The market is getting more and more good signals!
Affected by the external environment, A-Shares continued to fall on Tuesday, with the Shanghai index falling 3300 points and the gem index falling 2600 points, both hitting a 16 month low, with only 445 rising stocks in the two cities. The performance of Hong Kong stocks was also not optimistic. The Hang Seng Index closed down 1.39%, reaching a new low for more than five and a half years; The Hang Seng technology index fell 3.21%, also a record low.
Analysts believe that the situation in Russia and Ukraine has continued to evolve recently, commodity prices represented by crude oil and nickel metals have continued to soar, market concerns about commodity supply chain security have intensified, and global “stagflation” expectations have increased significantly. In this context, the market risk appetite is obviously downward, which may be the main reason for the market adjustment.
However, with the change of the situation, there are five positive signals in the market: first, Kweichow Moutai Co.Ltd(600519) reported two-month performance for the first time, exceeding market expectations; Second, the funds of bottom reading securities companies appeared on Tuesday; Third, against the backdrop of the rising US dollar index and the substantial outflow of foreign capital, the RMB remains strong; Fourth, Zhang Kun, the “top flow of 100 billion”, once again liberalized the purchase restriction within the year; Fifth, after A-share trading, when talking about the possibility of recognizing Crimea and the Republic of Donbas, Ukrainian President zelenski said that this issue can be discussed and a compromise solution for how people live there can be found. This is also one of the conditions for Russia’s armistice. The peripheral markets immediately showed a strong willingness to rebound again.
volatile market
In today’s world, the interaction between major markets is becoming greater and greater. Affected by the Russia Ukraine incident, the financial market fluctuated violently, and the logic of its fluctuation began from the commodity market. After the Chinese Lunar New Year, crude oil continued to rise sharply, and the maximum oil distribution has exceeded US $130 / barrel. The move triggered concerns about “stagflation” all over the world. The shadow of the “oil crisis” in the 1970s gradually shrouded the market, and the global stock market opened the killing and falling mode.
In the past two weeks, the European Stoxx 50 index fell by nearly 13% and the Shanghai Composite Index fell by nearly 5%. Although the overall decline of US stocks is not large, the trend has weakened significantly in recent trading days. From the morphological point of view, most of these indexes are technically in the downward channel and fall below the effective support level. In terms of individual stocks, most of them are also in a state of disintegration, except that very few sectors have funds to keep warm. It can be said that the profit-making effect of the market is poor. Nickel is the ultimate interpretation of everything.
Nickel prices rose by about 250% in the past two days, breaking a record high of US $100000 per ton, which is also the craziest trend in the history of London metal trading. The market is worried that the huge fluctuation of nickel metal may lead to a closing tide, which will lead to a short-term liquidity crisis. During the day of Tuesday, the craziest time of the variety is also the time when the Asia Pacific stock market fell the most miserably. Subsequently, the London Metal Exchange (LME) suspended nickel metal trading, and other non-ferrous metals began to plunge, leading to a rise in European stock markets.
China International Capital Corporation Limited(601995) said in the market quick review that the situation in Russia and Ukraine has been further interpreted recently and continues to ferment in the financial market. Commodity prices represented by crude oil rose sharply and reached a new high in recent years. Considering that Russia and Ukraine are important suppliers of some commodities in the world or regions, the market is worried that before the geographical situation is relatively clear, the supply risk may have to be further deduced. While raising the price of sectorau materials, it also casts a shadow on the future total demand, and the risk of “stagflation” increases. In addition, from the perspective of the Chinese market, the epidemic has been repeated locally recently, and investors are also worried about its drag on the overall demand side of the economy.
five positive signals in market
however, there may be no need to be too pessimistic in the face of such a volatile market. From the market situation of each market, at least five positive signals have been mapped out
First, on March 7, Kweichow Moutai Co.Ltd(600519) released its first monthly operating data. According to the announcement, from January to February 2022, the company achieved a growth rate of 20% in revenue and net profit, achieved a total operating revenue of about 20.2 billion yuan and a net profit attributable to shareholders of listed companies of about 10.2 billion yuan. This performance growth rate can be said to exceed the market expectations, is a performance report “Preview”, and re ignited the confidence of the consumer market, the Baijiu sector performance on Tuesday is obviously stronger than other sectors.
Secondly, from Tuesday’s disk, there have been several pulse quotes in brokerage stocks Guosen Securities Co.Ltd(002736) senior investment consultant Li Xinjun said that brokerage stocks are an emotional indicator of the market, and this kind of pulse market means that there are funds to enter the market to copy the bottom. Moreover, from the previous market, there will be a more resolute rise later, so as to repair the market sentiment.
Third, on Tuesday, the US dollar index once broke through the 99 mark, and the northbound funds sold a net 8.699 billion yuan throughout the day. However, the RMB exchange rate is very strong. The onshore RMB closed at 6.3141 against the US dollar at 16:30, up 42 basis points from the previous trading day. Offshore RMB is also quite strong. This means that peripheral funds are still flowing into RMB assets.
