Affected by the sharp decline in U.S. stocks overnight, the Asia-Pacific market collectively adjusted this morning. As of press time, the stock markets of Japan and South Korea have fallen by more than 2%, and the three major A-share indexes have fallen by more than 1%. It is worth noting that in the process of the decline of A-shares in early trading, foreign capital did not flee significantly, and the net inflow of northbound funds once exceeded 3 billion yuan. However, then the market sold too much, and northbound funds also turned into net outflows.
There are three main signals to keep an eye on for the current market:
First, China's GDP in the first quarter has just been announced to increase by 5.3% year-on-year, significantly exceeding market expectations, compared with the previous expectation of 4.6%. In addition, the civil aviation traffic data disclosed today is very impressive, in the first quarter, passenger traffic and cargo and mail traffic both hit the highest value in the same period of the previous year. The outlook for China's economy is also improving. Recently, Goldman Sachs and Citi respectively released reports raising their forecasts for China's GDP growth in 2024.
Second, the new trend of foreign investment. Last week, hedge funds net bought Chinese stocks for the third consecutive week, the largest net buying in more than two months, according to Goldman Sachs. In addition, in early trading on Monday and Tuesday this week, northbound funds entered the market in the process of falling A-shares.
Third, Moody's, an internationally renowned rating agency, upgraded the credit rating of lithium battery giant CATL from Baa1 to A3. CATL, as the leader of the A-share new energy sector, has upgraded its rating to stabilize the confidence of the relevant sectors and the market to a certain extent.
The economic data is bright
The mainland's economy continued to pick up and got off to a good start. On April 16, the Information Office of the State Council held a press conference to invite Sheng Laiyun, deputy director of the National Bureau of Statistics, to introduce the operation of the mainland's national economy in the first quarter of 2024. According to the data released at the meeting, preliminary calculations showed that the GDP in the first quarter was 296299 billion yuan, a year-on-year increase of 5.3% at constant prices, and an increase of 1.6% over the fourth quarter of last year.
By industry, the added value of the primary industry was 1,153.8 billion yuan, up by 3.3 percent year-on-year, the added value of the secondary industry was 109846 billion yuan, up by 6.0 percent, and the added value of the tertiary industry was 174915 billion yuan, up by 5.0 percent.
The National Bureau of Statistics said that the national economy had a good start in the first quarter, and the accumulation of positive factors increased, laying a good foundation for achieving the goals and tasks for the whole year. However, it should also be noted that the complexity, severity and uncertainty of the external environment have risen, and the foundation for economic stability and improvement is not yet solid. In the next stage, it is necessary to adhere to the principle of seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking down, completely, accurately and comprehensively implement the new development concept, accelerate the construction of a new development pattern, focus on promoting high-quality development, actively cultivate and develop new quality productive forces, increase the implementation of macro policies, effectively enhance economic vitality, prevent and resolve risks, improve social expectations, consolidate and enhance the positive trend of economic recovery, and continue to promote the economy to achieve qualitative and effective improvement and reasonable quantitative growth.
In addition, the data on civil aviation transport is also very impressive. According to CCTV News, in the first quarter of 2024, civil aviation transport production got off to a good start, with both passenger traffic and cargo and mail traffic hitting the highest values in the first quarter of the previous year. The total transportation turnover of the whole industry was 34.93 billion ton-kilometers, an increase of 45.6% year-on-year and 12.9% over the same period in 2019. Among them, 23.86 billion ton-kilometers were completed on domestic routes and 11.07 billion ton-kilometers on international routes. In terms of passenger traffic, the industry completed nearly 180 million passenger trips in the first quarter, the highest passenger volume in the first quarter of the previous year, a year-on-year increase of 37.7% and an increase of 10.2% over the same period in 2019. Among them, 160 million passengers were completed on domestic routes, an increase of 14.3% over the same period in 2019, and 14.12 million passengers were completed on international routes, recovering to 78.0% of the same period in 2019.
