapse of ten years, the third "National Nine Articles" of the capital market were promulgated, as a long-term programmatic document, which clarified the development goals for the next five years, 2035 and the middle of this century in stages, and drew a clear blueprint for the high-quality development of the capital market. Among them, it is worth noting that the document emphasizes the construction of a policy system that supports "long-term money and long-term investment". From the investment side, medium and long-term funds are the "anchor" of the capital market, which not only provides a stable source of funds, but also promotes the concept of value investment, especially when the market fluctuates, it can stabilize investor confidence. In recent years, the share of institutional investors in China's stock market has steadily increased, reaching 23% by the end of 2023, a significant increase from 17% in 2019. Chinese individual investors account for about 29%, higher than the 4% held by individual investors in the U.S. stock market, indicating that there is still a lot of room for improvement in the proportion of Chinese institutional investors in the stock market in the future. In the structure of institutional holdings, the proportion of insurance and pension holdings has sufficient upside. In the future, with policy support, the potential of insurance funds and pensions will be released, more attention will be paid to medium and long-term returns, attention to enterprise growth and innovation, and at the same time provide stable long-term funds for high-quality enterprises, so as to promote a virtuous cycle of high-quality development of enterprises and investor returns. In addition, strengthening the supervision of dividends of listed companies, especially for companies that have not paid dividends for many years and have a low proportion of dividends, will limit the reduction of major shareholders and risk warning measures, which means that the overall dividend level of the market will be improved and the investment attractiveness of the A-share market will be increased. As a result, the medium and long-term allocation of funds resonates with the increase in dividends, and the market judgment is expected to return to rationality, and the repair of undervalued assets has become a concern.
Source: Wind
Finally, looking back at the historical data, after the release of the last two "National Nine Articles", the market has performed well after a short period of adjustment, so the medium and long-term market outlook is worth looking forward to. A-shares have entered the performance disclosure period, the market game is becoming more and more complex, pricing or return to fundamentals, whether the macroeconomic benefits can be successfully transformed into corporate profits, still need to be continuously verified by financial report data, or become a short-term market good cash and good fermentation factors.
Hot Spots: In the first quarter, the scale of China's trade in goods hit a record high, and many foreign-funded institutions are optimistic about the economic growth.
Unscramble:
Due to the dislocation of the Spring Festival and the high base effect, the year-on-year growth rate of China's exports fluctuated significantly in March, but the month-on-month growth rate was still higher than that of the same period in history, showing resilience. By product, the performance of high-end manufacturing products is outstanding, especially the volume and price of automobile exports have risen, and the new export momentum remains strong. China has achieved "corner overtaking" in the field of new energy vehicles, and the market share in developed economies such as Europe has increased significantly, with exports increasing by more than 23% year-on-year in the first quarter. At the same time, the prosperity of the semiconductor industry has rebounded, and the export of consumer electronics and integrated circuits has also shown an improving trend. In terms of imports, also affected by the high base, imports fell slightly year-on-year in March, but commodity prices rose, and factors on the price side will form support.
Looking ahead to the second quarter, the gradual decline of the high base effect and the significant rise in new export orders in China's manufacturing PMI in March indicate that the export growth momentum has achieved marginal strengthening, but the variable of the US replenishment is an observation element in the export data of major Asian commodity exporters such as South Korea and Vietnam. In addition, in the future, the steady growth policy will be gradually released, and the "update" and "new" policies will be implemented in the near future, which will effectively stimulate the growth of domestic demand.
Hot Spots: US CPI exceeded expectations for the third consecutive month, inflation stickiness is obvious, and China's CPI performance is moderate, what is the inspiration for investment under the difference between China and US inflation data?
Unscramble:
The US CPI rebounded in tandem with the core CPI in March, significantly exceeding market expectations for three consecutive months, with energy prices and core services being the main drivers. On the one hand, crude oil prices continued to rise, driving the US energy CPI to increase significantly for two consecutive months. Affected by the geopolitical tensions in the Middle East, coupled with the extension of production cuts by major oil producers such as OPEC and Russia, the uncertainty of global crude oil supply is still high, and oil prices are expected to remain high in the short term, thereby maintaining the high stickiness of the overall CPI in the United States. On the other hand, the rebound in core services is the main reason for the "stagnation" of core CPI. According to Zillow data, the number of cities with more than one million home prices in the United States has reached a new high, and rents usually lag behind house prices.
It is worth noting that the weather in March is better than the historical phenomenon, and the low base effect of CPI year-on-year does change the market's expectations for interest rate cuts, but in terms of the CPI month-on-month situation, residential CPI or begin to enter the road of deflation, superimposed on the United States ISM purchasing managers' replenishment cycle seems to be short, the three phenomena indicate that the possibility of secondary inflation is declining, although the market began to react to the Fed's hawkish tone, but the current situation suggests that the timing of interest rate cuts may be earlier than expected.
Source: Wind
China's inflation was modest, with CPI rising 0.1% y/y in March, and while demand cooled after the holiday and prices of food and mobility services fell, it is worth noting that high-frequency data showed that pork prices have been slowly rising since March. From the supply side, as of February, the number of fertile sows has decreased for 8 consecutive months, the supply has been gradually adjusted, and the price of pork may come out of the trough, which may provide a rebound momentum for the CPI growth rate in the future. In addition, due to the superposition of the recent holiday effect, the demand for the service industry has rebounded moderately, while international oil prices remain high, and the combined effect of the two is expected to provide some support for non-food prices.
Source: Wind
On the whole, U.S. inflation is still sticky, although the market's interest rate cut expectations have been revised, the yield on 10-year U.S. Treasury bonds has risen above 4.5% to a new high in nearly five months, and short-term volatility in U.S. stocks is expected to intensify. With the gradual development of China's steady growth policy in the second quarter, especially the comprehensive promotion of the "three major projects" and "trade-in", combined with the recovery of the global manufacturing cycle, it is expected that the decline in PPI in April is expected to narrow. Combined with the obvious rebound of China's manufacturing PMI in March and the overall upward trend of international commodity prices, the upstream resource-based sector has taken the lead in stabilizing the requirements.
However, although there is a balanced relationship between the value preservation significance of high-speed precious metals and the high debt of the United States, don't forget that in addition to the synchronous reaction of futures driving spot prices, whether futures with contract nature have the possibility of delivery of a large number of physical objects is the price risk of the upstream resource sector facing the characteristics of futures.
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.