On Wednesday, following the deep V trend in the A-share session, European and U.S. stocks successively ushered in collective gains, gold, crude oil, London base metals and U.S. bonds were adjusted across the board, and risky assets and safe haven assets fell together, reflecting the previously suppressed rebound in risk appetite.
Did the bottom of the A-share market appear? Under the two external shocks of the epidemic spread and the conflict between Russia and Ukraine, as well as the three deviations of macro policies at home and abroad, the trend of commodity assets and stock assets, and the steady growth from investors’ expectations, we can’t help thinking again: how does the geopolitical “black swan” incident of the conflict between Russia and Ukraine affect the A-share market? The final “anchor” of the capital market — what will be the operation trend of economic fundamentals? Are there any signs of concern in the market capital?
is there a bottom in the market
“If you keep going, you can expect the future.” With the online drama “hidden corner” fire reasoning novel writer Zijin Chen issued a document on the 9th that he would redeem all financial management and copy the bottom of a shares.
“The market is up and down, panic adjustment or investment sowing date.” Huaxia Fund believes that long-term investment can ignore short-term fluctuations when analyzing the stock market on the 9th.
Also, the founder of Shanghai Shiva assets, a private equity fund, publicly said on the social platform: “I see a piece of gold.”
In the last five trading days, the Shanghai stock index fell from the highest 350029 points to the lowest 314768 points. Recently, three long negative lines have fallen sharply, and irrational panic has spread in the market. Some people “cut meat” to leave, some institutions passively reduce their positions, some writers and big V shouted “don’t panic”, and listed companies bought back and increased their holdings with real money and silver
“At present, the valuation of major indexes has been reasonably low. Looking forward to the future, the oversold rebound may come at any time.” According to the calculation of Pengyang fund, as of the closing of the 9th, the PE valuation of the CSI 300 index and the CSI 500 index has reached the historical quantile of 30% – 35%, and the gem index is in the quantile of 35% – 40%.
“I firmly believe that for a considerable number of stocks, today’s low is the bottom of the year.” In the face of the market shock on March 9, a senior market person said so.
There are not many similar views in the market. China Merchants Fund also pointed out that there is no need to be overly pessimistic about the short-term adjustment of the market. With the increase of positive factors, the risk appetite of A-Shares is expected to rise slowly from the low level. “The conflict between Russia and Ukraine has shown signs of slowing down. Once there is another signal of slowing down, the market will rebound. With the announcement of the Fed’s action in March, the time window for the market to fight back may open at any time.” China Securities Co.Ltd(601066) Securities chief strategy officer Chen Guo said.
China Industrial Securities Co.Ltd(601377) global chief strategist Zhang Yidong also believes that from the short-term impact, the impact of the Russian Ukrainian conflict on a shares, “I tend to basically end in early March, or March 9 may have bottomed out, at least the end of the next few months.” He said that investors have experienced relatively rare panic behavior in the short term, which is obviously an overreaction to overseas uncertainties. At present, the price earnings ratio (TTM) of Shanghai and Shenzhen 300 is about 12 times, which is at the low level since 2015. In the short term, with the release of panic, A-Shares are expected to confirm the short-term bottom.
In the view of Huaxia Fund, the market risk is structural rather than systematic, and the possibility of continuous unilateral decline is low. However, considering the short-term uncertainty and the possibility of repeated fluctuations at the index level, it is recommended that investors continue to observe carefully. It believes that from the perspective of trading, the index will probably shrink before stabilizing. If the external environment cooperates and the shrinkage flattens, it will form an obvious stabilizing signal.
Throughout the year, Zhang Yidong also reminded that this year’s market will be more complex than the judgment at the beginning of the year. It is not ruled out that there are “Black Swans” behind it. This year’s market may continue to do “push ups” and shake and grind the bottom. He suggested that investors should do a good job in defense and counterattack, and accumulate small victories into big victories. Every time there is a short-term market panic, they should allocate China’s high-quality assets based on medium and long-term bargain hunting, which is currently in the stage of market panic.
Many institutions began to prompt local investment opportunities. Zhang Jintao, the value style investment director of Harvest Fund, believes that the overall downside risk of the market is small. “After several rounds of valuation correction, the stocks with large decline in the early stage do not have much room for decline at present.” He believes that some tracks with low valuation and low market attention may regain the favor of investors in the future.
do not exaggerate the impact of the “black swan” incident
The institutions interviewed generally believed that the recent sharp adjustment of the market was mainly affected by the risk aversion driven by the conflict between Russia and Ukraine, which was a typical emotional impact.
