On the first trading day after the holiday, A-shares continued to make history, with the three major indices opening epic highs, with a full-day turnover of 3.45 trillion yuan, setting a new record high.
The Science and Technology Innovation Board and the Growth Enterprise Market led the broad base, and the Science and Technology Innovation 100 ETF ChinaAMC (588800), the ChiNext 100 ETF ChinaAMC (159957), and the ChiNext Growth ETF (159967) all had a 20CM daily limit.
Although there was a large retracement in the peripheral market, many stocks were opened, and the increase gradually became smaller, and some even turned green for a time, but the ChiNext index and the Science and Technology Innovation 100 maintained a strong strength throughout the day, and finally closed up 17% and 16% respectively.
The two boards have also contracted a lot of "20cm" tickets, such as SMIC, National Technology, Shanghai Silicon Industry, Cambrian, Fumanwei, Taiji and so on. Most of the concept plates such as semiconductors, Hongmeng, data security, and power batteries that have exploded today are also concentrated in the "two boards".
Obviously, funds are flowing into the Growth Enterprise Market and the Science and Technology Innovation Board in large quantities.
Does this mean that the Growth Enterprise Market and the Science and Technology Innovation Board are becoming new gold absorbing places?
01
Regular Drawdown or Close?
Before answering this question, let's first say that everyone is very concerned about it, today's sharp fall in the peripheral market, will it be a signal of the end of this round of rebound?
First of all, it should be clear that today's retracement of Hong Kong stocks is based on the crazy rise during the holiday. During the National Day holiday, Hong Kong stocks had a total of four trading days, with the Hang Seng Index and the Hang Seng Index rising by 9.3% and 13.36% respectively.
Taking today's real estate and brokerage companies with a relatively large decline as an example, China Merchants Securities rose by 81% on October 2 alone, and Vanke rose by 61%. Throughout the holiday, China Merchants Securities rose 185%, and Vanke rose 88%.
Because A-shares are not traded during the holidays, and the Hong Kong Stock Connect is also suspended, there are funds to rush in advance, and after the domestic market reopens, take the opportunity to flee, relying on the dislocation of the trading time between the two places to make an arbitrage.
In 2018, there was a similar case, but it was during the decline of the market, so there was also a saying that "the people are on vacation, and the money is running away". It's just that this time it's the opposite, it's a crazy rally.
In other words, this is also a conventional routine, and from the perspective of effect alone, the profits are indeed quite lucrative.
However, compared with the previous big rise and today's decline, the magnitude is actually not as pessimistic as everyone imagined. After all, if it doubles and falls by 3 percent, it is still up as a whole.
There is also a peripheral market that is often mentioned YINN and YANG, that is, 3x long FTSE China ETF and 3x short FTSE China ETF, which are also very volatile today, exuding pessimism among some investors.
To explain a little, these two ETFs track the FTSE China 50 Index, not the well-known FTSE China A50 Index, which selects the 50 largest and most liquid Chinese companies traded on the Hong Kong Stock Exchange.
It coincides with the relatively large drawdown of the Hong Kong stock prices of these companies, and the ETF itself is leveraged, so the volatility is relatively large. If the Hong Kong stock market rebounds tomorrow, the ETF will move in the opposite direction.
In addition, judging from every historical rally in the past, after a much rise, there will be some big drawdowns.
As the saying goes, the bear market is more likely to rise, and the bull market is more likely to plummet.
Occasionally, there is a big retracement, don't worry too much, because the decline is also a self-correction of the market, cool down the overly crazy mood, release the high valuation by the way, and then start a new upward trend after the reorganization.
If you go all the way up and never retreat, it is terrible, and once you can't hold back, you will plummet.
Today's sale of Hong Kong stocks, some of them are ambushes in the early stage, and some of them are funds that focus on the holiday rush, and after these funds are cleared, the market is likely to restart a new upward trend.
02
The upward momentum is still there
For now, the momentum of the stock market rally has not disappeared.
First of all, from the perspective of economic fundamentals, the stock market is the barometer of the economy, and the fundamental reason why the market has been so poor in recent years is that the downward pressure on the economy is great, especially in the real estate industry.
There is a statistic that proves the importance of real estate, let's say the troika of China's economy – investment, exports, and consumption.
Although there is also pressure on the data of exports and investment, they have not been halved in the past few years, only housing prices have been halved, and real estate is the largest item in investment.
It can be said that real estate is currently the biggest pressure on China's economy, only by effectively solving the real estate problem, or more bluntly, so that housing prices stop falling and stabilize, or even return to rise, then the downward pressure on China's economy will be effectively alleviated, at least in the short term, no one can deny this.
Therefore, the biggest difference between this economic stimulus policy and the past is to prescribe the right medicine, especially for the real estate stimulus policy, the RRR cut, interest rate cut, down payment cut, and second home loan interest rate cut, which can be said to be the target. During the National Day holiday, there was also good news about the recovery of real estate sales in many key cities.
Economic fundamentals are highly correlated with corporate earnings and mutually beneficial. When the economy rebounds, the overall profitability of enterprises will also rebound, and the EPS-driven market will be sustainable.
Second, from the perspective of liquidity, now the Fed has started a cycle of interest rate cuts, clearing the last hurdle to liquidity easing on our side. More importantly, in addition to the regular RRR and interest rate cuts, the central bank also mentioned the equalization fund and 500 billion + 300 billion liquidity injection into the stock market.
The original words of the central bank:
"In the future, we can come with another 500 billion yuan, or a third 500 billion yuan. The amount put away is 300 billion, and another 300 billion can be made, and even a third 300 billion can be made. ”
A steady stream of easy monetary support is good for the stock market.
