This paper analyzes the current situation of China's capital market from the four dimensions of valuation, asset allocation, economy and monetary policy.
well known American media sing more about China's stock market
Recently, the US media CBNC published several articles on the front page, including "global investors snap up Chinese stocks despite market declines", From Credit Suisse to Goldman Sachs, investment banks say its time to buy Chinese stocks.
In the latter article, Credit Suisse, Bernstein, a Wall Street investment bank, HSBC, Goldman Sachs and UBS are collectively bullish on China.
Goldman Sachs believes that A-Shares are now more investment oriented. Bernstein analysts believe that the market expects the growth of new social financing in China, looser monetary policy and more attractive stock valuation compared with the rest of the world.
UBS raised China's rating to "overweight", especially optimistic about Chinese Internet companies.
A shares were at the bottom, and the gem index fell by more than 14%
While overseas investment banks are optimistic about China's stock market, Chinese institutions have differences on the future trend of a shares. Based on the volatile market since the beginning of the year, many investors claim to be "cut leeks", and some investors were short positions and bearish on the market in the first quarter years ago.
As of February 18, the three major A-share indexes fell one after another during the year, ranking the bottom in the performance of major global capital markets, among which the gem index retreated the most, with a decline of nearly 15% during the year. At the same time, Hong Kong and UK stock markets remained strong.
From the perspective of individual stocks, there were more than 530 A shares with a decline of more than 20%, more than 60 shares such as Risen Energy Co.Ltd(300118) , Fujian Snowman Co.Ltd(002639) , China Reform Health Management And Services Group Co.Ltd(000503) fell by more than 30%, and * St Changdong was halved; Less than 200 stocks rose by more than 20%. The trend of IPO new shares was depressed in 2022, and more than 60% of the stocks fell since they were listed, resulting in poor market profit-making effect.
four strengths of China's assets
Where does foreign capital come from to China's capital market? Why do you think A-Shares are attractive? Over the past few months, foreign investors have generally remained cautious about China's stock market, but they have begun to change their attitude slowly and expect the Chinese government to support economic growth. data treasure preliminarily supports the judgment of foreign investment from the four dimensions of valuation, asset allocation, economy and monetary policy.
1. The valuation of the A-share market index is about half of that of the Dow
Although some stock valuations are seriously overestimated or even bubble, the valuation of the A share market index has always been relatively low, which is a phenomenon that A share market has been in existence for many years.
According to the statistics of securities times · databao, as of the latest closing date, the valuation of NASDAQ index is close to 33 times, the valuation of Dow index is more than 22 times, Shanghai index is about 13 times, only about half of that of Dow index, and the valuation of Shenzhen Composite index is about 26 times.
The MSCI China index is expected to rise 16 per cent this year as valuations remain below the bank's target of 14.5 times earnings.
2. Low asset allocation
Compared with the United States, whether bonds or stocks, the proportion of foreign capital in the allocation of Chinese assets is lower. According to the statistics of data treasure, overseas investors hold about 30% of US Treasury bonds, while overseas investors hold less than 5% of Chinese bonds.
In terms of stocks, the market value of Chinese stocks purchased through Beishang capital, QFII, rqfii and other channels is close to 3 trillion yuan. Among them, the market value of Beishang capital is as high as 2.55 trillion yuan, which is more than three times that of 2018, but the share of stock market value is only 3%. With QFII, the share of foreign capital in a stock market value is still less than 5%, and the share of foreign capital in the United States is about 15%, Japan Brazil and South Korea have a higher proportion of foreign ownership.
With the continuous opening of China's capital market and the lifting of restrictions on the proportion of foreign shares in China, foreign investors have continuously increased their investment in China's assets. Since the beginning of the year, the total net inflow of funds going north has exceeded 20 billion yuan. The latest disclosure is that in the 2021 annual report, many companies have obtained new positions in QFII.
3. China's economy continues to improve
In the face of the complex and changeable international environment, the covid-19 pneumonia epidemic is still breaking out on a large scale overseas. Zhang Yuxian, director of the economic prediction Department of the National Information Center, believes that China's economy will continue to improve and the trend will not change. In 2020, China is a rare country with positive economic growth. In 2021, China's GDP increased by 8.1%, the United States by 5.7% and Japan by only 0.8%.