Some analysts pointed out that civil aviation is a barometer of the tertiary industry and consumption, and generally reflects changes in the economic situation before other overall economic data such as GDP. The strength of civil aviation passenger traffic data also reflects the changes in economic restructuring.
Net foreign buying of Chinese stocks
On April 16, Goldman Sachs data showed that last week, hedge funds bought Chinese stocks for the third consecutive week, while net selling U.S. energy stocks.
Separately, hedge funds net sold U.S. equities for the second straight week last week, mainly after the strong consumer price index released last Wednesday surprised investors, raising further doubts about whether the Federal Reserve will start cutting interest rates soon. Goldman Sachs said in a report that trend-following hedge funds could sell $20 billion to $42 billion in U.S. stocks over the next month if the stock market continues to fall.
Northbound funds also continued to buy the bottom. On April 15, the first trading day after the release of the new "National Nine Articles", northbound funds bought 8.1 billion yuan on a large net basis, and Kweichow Moutai, Wuliangye and North Huachuang received net purchases of 879 million yuan, 512 million yuan and 219 million yuan respectively. In early trading today, northbound funds also bought more than 3 billion yuan on a net basis.
An Yun, deputy general manager and chief investment officer of Schroder Fund, said that after a three-year correction, A-shares are expected to have a structural market this year. "The market after March has been stronger than expected, and the market is expecting more positives. In his view, the economy has begun to show signs of bottoming out and stabilizing, and the market is constantly hot (AI, etc.), so the market heat has rebounded significantly. The overseas stock market is at a high level, and if the subsequent interest rate cut cycle starts, it cannot be ruled out that there will be overseas liquidity spillover to A-shares.
Recently, Goldman Sachs strategic analysts wrote in a report that given the strong policy sensitivity and compelling liquidity dynamics of the A-share market, they are still strategically optimistic about A-shares, and expect A-shares and H-shares to have potential upside of 12% and 8% respectively in the next 12 months. In addition, Goldman Sachs strategy analysts noted that they are bullish on consumer technology/internet stocks due to a more favorable environment for revenue growth and relatively good capex/cost control, and continue to focus on shareholder returns as both dividends and share buybacks are at all-time highs in 2023.
Ningwang's rating was upgraded
Today's A-share market pullback, but the lithium battery leader CATL is relatively down.
On April 15, Moody's, an internationally renowned rating agency, upgraded the credit rating of lithium battery leader CATL from Baa1 to A3, with a stable outlook, reflecting the company's competitiveness and sustainable growth potential in the global new energy market. Chenyi Lu, Vice President of Moody's Ratings, said: "This upgrade reflects our expectation that CATL's credit profile will remain strong, with stable earnings, low leverage and an increasing net cash advantage, even as price competition limits the company's revenue growth. ”
Moody's Ratings forecasts that CATL's net cash position will further grow to about CNY200 billion over the next 12-18 months, up from CNY111 billion at the end of 2023. Its net cash position provides a cushion against high investment requirements, increasing competition and an increasingly complex operating environment.
On April 15, CATL disclosed its financial report, with revenue of 79.7 billion yuan in the first quarter, down 10% year-on-year, and net profit of 10.5 billion yuan, up 7% year-on-year. In the past four quarters, CATL's net profit exceeded 10 billion yuan.
After the results were disclosed, Morgan Stanley and Jefferies both raised their price targets for CATL. Morgan Stanley analysts pointed out that CATL's battery margin exceeded expectations, benefited from improved sales mix and cost control, and is expected to continue to boost earnings, raising the company's price target by 4.5% to 230 yuan. Johnson Wan, an analyst at Jefferies, pointed out that CATL's net profit after tax in the first quarter was 10.5 billion yuan, slightly exceeding market expectations, reiterating its constructive view on the company, maintaining a buy rating and slightly raising the target price to 245 yuan.
Editor-in-charge: Yang Yucheng
Proofreading: Gao Yuan