Market review: the two cities continued to rise, with a large net purchase of more than 20 billion yuan by northward funds
Today, the two cities continued yesterday’s strong market and continued to rise after the opening. As of the closing, the Shanghai index rose 0.98% to 3673.04 and the Shenzhen index rose 1.23% to 15147.87. In terms of sectors, social services, medicine, biology and household appliances led the increase, while national defense and military industry, power equipment and non-ferrous metals led the decline. The turnover of the two cities was 1264.03 billion yuan, an increase of 14.75% over the previous trading day and 9.09% over the average of the previous five days. The net purchase of Shanghai Stock connect was about 10.7 billion yuan, that of Shenzhen Stock connect was about 9.3 billion yuan, and that of northbound funds was 21.556 billion yuan.
Market focus:
According to the data released by the National Bureau of statistics on December 9, China’s PPI rose 12.9% year-on-year in November, down 0.6 percentage points from the previous value. Among them, the month on month growth rate of means of production turned negative, down 0.1%. In November, CPI rose 2.3% year-on-year, 0.8 percentage points higher than the previous value. In addition, according to the data of China foreign exchange trading center, on December 9, the central parity rate of RMB against the US dollar was 6.3498, an increase of 179 basis points, a new high since May 15, 2018.
Strategy suggestion: focus on the consumption sector
Today, the A-share market continued yesterday’s upward trend, and the Shanghai and Shenzhen index continued to rise after the opening. The northward capital accelerated the admission, the market turnover rebounded, and the volume can be expanded. Blue chips were relatively dominant in the market, with CSI 300 and SSE 50 up more than 1.6%, and CSI 1000 closing up slightly by 0.12%.
In November, the scissors gap between PPI and CPI narrowed as scheduled. From the perspective of PPI, the effect of “ensuring supply and stabilizing price” is prominent, and the month on month growth rate of industrial prices in coal mining, processing and metal industry has changed from positive to negative, with a significant decline. Combined with the determination of the “double carbon” strategy and the statement on ensuring energy supply at the recent Politburo meeting, we expect that although the supply of energy and high energy consuming raw materials such as coal will improve marginally, it will continue to be tight. In the short term, the prices of relevant products will have a top and bottom, the probability of profitability of relevant industries will gradually decline, and profits will begin to transmit downward, This may also be one of the main reasons why mining, nonferrous metals and other sectors closed down against the market today. CPI continued to rebound, making the profit recovery expectation of middle and downstream industries stronger, increasing the upward potential energy of food and beverage, household appliances and other sectors. Specifically, the rebound of CPI in November may be mainly driven by the increase of food product prices and the seasonal rise of pig prices. Under the guidance of “expanding domestic demand” at the policy level, residents’ consumption is expected to accelerate the repair and drive the profits of the consumption sector to rise. At the same time, the upstream production capacity of this round of pig cycle has reached the top, and will gradually accelerate the de capitalization in the future. The pig price may hit the bottom again after the seasonal rise. In the first half of 2022, it may remain relatively low, dilute the upward pressure of CPI, make the CPI rise moderately, and give room for loose policy. Therefore, the financial sector still has better allocation opportunities, so it is recommended to continue to pay attention.
In addition, the RMB strengthened again, driven by the strong demand for foreign exchange settlement under the high export boom, and the slow impact of Omicron, which led the fed to raise interest rates and fall in advance. The RMB has been maintaining a high resilience in recent years, and foreign capital’s preference for China’s China market is rising. It is expected to continue to drive the A share market to expand, and to boost the consumption sector which has long been favored by foreign investors.
Risk tip: the macro-economy is less than expected, the national epidemic situation is more than expected, and the geopolitical risk is intensified.