2022 is the first year of the full implementation of the 14th five year plan. Facing the triple pressure of shrinking demand, supply impact and weakening expectation, Xing Ziqiang, chief economist of Morgan Stanley, believes that China's economy will show a recovery trend in 2022, and the annual GDP growth is expected to reach 5.5%. The United States is still deeply affected by high inflation, high unemployment and the high outbreak of covid-19. The IMF's latest forecast has significantly reduced the U.S. economic growth rate by 1.2 percentage points to 4% in 2022, down 1.7 percentage points from 2021.
4. US tightening and China's loose monetary policy
In the article previously released by databao, it was mentioned that after the massive water release for nearly two years, the United States adopted a tightened monetary policy, while China began a loose monetary policy. The central bank carried out a series of medium-term lending facilities (MLF) operations, with a total of 700 billion yuan at the beginning of the year; On February 15, the central bank continued to carry out 300 billion yuan of one-year MLF operation and 10 billion yuan of seven-day reverse repurchase operation in the open market, and the bid winning interest rates were 2.85% and 2.10% respectively, which was the same as before.
The central bank's incremental parity renewal of MLF is intended to increase long-term capital investment, guide financial institutions to increase their support for the real economy such as agriculture, rural areas and farmers, small and micro enterprises, and release the policy orientation of the central bank's active and stable growth.
According to data treasure statistics, the latest data show that the yield of us 10-year Treasury bonds is nearly 2%, the highest since 2020; Britain, India and France have reached the highest level since 2020; China's current 10-year Treasury bond yield is 2.8%, slightly lower than that in early 2020 and 0.36 percentage points lower than that in early 2019. In addition, from the perspective of China's broad money supply, M2 reached 243.1 trillion yuan in January 2022, with a year-on-year increase of 9.8% and a month on month increase of 2.02%.
It should be added that the RMB is also expected to appreciate. Under multiple factors, Chinese assets not only have the advantage of avoiding risks, but also obtain a higher return on investment.
these high return blue chip stocks have been increased by foreign capital
foreign investment banks believe that undervalued and large market blue chips are still attractive. according to the stock market value classification, data treasure calculates the average rise and fall since the beginning of the year. It is found that the average rise of stocks with a market value of more than 500 billion is nearly 2%, the average decline of 300 billion to 500 billion shares is about 3%, the average decline of 10 billion to 50 billion shares is more than 7.5%, and the average decline of less than 10 billion shares is about 6%. Large cap stocks fluctuate in a narrow range, and small cap stocks callback sharply, which is basically consistent with the view of investment banks.
Which stocks are focused by institutions and which stocks are added? According to the statistics of data treasure, since this year, it has been increased by going north. The return on net assets in the three quarterly reports of 2019, 2020 and 2021 has exceeded 10%, and the latest valuation is less than 30 times. There are only 15 performance pre hi stocks with a market value of more than 10 billion; These 15 shares have been investigated by institutions since 2021, of which Qingdao Haier Biomedical Co.Ltd(688139) has been investigated by 590 institutions, and Shenzhen Jinjia Group Co.Ltd(002191) , Zhejiang Orient Gene Biotech Co.Ltd(688298) has been investigated by more than 30 institutions.
According to the statistics of databao, Zhejiang Orient Gene Biotech Co.Ltd(688298) , Eastern Air Logistics Co.Ltd(601156) , Shenzhen Tagen Group Co.Ltd(000090) gained more than 1 percentage point of capital increase in the north, and Xinjiang Tianshan Cement Co.Ltd(000877) and satellite chemistry gained increase in positions. Hubei Yihua Chemical Industry Co.Ltd(000422) , satellite chemistry, Zhejiang Orient Gene Biotech Co.Ltd(688298) have outstanding performance in 2021, of which Hubei Yihua Chemical Industry Co.Ltd(000422) is expected to increase by more than 10 times. Since the beginning of the year, the company has increased its position by 0.28 percentage points, and the latest valuation is less than 15 times.
