Editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
【Content Guide】
1. A-shares fluctuated in a wide range in April
Since April 2024, the global stock market has entered the earnings season, coupled with the impact of geopolitical conflicts, the amplitude of the global capital market has increased. The performance of A-shares is differentiated: the Shanghai Composite Index and the CSI 300 Index have risen steadily, while the STAR 50 and ChiNext have performed sluggishly. This is related to the cautious investor sentiment during the earnings season. In addition, the release of the nine articles of the new country has a far-reaching impact on A-shares, and also forms a strong support for the index to a certain extent. It is expected that with the end of the annual and quarterly reports and the advent of May Day, A-shares will continue to diverge.
In February, the market was stylized obviously
The market index is not volatile, but the stylization is obvious: the cyclical style rose by 2.24%, outperforming other styles for the second consecutive month. The driving force behind this is the strong performance of resource stocks such as gold and oil, with PetroChina and Sinopec both hitting multi-year highs. After a two-month adjustment, the financial style rose again, rising by 1.97%. From the trend of 2024 so far, the cyclical style has performed extremely well, but it has shown a weak state, and the financial style has risen strongly after a two-month correction.
Third, the market will enter the equilibrium stage
The market's expectations for the economy relative to the policy objectives have a large upward revision space, the external macro environment is more moderate, A-shares in the short term by the investor mentality and capital behavior of the influence, after the market clearing, after the Spring Festival A-shares rebounded sharply, the long-term market bottom in the further confirmation, the gradual upward trend is obvious, coupled with the valuation and market confidence in the enhancement, is expected to still attract funds to enter.
A review of history shows that in the past 30 years, the Shanghai Composite Index has no obvious upward and downward trend in May, and has risen and fallen for 15 years each. Judging from past experience, after entering May, the technology sector that was suppressed in the early stage is expected to rise. An important reason is that the "performance kill" of the technology sector will pass, and its stock price will enter the stage of repairing and rising. Based on the average rise and fall in May in the past ten years, the average increase in sub-sectors such as aerospace and military industry, lithium batteries, and robots exceeded 2%, and it is recommended that investors pay attention to it.
Seize the opportunity of technology stocks in April and May
Military industry: the development of military informatization welcomes opportunities;
Lithium battery: profits are concentrated in the head enterprises;
Robots: AI + humanoid robots have great prospects.
1. The A-share differentiation was obvious in April
Since April 2024, the global stock market has entered the earnings season, coupled with the impact of geopolitical conflicts, the amplitude of the global capital market has increased. The performance of A-shares is differentiated: the Shanghai Composite Index and the CSI 300 Index have risen steadily, while the STAR 50 and ChiNext have performed sluggishly. This is related to the cautious investor sentiment during the earnings season. In addition, the release of the nine articles of the new country has a far-reaching impact on A-shares, and also forms a strong support for the index to a certain extent. It is expected that with the end of the annual and quarterly reports and the advent of May Day, A-shares will continue to diverge.
In terms of index performance, the Shanghai Composite Index rose by 1.56% in the month, leading the major indices for two consecutive months. The CSI 300 index rose 1.32% for the month, and the STAR 50 index, which rose as much as 12% in February, weakened for two consecutive months. Pay attention to Jufeng Investment Advisor (jfinfo)/good stock application, and the analysis and research report of the leading target of "Institutional Research and Selection" is waiting for you to get!
Chart 1: April performance of major market indices (%) (as of 2024-04-26)
来源：choice、巨丰金融研究院
The market index is not volatile, but the stylization is obvious: the cyclical style rose by 2.24%, outperforming other styles for the second consecutive month. The driving force behind this is the strong performance of resource stocks such as gold and oil, with PetroChina and Sinopec both hitting multi-year highs. After a two-month adjustment, the financial style rose again, rising by 1.97%.
Exhibit 2: Performance of major style indices (%) (as of 2024-04-26)
来源：choice、巨丰金融研究院
Chart 3: Comparison of major style indices (as of 2024-04-26)
来源：choice、巨丰金融研究院
Historically, the consumption style has long outperformed the major styles, but from the trend of 2024 to the present, the cyclical style has performed extremely well, but it has shown a weak state, and the financial style has risen strongly after two months of adjustment.
2. The market was generally active in April
(1) Non-ferrous metals rose sharply for two consecutive months
As of April 26, Shenwan's first-class industry has risen and fallen more. The five strongest performing sectors were household appliances (4.45%), non-ferrous metals (3.80%), banking (3.33%), transportation (3.09%), and steel (2.65%). The five industries of comprehensive, real estate, media, commerce and retail, and computer were among the top decliners, with the ranges of -9.24%, -8.35%, -6.81%, -5.68% and -5.15% respectively.
From the rise and fall of the industry, it can be clearly seen that compared with the big rise in February, the increase in March and April has converged significantly. The non-ferrous metals industry has risen sharply for two consecutive months, and the logic behind it is that under the expectation of US dollar interest rate cuts, the prices of commodities such as copper and aluminum have continued to rise, and the international gold price once hit a record high of 2448.8 US dollars / ounce in mid-April.
Chart 4: February market performance of major sectors (as of 2024-04-26)
来源：choice、巨丰金融研究院
Overall, the characteristics of the market structure are still obvious, and the industry with a large increase in March will converge or make up for the decline in April, and the market is in a benign fluctuation.