From the perspective of valuation, although A-shares have risen a lot, the stock prices and valuations of many companies are still at a historic low.
Even if we just look at the dividend yield, our risk-free yield, which is the yield on 10-year Treasury bonds is currently 2.2%, and the Shanghai dividend yield is 3%, back to 2.7%, which can go to around 3380 points (realized). Go back to 2.5% and at least go to the 3600 position.
At the same time, U.S. stocks, Japanese stocks, and other emerging markets, after experiencing a sharp rise, have speculated their valuations to historic highs, and the price-performance advantage has begun to fade.
For example, the NASDAQ PE is 43 times, located at the historical quantile of 82.95%, while the PE of the GEM index is 33 times, located at the historical quantile of 17.65%.
Coupled with the fact that there are many geopolitical conflicts, the funds flowing out of the markets of developed countries will look for new value depressions, and A-shares have naturally become one of the most attractive markets.
It can be said that after a long period of "double killing", Big A is now ushering in a "double-click" moment of good performance and valuation.
Today's pullback may instead be a new round of layout opportunities.
03
What else can you buy?
Of course, today's big drawdown of Hong Kong stocks, as well as the A-share auction period, and then the rapid opening of the board, have a relatively large impact on the psychology of investors, especially some investors who buy at the auction limit.
At this time, you need to re-examine your investment strategy and make reasonable adjustments according to the market trend.
Generally speaking, a large level of rise will be divided into several stages:
First of all, the most flexible sectors go first, such as real estate, brokerages, etc.;
Then there are the middle row, such as IT, semiconductors, consumption, etc.;
Then there are the low valuations in the back row, such as some sectors that have been in the doldrums for a long time.
After all the rotation is on one side and the rain and dew are even, the market will re-embrace some companies with better fundamentals.
At this stage, although the upward momentum is still there, from a stable point of view, it is a good strategy to choose some high-quality companies and companies with growth prospects in the future, which can give priority to dividends during the market rise period, and can well control the drawdown during the callback period, both offensive and defensive.
But what are these companies?
The concept of science and technology, the concept of innovation, is one of them.
The reason why these concepts are emphasized is that many companies of this kind are not only in line with the national trend of high-quality development, are the objects of key policy support, but also are the leaders of the current emerging industries, and have a large room for growth in performance, and are the easiest to enjoy the benefits of the current loose liquidity.
Just like CATL on the Growth Enterprise Market and SMIC on the Science and Technology Innovation Board, they are both leading companies in their respective fields.
There are many more of these companies on the Growth Enterprise Market and the Science and Technology Innovation Board.
However, GEM investment requires more than two years of stock investment experience and an average daily asset of 100,000 yuan in the first 20 trading days; Investment in the STAR Market requires more than two years of stock investment experience and an average daily asset of 500,000 yuan in the first 20 trading days.
In addition, there are many high-priced stocks on the Growth Enterprise Market and the Science and Technology Innovation Board, and 100 shares in one hand can easily cost tens of thousands of yuan.
In a bull market, ETFs are more cost-effective, and many experienced investors will choose to invest through ETFs.
For example, for example, the ChiNext 100 ETF ChinaAMC, which tracks the ChiNext Index, the Kechuang 50 ETF that tracks the STAR 50 Index, and the STAR 100 ETF ChinaAMC, which tracks the STAR 100 Index, have a capital threshold as low as 100 yuan per lot.
ETFs related to ChiNext and STAR Market frequently have daily limits, and ETFs cannot be bought on the market after the price limit, so you can consider subscribing to ETF feeder funds over-the-counter, and as long as there is no limit to the purchase of feeder funds, you can subscribe, and 90% of the assets of ETF feeder funds are invested in the corresponding ETFs.
For example, STAR 100 ETF ChinaAMC (588800), feeder fund (Class A: 020291, Class C: 020292); ChiNext 100 ETF ChinaAMC (159957), feeder fund (Class A: 006248, Class C: 006249) OF; ChiNext Growth ETF (159967), feeder fund (Class A: 007475, Class C: 007475).
04
epilogue
Although the periphery has fallen more today, it is likely to be just a regular adjustment after the holiday, and the funds and enthusiasm of the market are still there, and it may be better to adjust it again.
The history of the stock market has also repeatedly proven that a slow cow is better than a mad cow to really make as many investors as possible make money.
Of course, it is also necessary to remind investors that a bull market is not only the easiest time to make money, but it can also be the easiest time to lose money.
Because the crazy rising market will make investors form a linear thinking, thinking that the stock market will rise all the way, so as to ignore the risk, and wait until the bull market turns to know how to withdraw, and eventually not only lose profits, but also lose principal.
Even in the bull market rise, the stage of lucrative profits, the frenzied market sentiment, and the violent psychological impact, investors are also prone to make wrong decisions, may not be able to keep up with the rhythm and step short, may not be able to hold and sell early, or may not be able to withstand the pressure in the violent drawdown stage and cut the meat, but also may overuse leverage, derivatives, pressure in the wrong direction and suffer heavy losses.
It is obviously unrealistic to require all investors to have a high level of trading ability and be comfortable in a high-risk and high-return bull market. Therefore, it is particularly important to choose some investment tools that are stable and both offensive and defensive. (End of full text)
Risk Warning:
The above views, opinions and ideas are based on current market conditions and are subject to change in the future. Past performance of the Index is not indicative of future performance and does not constitute a guarantee of investment income or any investment advice. Indices operate for a relatively short period of time and do not reflect all stages of market development. Funds are risky and should be invested with caution.