In last week's weekly newspaper, we mentioned the "big force with repair after the freezing point, but the medium-term trend still depends on credit". In the first two days of this week, the market collapsed and the sentiment reached the freezing point, but then Premier Liu he presided over the meeting of the financial committee of the State Council, and the market sentiment began to recover significantly.
In the follow-up, A-Shares may usher in a stage of breathing window, and continue to recommend medicine (CXO, vaccine, traditional Chinese medicine, API, etc.), automobile chain (battery, lithium battery equipment, smart car, etc.), and stable investment direction (nuclear power, 5g + industrial Internet of things, pipe gallery, ultra-high pressure, water conservancy, real estate leaders, etc.)
Risk tips: geopolitical upgrading, intensified supply chain crisis, inflation restricting the space for steady growth, etc
\u3000\u3000. Short term sentiment dominated market volatility
In the short term, the factors leading the change of market sentiment in China include: contractionary policy, China concept stock problem and real estate problem. The financial committee meeting of the State Council on Wednesday pointed to the pain and made clear instructions on these three issues, which helped to stabilize market sentiment.
Overseas factors leading to changes in market sentiment include: the conflict between Russia and Ukraine, China US relations, the Federal Reserve raising interest rates, etc. Among them, the most violent stage of Sino US relations derived from the conflict between Russia and Ukraine and the sharp withdrawal of funds going north may have passed temporarily (the average daily net outflow of about 10 billion funds going north for seven consecutive days is unprecedented).
Another is the Fed's expectation of raising interest rates. In the short term, for example, since January this year, the Fed's expectation of raising interest rates has fluctuated sharply. During this period, the trend of A-share index almost corresponds to the probability trend of the Fed's expectation of raising interest rates.
As of the latest situation, the probability of the Fed raising interest rates by a total of 75 BP from May to June has risen to 84%. It is expected that there is little room for further deterioration. It is expected that the next 1-2 months may provide a window for the oversold rebound of growth. However, since May, the Fed's interest rate meeting may further discuss the details of the reduction. At that time (from May to June), the global market will trade the expectation of the Fed's reduction, which may continue to disturb the short-term sentiment of China's growth style and need to be closely followed.
