This A-share makes people panic

Xingtu Financial Research Institute

2024-04-30 11:40Posted on the official account of Jiangsu Suning Institute of Finance

For a long time in the past, investors in A-shares have been envious of U.S. stock investors who have been living in "fear of the rising stock market". And today, A-share investors can finally experience the same feeling.

A-shares can always be unexpected, not only can continue to fall sharply when investors think it is the end, but also can "suddenly rise" on a seemingly ordinary trading day. On April 29, A-shares broke through the consolidation area strongly, rising to more than 3,100 points, the real estate industry chain and new energy sector became the "most beautiful boys" in the whole market, and the GEM index rose 3.5%, leading the whole market. The dividend sector, which has performed strongly in the past two years, has become one of the few declining sectors in the whole market.

It is estimated that few people can predict that there will be such a wave of market in the only two trading days before the May Day holiday. In retrospect, the continued buying of foreign investors and the "small composition" may be the two most important factors driving the sharp rise of A-shares. According to Wind's statistics of northbound funds, after the northbound funds set a single-day net buying record on April 28, northbound funds continued to buy 10.8 billion yuan on April 29, and even had a net inflow of more than 14 billion yuan during the period.

The other is the widely circulated "small composition" of the real estate industry, that is, it is rumored that there will be major policies for the real estate industry after May Day, including deed tax reduction, stock housing disposal and other related aspects. Therefore, the Shenwan real estate industry index rose by 6.48%, leading the whole market, and many listed real estate companies such as Vanke and Huaxia Fortune are batch daily limits. Although it cannot be confirmed or falsified, the real estate market is an important catalyst for the sharp rise of A-shares.

The sky-high buying of northbound funds may be one of the reasons for the sharp rise in A-shares, but the flow of funds reflects various expected results. As we all know, the rise and fall of the stock market also reflects expectations. Whether it is the inflow of funds caused by the asset allocation and allocation of foreign capital among various Asian countries, or a variety of true and false essays, it ultimately reflects the expectation that the economy will pick up and enterprises can really make money. Therefore, whether A-shares can continue to strengthen in the future depends on how these reasons for the flow of funds will be interpreted.

First of all, it is necessary to look at the changes in the yen exchange rate. Speaking of this, I have to sigh that "A-shares are the world's largest knowledge payment platform", in the past, I paid attention to the impact of the Federal Reserve and the U.S. Treasury on A-shares, but now even Japan next door can have a decisive impact on A-shares, and A-share investors are forced to learn a bunch of "YCC, yen exchange rate factors" and other knowledge. If you look at the Asia-Pacific sector, in the past, the yen and Japanese bonds became a safe haven for global funds due to their robustness, but recently due to the continuous depreciation of the yen against the US dollar, funds began to flow out of Japan and turned to other markets, such as Hong Kong stocks and A shares.

However, if we look at the market outlook, in the case that the yen has broken through the new high since 1990, the judgment of the yen exchange rate has exceeded the ability of the vast majority of investors, and it is difficult to bet that "the yen will continue to fall, and funds will continue to flow into A-shares and Hong Kong stocks".

Another, more important impact may be the recovery of the economy. Over the past three years, the domestic economy has been clearly dragged down by the real estate sector. At present, domestic and foreign studies have basically recognized China's economic recovery after the elimination of the real estate industry, and the private investment excluding the real estate industry has continued to improve, infrastructure investment and manufacturing investment have contributed to the positive contribution of economic growth, and only the continuous decline of real estate is pulling down the driving force of economic progress. Although there has been no "V-shaped rebound" in consumption, it has continued to improve. Exports are stronger than market expectations. It may be because of this that UBS has advanced the recovery time of domestic real estate and the fermentation of real estate essays, which has greatly boosted market sentiment and brought such a wave of surge.

In the short term, the recent surge in A-shares is the result of the resonance of internal and external news. However, how to look at the changes in those factors that suppress A-shares can determine the future trend. For example, changes in economic fundamentals, foreign capital flows due to interest rate differentials between China and the United States, and changes in the Fed's interest rate cut expectations. From the perspective of the recent market, although the reduction in the number of interest rate cuts by the Fed during the year still has a negative impact on the valuation of A-shares, the cost performance of foreign investment in the Asia-Pacific sector has shifted to the side of Chinese assets. If real estate, which has a significant impact on the economy, can usher in a major policy change, the economy may further accelerate its recovery and bring about a recovery in the earnings of listed companies. The policy care for the stock market cannot be ignored, and the impact of the "investor-oriented" concept on A-shares will gradually be reflected. From this point of view, we can be more optimistic about A-shares.

Finally, to sum up:

First, this round of market began with the first start of Hong Kong stocks, and the flow of foreign capital to A-shares brought about by the sharp depreciation of the yen may be the most important reason for the sharp rise of A-shares. At the same time, foreign investors have played a role in the collective bullishness of China's real estate and China's stock market allocation value, while domestic expectations for the April Politburo meeting and the fermentation of real estate essays have become the accelerant for a sharp rebound in real estate.

Second, there has been no marginal change in factors such as the economic recovery that suppressed A-shares in the past and the Fed's failure to cut interest rates this year. It is also difficult to conclude that "the continuous recovery of the domestic economy has promoted the continuous rise of A-shares". Many industries and sectors that have rebounded at a low level are more like bottom-buying funds brought by "falling out of cost performance". For investors, the opportunities of low-level layout far outweigh the risks, and the cost performance of holding shares is higher.

Third, holding on is more appropriate than swinging. Now the market is like a pendulum every day, optimistic will tend to low real estate, new energy, medicine and other over-falling sectors, pessimistic immediately turn to treasury bonds, dividend assets, or the stars of the sea, or stable dividends, stick to a sector or choose to allocate, left and right swaying style is more likely to be repeatedly slapped in the face.

[Note: The market is risky, and investment needs to be cautious.] In any case, the information or opinions expressed in this subscription account are only an exchange of views and do not constitute investment advice to any person. Unless otherwise noted, the research data in this article is supported by Straight Flush iFinD]

This article was originally written by "Xingtu Financial Research Institute", and the author is Huang Dazhi, a researcher at Xingtu Financial Research Institute

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