Since new year’s day in 2022, the continuous decline of A-Shares has delayed the spring market expected by the market. On the first trading day after the Spring Festival, although the Shanghai and Shenzhen 300 index and Shanghai stock index rose by 1.54% and 2.03%, the trend of the three indexes differentiated the next day. The Shanghai index closed up by 0.67%, the Shenzhen Component Index fell by 0.98%, the gem index fell by more than 4.5% for a time, and the decline throughout the day also reached 2.45%.
Looking back on the two most impressive sharp falls of A-Shares in 2021, they were the flash collapse caused by the collapse of Mao index and cyclical stocks after the Spring Festival and in September. According to the fourth quarter report data of 2021 disclosed by public funds, the positions on the gem were significantly reduced, the positions on the main board and the proportion of super large market allocation industry increased significantly, and the style of equity funds changed, resulting in a trend of switching from small market value to large market value. In the decline before and after the new year, many heavy positions and high price stocks raised by the public deduce the plot of “the higher you stand, the heavier you fall”. This makes the market worry: will the trend of “killing more” appear? Will the agreed spring market really come?
game between value and growth, undervalued value and high prosperity
According to the four seasons report of public offering, as of December 31, 2021, among the top 20 heavy positions of public offering funds, Kweichow Moutai Co.Ltd(600519) , Contemporary Amperex Technology Co.Limited(300750) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , Wuxi Apptec Co.Ltd(603259) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Eve Energy Co.Ltd(300014) , Sungrow Power Supply Co.Ltd(300274) , Byd Company Limited(002594) , Unigroup Guoxin Microelectronics Co.Ltd(002049) , China Tourism Group Duty Free Corporation Limited(601888) , Will Semiconductor Co.Ltd.Shanghai(603501) share prices are more than 100 yuan, of which Kweichow Moutai Co.Ltd(600519) is more than 2000 yuan. In 2022, with the decline of most A shares in different ranges, the public offering of the above heavy positions was also not spared. As of February 9, 2022, some high-priced stocks have interpreted the plot of “the higher you stand, the heavier you fall”. Among them, Wuxi Apptec Co.Ltd(603259) fell by 21.8% during the year, the share price fell from 118 yuan to 92 yuan, Eve Energy Co.Ltd(300014) fell sharply by 22.76%, the share price fell below 91 yuan, and the share price of Will Semiconductor Co.Ltd.Shanghai(603501) fell from 310 yuan to around 232 yuan, down more than 25%.
In terms of industry, the hardest hit areas of this decline are concentrated in biomedicine. In addition to Wuxi Apptec Co.Ltd(603259) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) fell by 30%, the share price was hit from 435 yuan to 300 yuan, Hangzhou Tigermed Consulting Co.Ltd(300347) fell from 127 yuan to 99 yuan, Changchun High And New Technology Industries (Group) Inc(000661) fell by 38%, and the share price fell from 271 yuan to 166 yuan; Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) also fell by 20%, retreating to the 300 yuan stock echelon, Imeik Technology Development Co.Ltd(300896) also fell from 536 yuan to 458 yuan, down 14%, and Guangzhou Kingmed Diagnostics Group Co.Ltd(603882) fell by nearly 30%, exiting the 100 yuan stock queue.
With the decline of the market, the market is curious about who is the “behind the scenes driver”. A fund manager told reporters that if an industry, especially the individual stocks with heavy institutional positions, falls sharply in trend, generally speaking, the first wave of selling may be mainly foreign capital; The second wave is domestic funds. The trend of Kweichow Moutai Co.Ltd(600519) 2021 is related to the two top fund managers of “good wine”.
According to the views of the above fund managers, combined with the fund’s 2021 fourth quarter report, the fund with the largest number of Wuxi Apptec Co.Ltd(603259) is the China Europe medical and health hybrid, with a number of 65.7161 million shares, far exceeding the 30 million shares of Jingshun Great Wall emerging growth hybrid, the third is Huaxia Shanghai Stock Exchange 50ETF, with a share of 17.5081 million shares, and the fourth is ICBC Frontier Medical stock, with a share of 17.001 million shares.
Another industry source said that the current market is very similar to that in early 2021. There is a game between value and growth, as well as differences between undervalued value and high prosperity. Generally speaking, the current direction and trend are not clear, and the capital flows between various sectors, which brings shocks, which can not be regarded as a big move to adjust positions.
In addition, Boshi Fund believes that the sentiment of A-Shares has been digested into the high cost performance trading area, superimposed with the easing of the impact of overseas US bond interest rate, and A-Shares are expected to open the oversold rebound after the Spring Festival. Historically, the probability of style growth in February every year is very high, especially focusing on the oversold rebound of military industry and new energy sector after the Spring Festival. In addition to the oversold rebound of the high boom track, the expected repair opportunities under the low positions of institutions are also the focus of the rebound after the Spring Festival. One is the auto parts and electricity of “high boom in 2022 + current low positions”, and the other is the power grid equipment of “low boom in 2022 + current low positions”.
unavoidable “kill more”
Looking back on history, it is not difficult to find that in the past 20 years, the restless market of A-Shares at the end of the year and the beginning of the year has always arrived as scheduled. Meanwhile, the average maximum increases of the CSI 300 and the Shanghai composite index were 24% and 22% respectively, and A-Shares experienced a year-on-year decline similar to the current market from 2002 to 2003, 2010 to 2012, 2014, 2016 and 2019.
