Key investment points:
I. after 2008, there have been four “policy bottom market bottom” combinations in the A-share market: September 2008 November 2008, June 2012 December 2012, July 2015 August 2015 and October 2018 January 2019. The confirmation of “policy bottom” is usually accompanied by the continuous introduction of policy combination, including monetary policy, fiscal policy and capital market related policies. The focus of monetary policy is to build the “bottom” and the “capital policy” is often the first, while the “capital policy” is often the first. The improvement of market expectations for economic fundamentals and the recovery of confidence in the stock market are the main driving forces for the market to get out of the bottom. For example, the three major policies to rescue the market and the “four trillion” investment plan were issued in 2008; In 2012, the national development and Reform Commission intensively approved more than trillion yuan of infrastructure investment projects, while insurance capital and the national team collectively increased their holdings of a shares; In 2015, seven ministries and commissions participated in the “rescue of the market” of a shares, and the national team made efforts to protect the market with funds; In 2018, the high-level voice for stock market fluctuations, the easing of Sino US trade frictions and the comprehensive reduction of reserve requirements by the central bank in early 2019 are all coordinated with active fiscal policies and relevant policies of the capital market to boost the market’s confidence in economic fundamentals and the stock market.
II. The bottom of A-Shares generally presents the time law of “policy bottom – market bottom – profit bottom”. The “policy bottom” is usually 1.5-3 months ahead of the “market bottom”: the “policy bottom – market bottom – profit bottom” in 20082009 appeared in September, October and March 2009 respectively, and the “policy bottom – market bottom – profit bottom” in 20152016 appeared in July, August and June 2016 respectively. The “market bottom” is not necessarily ahead of the “profit bottom”: the profit bottom in 2012 is 3 months earlier than the market bottom; At the end of 2018, the profit was synchronized with the market bottom.
III. after the “policy bottom” is confirmed, the market often rebounds, but the construction of the market bottom is often not achieved overnight. After the intensive introduction of previous stability maintenance policies, the A-share market often rebounded, which lasted for 6 to 29 trading days, ranging from + 4.4% to + 19.1%. In the rebound stage, the industry sector generally rose. However, the disturbance of external factors or concerns about economic fundamentals may cause the market to fall back again, and the industry sector generally fell in the falling stage. For example, after rebounding for six trading days in 2008, the market weakened again due to the continued weakening of China’s economic data and the sharp decline of the US stock market during the National Day holiday; As another example, in 2018, due to repeated Sino US frictions, the A-share market began to grind the bottom slowly again.
IV. the “policy bottom” of this round of A-Shares has been basically proved. Jinlong Machinery & Electronic Co.Ltd(300032) 00 points are the bottom range, and the probability of “shock upward after grinding the bottom” is high. On March 16, the meeting of the Finance Committee of the State Council was held. After hitting the lowest point of 3023, the Shanghai Composite Index came out of the “V” shaped rebound. From the rhythm of previous bottoming of a shares, after the “policy bottom” is proved, the “market bottom” is not too far away. The Shanghai composite index is near Jinlong Machinery & Electronic Co.Ltd(300032) 00 points or a relatively solid bottom. In the future, there will be a high probability of upward shock after the bottom of a shares. We should pay attention to two signals: on the one hand, China’s stability maintenance policy continues to be issued, and the economic fundamentals confirm the bottom; On the other hand, the external disturbance factors such as the rhythm of the Fed’s interest rate increase and contraction and geographical relations are gradually becoming clear.
Risk tips:
The policy strength is less than expected; Repeated outbreaks outside China; Economic growth is less than expected; Global black swan incident, etc.