Combing the geopolitical conflicts in the past decades and other “black swan” events, including covid-19 epidemic, Chongyang investment, Huaan Securities Co.Ltd(600909) , Dongxing Securities Corporation Limited(601198) and other institutions believe that such events will amplify the volatility of the financial market and urge investors to pursue safe haven assets, but they are basically impulse shocks, which will have a greater and longer impact on the “party” capital market, The overall impact is short-lived and unsustainable. “The impact of current geopolitical events on China’s capital market will also be temporary.”
“Although we cannot predict the development of the geographical situation, the excessive feedback of the market has proved to exist. Events at a certain point in time are difficult to affect the long-term trend of a shares.” Minority investment of private equity fund companies also believe that irrational factors dominate the recent market.
At the same time, irrational factors also affect the commodity market, resulting in the deviation between the price trend of commodity assets and stock assets. Yao Zhipeng, director of harvest growth style investment, said that according to long-term supply and demand and historical experience, the surge of commodities at this stage is more catalyzed by emotions. If the conflict slows down in the future, it may fall back quickly.
Huaxia Fund also believes that the expectation of global high inflation is unfavorable to the environment of overvalued growth stocks. The particularity of the Russian Ukrainian conflict lies in the resource country attribute of Ukraine and Russia. If the situation is difficult to calm in the short term, the stagflation effect on the world will be gradually reflected. At the same time, the Fed has entered the interest rate hike cycle, and it is a foregone conclusion to raise interest rates in March.
From the medium-term impact of the conflict between Russia and Ukraine, Zhang Yidong reminded that we should be highly vigilant against the risk of global economic stagflation and the medium-term fundamental risk of US stocks and even global stock markets. The global stock disaster similar to that in 2008 cannot be completely ruled out. He believes that the United States may encounter more obvious “stagflation” pressure from the late second quarter.
From the impact of the covid-19 epidemic, which also belongs to the “black swan” incident, experts believe that more than two years of prevention and control practice has proved that while China is in the global leading position in epidemic prevention and control, its economic growth has also maintained the global leading position. At present, the spread of the epidemic in some places will not affect the overall stable growth.
don’t doubt the prospect of steady growth
Geopolitical conflicts have exacerbated the concern of economic stagflation, which is an important reason for the recent fluctuation of global risky assets. This also means that the emotional impact caused by geographical conflict may also affect the A-share market through stagflation risk and monetary policy tightening spillover effect.
At present, the market’s concern about economic fundamentals also lies in the lack of sufficient confidence in the economic outlook caused by the deviation of domestic and foreign macro policies and the deviation between steady growth and investor expectations.
From the perspective of macro policy deviation at home and abroad, Zhang Yidong believes that under the tone of stable growth, China’s “broad currency” will continue, and there is still room for subsequent RRR and interest rate cuts; Although the fiscal deficit ratio has been lowered, the scale of fiscal expenditure has increased by more than 2 trillion yuan over last year. Coupled with the implementation of tax cuts and rebates, the government can effectively support steady growth. Compared with European and American countries, China’s price level is low, and the “self dominated” monetary policy is opposite to the tightening of European and American monetary policy, which is conducive to improving investors’ confidence in China’s economy and Chinese assets.
From the perspective of stable growth expectations, many institutions and experts believe that China’s economy has no risk of stall in the short term, and the positive trend in the medium and long term has not changed. “The expected GDP growth target of about 5.5% is higher than the consensus expectation of the market, which releases a relatively strong policy signal of stable growth and improves the market’s confidence in stable growth.” Yinhua Xinyi fund manager Li Xiaoxing pointed out.
“From our recent research, banks have a strong motivation to invest early and benefit early, and the corresponding social finance is expected to continue the recovery trend. The certainty of macroeconomic stabilization and recovery is increasing, and economic growth is expected to make a good start in the first quarter.” Huaxia Fund pointed out that the current market adjustment does not reflect the expectation of future fundamental trend improvement. With more policy effects, market confidence and risk appetite are expected to be reshaped.