After the Spring Festival in 2021, most of the group holding stocks of many institutions retreated sharply, and the value blue chips represented by Kweichow Moutai Co.Ltd(600519) fell sharply. Now, this scene seems to be happening again, but a little earlier. Will the A shares in early 2022 be a replica of 2021? If not, why did it fall this time?
“After analyzing the internal and external factors of last year’s market adjustment and the reasons for stopping the decline, this year is actually a replica of last year to a certain extent.” Zhang Yingjun, research director and general manager of Fund Investment Department of Bodao Fund Management Co., Ltd., told reporters, “At that time, the market generally believed that the yield of 10-year US bonds rose faster than expected, which was actually just a fuse. From the second half of 2020 to the first quarter of 2021, it was a structural market, which led to the deterioration of microstructure after developing to a certain stage, which was the most important short-term factor in the market adjustment at that time. The first sector to stop falling in 2021 was a long-term boom industry 。”
From this point of view, the reasons for the adjustment of the A-share market after new year’s day in 2022 are similar to the Spring Festival last year. The external factors are also that the overseas market entered the interest rate increase cycle in advance. The yield of 10-year US bonds rose rapidly. The most important are the following three internal factors.
Zhang Yingjun further said that from the market level, the deterioration of the market microstructure is the result of a structured market. The A-share market in 2021 will focus on the high-carbon and low-carbon industrial chain with carbon neutralization as the background. Now, from the perspective of fundamentals, the market is divided on the relationship between steady growth and carbon neutrality; There are differences between PV and new energy vehicles on popular tracks; The emergence of the epidemic has had another impact on consumer stocks.
Yan Kaiwen, chief strategic analyst of Huaxin securities, also told reporters that this time it was mainly affected by the bad news on the periphery and the new round of sanctions against Chinese enterprises in the United States, which led to the wide adjustment of leading stocks in the two mainstream popular tracks of innovative drugs and new energy. “As the current market sentiment is depressed, the stampede phenomenon is very serious. As for the situation of ‘killing more than one’, it must exist.”
Data show that after the previous adjustment of the new energy track, the valuation dropped significantly. According to the consistent earnings expectations for 2021, the core PEG has been significantly lower than 1, and over 80% of the target companies, according to the 2022 consensus expectations, PEG is near 0.9.
Kevin Yan believes that under the background that the current market risk appetite has not been fully repaired, it is the excessive interpretation and response to negative information and pessimism that lead to the emergence of “killing more” in the growth stock sector.
fluctuations will still be large, but there is no need to be pessimistic
The repair of risk appetite will not be achieved overnight. Can A-Shares be expected in the future? Is the bear market first, or the rebound first?
Kevin Yan believes that in terms of short cycle, we should first wait for the market to enter the bottom grinding stage. At present, we are cautiously optimistic. With the accelerated promotion and force of the steady growth policy, the gradual easing of broad liquidity and the emergence of the bottom signal of economic growth, the index is expected to enter the shock and bottom building stage, so as to brewing a new round of rebound opportunities.
Looking to the future, he said that the “mixed” of liquidity indicators indicates that asset price fluctuations will still be large, and the spring offensive can be grasped from two dimensions. The first dimension is the implementation and overweight of specific steady growth policies to hedge the pessimistic expectation of upward pressure on the economy. The economic work conference held in December 2021 made it clear that China’s economic development is facing the triple pressure of shrinking demand, supply shock and weakening expectations. In 2022, economic work should be stable and seek progress while maintaining stability, and an active fiscal policy should be implemented. The market is waiting for the landing of the steady growth policy. The second dimension is the gradual change of global liquidity expectations, the expansion of China’s broad liquidity, the landing of structural wide credit and the stability of narrow liquidity.
Like Kevin Yan, Zhang Yingjun is still relatively optimistic about the market in 2022. He judged that the probability of medium-term adjustment trend in the A-share market lasting for more than 6 months is small. There is no need to panic excessively when the market is depressed and the economy is down.
He believes that in the economic downturn, the policy will carry out counter cyclical adjustment and bring phased investment opportunities. Moreover, China’s economy is in a period of structural transformation, and there will probably be new growth points, which will also bring investment opportunities to markets with long-term capital.
“In the first quarter, we should grasp the investment opportunities brought by the boom brought by the market adjustment and the stabilization of excellent companies in the industry. The first quarter is also an important period for the main line of market investment in the whole year to brew and gradually reach a consensus.” Zhang Yingjun said.
