Event: the Shanghai Composite Index fell sharply for three consecutive days on March 7, 8 and 9, of which the intraday decline was as high as 4.4% on March 9. The trading volume was enlarged and there was obvious panic. However, it rebounded strongly in the late trading, and the closing decline narrowed to 1.1%. On March 10, the Shanghai Stock Exchange opened higher and closed up 1.2%, and the market sentiment was relieved. European and American stock markets also rebounded strongly from the 9th, with commodities falling and market risk appetite improving.
Our comments are as follows:
(I) some positive factors have emerged in the market:
1) the situation in Russia and Ukraine improved and overseas stock markets rebounded strongly
On the one hand, the market has expectations for the negotiations between Russia and Ukraine. The foreign ministers of the two countries will have their first contact since the outbreak of the war. The market expects that Ukraine may conduct substantive negotiations with Russia on maintaining its neutral status, Crimea and Eastern independent region. Although the final result is difficult to determine, the negotiations can better ease market tensions. Driven by this expectation, the global stock market rose sharply overnight, and the German and French stock markets rose by more than 7%.
Secondly, the sanctions imposed by western countries on Russia may be phased out. The United States approved the ban on the import of Russian crude oil yesterday, marking that the market expected sanctions on Russian energy and key punishment measures such as kicking Russia out of the swift system have been successively introduced, which has a short-term negative effect on the market. At the same time, Germany expressed its opposition to sanctions on Russian energy. Germany will not stop importing energy from Russia, which also makes the market think that the sanctions will be relaxed.
Previously, the market mainly traded around the Russian Ukrainian war and the resulting sanctions. At present, the negative effects of this variable have been priced in stages, and the margin has improved, which has significantly boosted the risk appetite of the global stock market. Today, A-Shares are also driven by the warmer peripheral atmosphere.
2) the market signal of regulatory stability is prominent. Over the past three days, more than 20 leading companies, including Kweichow Moutai Co.Ltd(600519) , Yonghui Superstores Co.Ltd(601933) , Semiconductor Manufacturing International Corporation(688981) , Wuxi Apptec Co.Ltd(603259) , Tongwei Co.Ltd(600438) and others, rarely released operating data from January to February, but never released monthly financial data in the past. The overall performance of these companies was bright, with a median revenue growth rate of 40% and a median profit growth rate of 50%, which was helpful to boost market confidence.
3) the steady growth policy can still be expected to continue to be implemented. The 5.5% GDP target set in the government work report is relatively positive. If this target is to be achieved, the market speculates that more substantive steady growth policies involving real estate and infrastructure should be launched in the follow-up. At the same time, the central bank should turn in the balance profit of RMB 1 trillion to the finance, highlighting the coordination and linkage of monetary and fiscal policies to jointly contribute to steady growth. In the short term, the favorable factors for steady growth are suppressed by geopolitical risks, but if the peripheral risks do not deteriorate, the role of this favorable factor will be gradually reflected.
(II) the market may usher in a window of oversold rebound
Based on the above analysis, after continuous and rapid decline in domestic and foreign markets, there is oversold rebound demand. We need to pay more attention to the rebound of energy, infrastructure and other sectors.
(III) A shares are still suppressed by adverse factors in the medium term
However, the strength and duration of A-share rebound should not be expected too high for the time being. At present, there are still many adverse factors in the medium term.
First, the situation in Russia and Ukraine has not substantially warmed up, and it is difficult to say that the risk appetite of peripheral markets has bottomed out.
Secondly, after the current round of surge in bulk prices, the fluctuation center is likely to rise to a higher level, and it is difficult to return to the level before the outbreak of the Russian Ukrainian war in the short term. Global stagflation or similar stagflation worries linger, which is unfavorable to the global market, including a shares.
Thirdly, the Federal Reserve will soon start the process of raising interest rates and shrinking the table. At present, the impact of the Russian Ukrainian war and large price increases on the US economy is less than that in Europe. The Federal Reserve is likely to quickly promote the rate increase and shrinking table according to the established plan.
Finally, the endogenous factors of A-Shares can hardly be improved. In the first half of the year, it is still restricted by the rapid decline of performance growth.
Risk tip: if the situation in Ukraine deteriorates further, or western countries introduce tougher sanctions against Russia, or China's steady growth effect does not meet expectations, the rebound window may close quickly.