(2) The value style has risen across the board
Major size indices were mixed in April, with the value style dominating and the small-cap style ebbing. The main size indices with the largest declines were the CNI 2000 (-2.47%), the ChiNext Composite (-2.07%), the SME Composite Index (-1.43%), the STAR 50 (-1.38%) and the Shenzhen A Index (-1.09%).
Chart 5: Market performance of major size indices in February (as of 2024-04-26)
来源：choice、巨丰金融研究院
The strongest performing indices are: Small Cap Value (4.25%), Mid Cap Value (2.98%), Large Cap Value (2.17%), SSE 50 (1.94%), and SSE 180 (1.78%).
The data reflects that the small and micro market represented by the CNI 2000 index has turned a page, the heavyweight stocks continue to stabilize the index, and the value style has risen across the board.
(3) Northbound funds significantly increased their holdings in traditional industries such as non-ferrous metals and banks in April
As of April 26, the net inflow of northbound funds during the year was 71.968 billion yuan. Among them, the net inflow in March was 21.985 billion yuan, a significant decrease from 60.744 billion yuan in February, and only 3.745 billion yuan in April. Non-ferrous metals, banking, food and beverage, medicine and biology, non-bank finance and other industries had the largest net inflows, with net inflows of 6.186 billion yuan, 5.156 billion yuan, 1.686 billion yuan, 1.492 billion yuan and 1.274 billion yuan respectively.
Among all industries, the five industries with the largest net outflows of northbound funds were commerce and retail (-2.672 billion yuan), media (-2.565 billion yuan), computers (-1.965 billion yuan), household appliances (-1.911 billion yuan) and building materials (-1.522 billion yuan).
Chart 6: Net inflow of northbound funds in major industries (100 million yuan) (as of 2024-04-26)
来源：choice、巨丰金融研究院
Overall, the inflow of northbound funds slowed down in April, and the top net buyers were mainly in traditional industries: non-ferrous metals, banking, food and beverage, medicine and biology, and non-bank finance. In March, the top net inflows of electronics and household appliances were among the top net sellers, while banks and food and beverages continued to be at the forefront of net buying. The media sector has been significantly reduced by northbound funds for 4 consecutive months, and building materials have been significantly reduced for 2 consecutive months. Northbound funds may regain their role as "smart money", and industries that have increased their holdings sharply in April may have excess returns in May.
(4) The main factors affecting A-shares in April
In April 2024, A-shares fluctuated widely, both internally and externally. There are both macroeconomic and micro factors, which are caused by the superposition of multiple factors.
Internal factors: New national nine articles to boost the stock market
On April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market". The opinions issued this time have a total of 9 parts, which is the third "National Nine Articles" in the capital market, and is the guiding document for the capital market issued by the State Council again after the two "National Nine Articles" in 2004 and 2014. The "Opinions" pointed out that in the next five years, an overall framework for the high-quality development of the capital market will be basically formed. The institutional mechanism for investor protection has been further improved. The quality and structure of listed companies have been significantly optimized, and the strength and service capabilities of securities, funds and futures institutions have continued to increase. The regulatory capacity and effectiveness of the capital market have been greatly improved. The formation of a sound ecology of the capital market has been accelerated.
Due to the fact that after the release of the first two national nine articles, there was a big bull market in A-shares, and the new national nine articles were pinned on by market participants.
On April 25, the State Council issued a report on the research and handling of the deliberation opinions of the special report on the management of state-owned assets of financial enterprises and the rectification and accountability. The report pointed out that it is necessary to promote the quality and efficiency of financial state-owned assets and state-owned enterprises, and concentrate on building a "national team" in the financial industry. Research and draft an action plan to strengthen the management of state-owned financial capital, promote large state-owned financial enterprises to benchmark with world-class financial enterprises, highlight their main business, do fine and professional, and continuously enhance their competitiveness and international influence. Research and formulate guidance on promoting the high-quality development of the insurance industry, and promote the standardized development of non-bank financial institutions. Promote leading securities companies to become stronger and better, and support the Shanghai and Shenzhen stock exchanges to build world-class exchanges.
After the news was released, on April 26, there was a rising limit in the brokerage sector, activating the A-share market.
External factors: The continuous repatriation of foreign capital confirms the bottom of A-shares
The outflow of northbound funds has had a negative impact on China's stock market. Since the Fed began multiple rounds of interest rate hikes in March 2022, the US federal funds rate has increased by a cumulative 525 basis points, and US Treasury yields have risen. In contrast, China's central bank has adopted a relatively loose monetary policy. The difference in policies between China and the United States has made the US dollar relatively strong, affecting the net inflow of northbound funds and hindering the entry of foreign capital into the mainland.
From 2017 to 2022, the average annual inflow of the Stock Connect remained at around RMB260 billion. The net inflow in 2023 will only be 47.3 billion, and in January 2024, there will be a rare net outflow of northbound funds. In the context of the continuous opening up of the capital market, the flow of northbound funds is increasingly correlated with the A-share market, and the outflow of foreign capital has exacerbated the uncertainty of the A-share market. In February and March, as the A-share market warmed, northbound funds returned significantly to more than 80 billion.
3. It is expected that the structural market will continue in May
At present, the structural characteristics of A-shares are obvious, the hot sectors in the market are not strong, and the market center of gravity is still declining. From a historical perspective, liquidity and market sentiment will be the main driving factors of the market. Below, we will analyze from three aspects: macro, capital, and sentiment to explore the opportunities of A-shares in May 2024.
Disclaimer: The above content is for reference only and does not constitute specific operation advice, and you shall operate at your own risk and profit and loss