From a micro perspective, Li Xiaoxing said that the competitiveness of industry leading companies has been generally enhanced. Under the pressure of economic growth, large companies have stronger anti risk ability, and their performance growth is often faster than the industry average. Listed companies are generally the leading companies in various sub sectors, and their business resilience is generally strong.
should not worry too much about the pressure of short-term capital outflow
Under the panic, northbound funds have been net outflow recently, and some private equity institutions are also passively reducing their positions. However, the reporter of China Securities Journal learned from many institutions that the private fund products that hit the warning line accounted for less than 1% of the whole market, and there was no massive redemption of public funds.
Haitong Securities Company Limited(600837) 3 the report released on March 9 said that according to its calculation of Jimin’s application for redemption, individual investors did not redeem a large number of funds in the recent decline as the market thought, but “bought more and more when they fell”. It believes that behind this change is the trend transfer of residents’ asset allocation to the equity market.
Several public funds in Beijing and Shanghai interviewed by the reporter of China Securities Journal said that the issuance of new funds is indeed not easy, but the redemption of old funds has not increased significantly. A fund company disclosed that on March 9, except for the redemption of some of its monetary fund products, there were net subscription of other products.
In fact, the market is not short of “money”. In a narrow sense, the liquidity of the money market continues to be abundant, and the interest rate of the money market is at a low level; In a broad sense, the high growth of credit and financing data in the beginning of the year not only transmits the information of credit expansion while falsifying the “credit collapse”; At the market level, a large number of long-term funds are sticking, foreign investment is long-term, and industrial capital has been sold one after another.
Orient Securities Company Limited(600958) chief economist Shao Yu said that compared with last year, this year’s total liquidity is marginally looser. At present, the RMB has a certain risk aversion attribute, so the long-term investment capital probably maintains the inflow trend, and the short-term arbitrage funds may be repeated.
It is generally believed in the industry that China’s economy has been improving for a long time, the RMB exchange rate is stable and reasonable, and the correlation between RMB assets and overseas assets is low, which is more suitable as the subject of long-term allocation and decentralized investment. Some recent feedback shows that foreign-funded institutions are optimistic about the long-term prospects of the Chinese market in multiple dimensions, and new energy, consumption, high-quality small and medium-sized enterprises, advanced manufacturing and other fields are considered to be more worthy of attention.
In Li Xiaoxing’s view, the rise and fall of the market is not determined by funds, but by medium – and long-term fundamentals. From a global perspective, high-quality companies in the Chinese market are very scarce assets, which will attract continuous capital inflow under the condition of reasonable valuation. “After the recent market decline, many high-quality companies have fallen by 30% – 50%, which has entered a reasonable or even underestimated range.”
Back to fundamentals, there is no need to doubt the determination, confidence and ability to achieve steady growth. In the government work report, “stability” has been mentioned 76 times, “timely use of reserve policy tools”, “strengthening the implementation of prudent monetary policy” and “actively expanding effective investment” are expected to be gradually implemented.
At 22:51 p.m. on the 9th, reasoning novel writer Zi Jinchen wrote “prepare for the ammunition showdown” and distributed a screenshot of the redemption of financial products.
Huaxia Fund recommends that investors continue to observe carefully and do not blindly copy the bottom of full positions. For high-quality public fund products, it is recommended that investors make long-term investment or adopt fixed investment strategy by taking advantage of market fluctuations. There is no need to panic too much.
“Objectively speaking, each investor’s risk appetite is different, and the investment period is also different, so it is difficult to have unified investment suggestions. Personally, I have bought a lot of fund shares this year, and I will continue to increase my holdings of funds under my own management.” Li Xiaoxing said.
As some investors have said, buy where no one cares and sell when there is a lot of noise.
As of March 8, 2022, the annualized return of partial equity hybrid fund index since the base date (December 31, 2003) was 14.37%, 9.86 percentage points higher than that of Shanghai Composite Index in the same period, and the annualized return of bond fund index since the base date was 6%, 3.25 percentage points higher than the three-year time deposit interest rate of the bank.
Looking back over the past 20 years, the cumulative yield of the partial stock fund index has been 11 times. During the 2000 Internet bubble burst, the 911 events in 2001, the overseas subprime mortgage crisis in 2008, and the impact of the global COVID-19 epidemic in 2020, we finally got an annual return of nearly 15%.
We believe that in the long run, time is a friend of investment.
