Against the backdrop of wailing on the periphery, today's A-share market is unique, and the major indices have recovered yesterday's losses in the afternoon, and the rebound is very large. As of the close, the Shanghai Composite Index soared 64 points, the CSI 1000 soared by more than 4%, and more than 5,100 stocks rose. So, what exactly are the benefits? Analysts believe that there are several pieces of news that deserve attention.
First, foreign capital is more than Chinese assets. Morgan Stanley said that based on the latest forecast for crude oil prices amid recent geopolitical tensions, it raised the earnings forecast and target price of PetroChina and CNOOC;
Second, WuXi AppTec ushered in a good afternoon According to the New York Times, WuXi AppTec's involvement in the U.S. healthcare sector extends far beyond congressional discussion. Some of the country's top brass in the biotech industry have explicitly opposed the bill, trying to make Congress aware that an abrupt "decoupling" could delay the development of some drugs for years;
Third, after yesterday evening, the China Securities Regulatory Commission responded to questions related to micro-cap stocks. Today, some industry insiders said that the transaction of private placement-related products may be standardized. The strategy of high-frequency quantitative products will also be adjusted accordingly. In the process of adjustment, the corresponding oscillation may also go to the tail;
Fourth, the weakening of the Japanese market has allowed some funds to flow back to A-shares. Previously, there was a certain seesaw effect in the stock markets of the two places.
"Icing on the cake" and "Fudo Myowang"
After CATL was upgraded its rating, the "two barrels of oil" also ushered in a positive situation. Today, Morgan Stanley said it raised its earnings forecasts and price targets for PetroChina and CNOOC based on the latest forecasts for crude oil prices amid recent geopolitical tensions. Morgan Stanley raised its price target for PetroChina to 7.3 yuan from 6.5 yuan and CNOOC Limited from HK$18.18 to HK$19.8. Although PetroChina and CNOOC both adjusted today, the share price decline in the afternoon also narrowed significantly, which supported the market performance in the afternoon to a certain extent.
More notably, on 16 April, Fitch revised the outlook of six Chinese state-owned banks to negative from stable. Fitch also affirms the banks' Long-Term Foreign Currency IDRs, Government-Backed Ratings and Short-Term Foreign Currency IDRs. The six banks include Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China, Bank of Communications, and Postal Savings Bank.
What I didn't expect was that today's bank stocks rose instead of falling, and they were completely unaffected by the outside world. Today, bank stocks strengthened across the board at the end of the session, with Bank of China and Agricultural Bank of China both hitting record highs, Bank of Communications hitting a new high in more than 16 years, and China Merchants Bank rising more than 2% to hit a new high in nearly 7 months. China CITIC Bank even blocked the price limit. And this happened against the backdrop of yesterday's bearish situation for bank stocks.
The benefits of WuXi AppTec
This afternoon, WuXi AppTec's stocks also rose across the board for the first time in a long time.
There are also corresponding benefits from the periphery. According to the New York Times, lawmakers who discussed the bill in the Senate and House barely mentioned the vast amount of work WuXi AppTec is doing for the U.S. biotechnology and pharmaceutical industries, as well as patients, during the hearings. The newspaper reviewed hundreds of pages of records from around the world and found that WuXi AppTec has a significant presence in the U.S. pharmaceutical industry, providing some or all of the main ingredients for drugs widely used to treat certain types of leukemia, cancers such as lymphoma, as well as obesity and AIDS.
WuXi AppTec and its affiliate, WuXi Biologics, are reportedly growing rapidly and are known for their low-cost and reliable work. It is estimated that one-quarter of the drugs used in the United States were developed by WuXi AppTec. According to data analytics firm Statista, WuXi AppTec is one of the world's top five drug development and manufacturing companies by revenue. According to WuXi AppTec's annual report, two-thirds of its revenue comes from its U.S. operations.
Korchinski, managing partner of RA Capital Management, said WuXi AppTec is known for helping biotech companies move from the ideation stage to large-scale production. "U.S. companies have ideas, raise capital, and own patents for drugs, but they may rely on WuXi AppTec or similar contractors to do almost every step," he said. ”
Seattle-based Gulf Pharma CEO Keir said WuXi AppTec has been working with the company for 16 years to develop drugs to treat hearing loss and tinnitus. Finding other contractors to produce the drug could set the company back two years, he said. "I don't want to see us become so anti-Chinese that we can't think properly. Kiel said.
Two other positives
Yesterday, micro-cap stocks fell by more than 10%, and today the sector index has soared by nearly 10%, which has effectively driven the broader market to strengthen.
Yesterday evening, the China Securities Regulatory Commission answered reporters' questions on hot issues such as dividends and delisting. According to the CSRC, there is a view in the market that "the delisting rule changes are mainly for small-cap stocks", which is a pure misreading. If the company is ST only because the dividend does not meet the standard, it will not lead to delisting. Based on the data from 2020 to 2022, the number of companies that may implement ST in Shanghai and Shenzhen due to substandard dividends is only more than 80. It has effectively stabilized the market's expectations.
At the same time, some market participants told the Chinese reporter of the brokerage that the trading behavior of some private placements has been standardized, and the strategies of some high-frequency quantitative products are also being adjusted. This may have eased the short-selling pressure in the market to some extent. The shock caused by the strategy adjustment may also be going to the tail.
Of course, there is another factor. This afternoon, the net inflow of northbound funds fluctuated and strengthened. In the context of the decline of the whole line in the periphery, this kind of funds into A-shares may be related to the allocation of arbitrage. Recently, the Japanese stock market has weakened significantly, and the yen exchange rate has plummeted. China's Q1 GDP significantly exceeded market expectations, coupled with low stock market valuations, so there may be funds withdrawn from the Japanese stock market and moved into Chinese assets.
However, it is worth noting that the exchange rate of Southeast Asian countries has become somewhat volatile recently. Today, the Thai baht fell as much as 0.5%, leading the decline among Asian currencies. This is reminiscent of the financial crisis of 1997, which is a risk point that is worth paying attention to at the moment.
Editor-in-charge: Yang Yucheng
Proofreading: Liao Shengchao