Fourth, on Tuesday, e fund announced that the purchase restrictions of the two largest funds under Zhang Kun’s management, e fund blue chip selection fund and e fund high-quality selection fund (formerly known as e fund medium and small cap), were lifted again, from 10000 yuan to 50000 yuan. It is worth noting that this is the second time Zhang Kun has liberalized the purchase restriction in the year. Before February 7 this year, the blue chip selection limit of e fund was 2000 yuan, that is to say, the latest limit has been expanded to 25 times, and the high-quality selection status of e fund is to suspend the subscription.
Fifth, on the news front, the report from pengpai news pointed out that Ukrainian President zelens said on March 8 local time that Ukraine could discuss with Russia on how the people of Crimea and Donbas would live and seek a compromise. According to the Russian satellite news agency reported on March 8, Zelensky made the above statement when he expressed his position on the dispute between Crimea and Donbas on the same day. This is also one of the conditions for Moscow to stop special military operations in Ukraine “immediately”.
Affected by the above news, peripheral commodity futures plunged collectively after the closing of a shares. On the contrary, the equity market counterattacks across the board. Europe’s Stoxx 50 index and France’s CAC40 index both expanded to 2% at one time, fell nearly 2% at the opening, and the US stock futures index also rebounded. Commodity prices directly point to inflation, and the correction of futures prices can alleviate the bearish sentiment in the equity market to a great extent.
In addition, Li Xinjun also said that the decline of the stock market is more affected by the transaction level. Recently, there are many statements about “redemption pressure” in the market, which is not so serious. For example, the bank’s financial products are usually entrusted to the fixed public fund for one-year lock-in management, which cannot be redeemed in the middle; In addition, according to the Convention, individual investors will not be too strong to redeem after continuous rapid decline. In fact, the market sentiment on Tuesday is close to the freezing point, the number of stocks falling by the limit on the disk has increased significantly, and there was a panic in the afternoon. These are signals that the adjustment is coming to an end.
stagflation is not a bull market
With the intensification of the conflict between the two major countries at the source of the supply chain and the continuous surge of global commodities in the short term, “stagflation” has become the devil of the equity market, although this is only an expectation. Today, investors need to face three major problems: first, will the sharp fluctuations in commodities make stagflation expectations a reality? Second, “stagflation” is really coming. Is there still a bull market? Third, how will the current stage be interpreted?
Many market participants like to compare the current global situation with that in the 1970s, believing that the risk of “stagflation” and the oil crisis are happening, and bring great trouble to the stock market. There are indeed many similarities among them, and there is no need to repeat them. However, there are fundamental differences, that is, “the cycle now is different from that at that time”.
The global trade volume expanded rapidly in the last decade, and the total annual growth rate of Global trade reached 12 70 in the last century. Today’s Global trade is facing great changes:
First, due to the epidemic, the growth rate of global cargo volume fluctuated sharply in the past two years. According to the data of the world bank, the growth rate in 2021 was only 10.8%. Moreover, due to the changes in U.S. trade policy, the anti globalization trend has continued to spread in recent years, trade disturbances occur from time to time, and the total global demand is facing great variables. As the US interest rate hike moves forward, the offshore dollar credit expansion turns to contraction. If the conflict between Russia and Ukraine is eased, inflation expectations may fall rapidly, and the probability of “stagflation scenario” in the 1970s will not be too high.
Second, stagflation is not without a bull market. During the first oil crisis, the global stock market did adjust. During the oil embargo (October 1973 to March 1974), the S & P 500 fell 13%; However, the German and Japanese stock markets, which are in a period of rapid development, fell only slightly, with the DAX index and the Nikkei 225 index falling 8% and 3% respectively. After the outbreak of the second oil crisis (December 1978 to December 1979), most of the world’s major stock indexes rose. Among them, the S & P 500 rose by 14%, and the Japanese stock market rose all the way from 1974 to 1981, up 2.4 times. At present, China’s per capita GDP and industrial transformation cycle are similar to those of Japan at that time. From this perspective, the capital market also has reasons to show the resilience of the stock market of large manufacturing countries.
In fact, if we simply look at the market, the current state of the market has largely reflected extremely pessimistic expectations. In the near future, as long as there is a signal of easing international disputes, it will be amplified in the market. These clues can also be seen as that the equity market is accumulating counter offensive force. On the other hand, with the interpretation of the complex situation since February, the expectation and rhythm of the Fed’s interest rate hike have actually decreased. This is actually conducive to the development of the market towards valuation expansion.
It is true that the current global economy still faces many variables, but for China’s stock market, there is no lack of opportunities for improvement. This year’s government work report puts forward an economic growth target of about 5.5%, which means that the driving force of “stable growth” still exists and its policy reserve space is relatively sufficient; On the other hand, although international commodities continue to rise sharply, China’s inflation as a whole is still under control. In the short and medium term, this should not become the main variable hindering the expansion of equity asset valuation.
More importantly, the valuation of the Chinese market is still relatively low, the overall P / E ratio of A-Shares is already below the median, and the valuation of Hong Kong stocks is lower. With the sustained efforts of the steady growth policy, the reversal of the expected weakening of economic growth should be seen in the middle of the year. If geopolitical events, covid-19 epidemic and other overseas disturbances tend to ease, then it is possible to see an exponential market in which the valuation resonates with the fundamentals.
