The world political arena is full of twists and turns!
On Sunday, the French presidential election war was staged. In this election, the cost of living and the war in Ukraine dominated the political debate. Opinion polls a week before the first round of the presidential election showed that the gap between the current president macron and Marina Le Pen, the leader of the far right party who ran for the third time, had narrowed significantly. After the outbreak of the Ukrainian war, macron’s support rate once soared, but with the soaring prices, Marina Le Pen’s support rate began to soar. At present, the difference between the two is only one point. Macron obviously encountered a great threat in this election. The two are ready to debate the second and final round of voting on April 24.
n addition, shortly after Obama visited the White House, Biden encountered Trump’s “gunfire”. According to the Russian satellite news agency, former US President trump “opened fire” on Biden again at the rally on the 9th local time, accusing Biden of soaring US energy prices long before the outbreak of the Ukrainian crisis, and then trying to blame the Russian government for inflation. He also said that if he is re elected president of the United States, the United States will achieve “energy independence”
On the other hand, in the early morning of the 10th local time, Pakistan’s National Assembly passed a motion of no confidence in prime minister Imran Khan, who also became the first prime minister in Pakistan’s history to be dismissed by the national assembly. Protests erupted in Sri Lanka over a shortage of natural gas and other basic commodities. Peru also recently triggered anti-government protests over rising fuel prices, killing at least six people.
It can be said that both the pressure of macron and Biden and the turbulence in some of the above-mentioned countries were born around inflation. According to some overseas experts, tensions are brewing. Then, under this background, can the A-share market break through?
macron is under great threat
According to CCTV news, April 10 is the first round of the French presidential election. There are 12 candidates in this round of voting, among which macron, Le Pen and Mei langxiong are the three most popular candidates. As of April 8, the poll showed that French President macron, who is seeking re-election, took the lead in the poll, with a support rate of 26%. The French “National League” candidate Marina Le Pen ranked second, with a support rate of 25%, which is quite close. The third is Jean Luc Mellon of the “unyielding France” party, with a support rate of 17.5%, more behind the first two candidates.
after Russia invaded Ukraine, the French people’s support for macron surged. The French President tried to promote a diplomatic settlement between Kiev and Moscow, called for a ceasefire, and guided the EU to take action against the Kremlin’s unwarranted invasion of Ukraine. However, his soaring ratings at the beginning of Russia’s invasion of Ukraine have disappeared
The war in Ukraine has also contributed to higher energy prices, in addition to a broader surge in inflation – which his opponent, marine Le Pen, took advantage of in her campaign. Le Pen has always been highly concerned about the cost of living, and she also tried to keep a distance from Russian President Vladimir Putin. Le Pen also abandoned some other political positions in an attempt to attract more moderate voters. For example, she stopped pushing France to leave the EU.
On the other hand, polls show that the rejection rate in the first round of the French presidential election is likely to exceed 30%, which has also created the history of the Fifth Republic of France. French media believe that the high rejection rate is likely to bring variables to the election results. In the history of the Fifth Republic, there have been two candidates, destein and Jospin, who lost in the lead in the polls because of the high rejection rate.
The French presidential election is divided into two rounds. If a candidate obtains an absolute majority of votes in the first round, that is, more than 50% of the votes, the candidate will be elected president of France. If no one obtains an absolute majority in the first round of voting, the candidates with the top two votes will enter the second round, and the one with the most votes in the second round will be elected president. The results of the first round of the French presidential election will be announced in the early morning of Beijing time on the 11th.
trump shelled Biden and the Prime Minister of Pakistan was exempted
It is worth mentioning that inflation is also affecting US President Biden. According to the Russian satellite news agency, former US President trump “opened fire” on Biden again at the rally on the 9th local time, accusing Biden of soaring US energy prices long before the outbreak of the Ukrainian crisis, and then trying to blame the Russian government for inflation. He also said that if he is re elected president of the United States, the United States will achieve “energy independence”.
At the end of March, according to chinanews, a NBC poll showed that the overall support rate of US President Biden fell to 40%, the lowest level since he became president. In addition, 70% of Americans lack confidence in Biden’s ability to deal with the conflict between Russia and Ukraine. Moreover, during the worst surge in inflation in the United States in 40 years, the vast majority said they believed the country was going in the wrong direction.
Pakistan is also experiencing political turmoil due to inflation.
According to the global times, in the early morning of the 10th local time, Pakistan’s National Assembly passed a motion of no confidence in prime minister Imran Khan, who became the first prime minister in Pakistan’s history to be dismissed by the national assembly. According to the regulations, the national assembly of Pakistan should immediately elect a new prime minister during this session, and shabaz Sharif, the leader of the opposition party in the Parliament and the brother of former Prime Minister Nawaz Sharif of Pakistan, is the most likely candidate. Although Imran Khan’s political problems can be traced back to a few years ago, economic mismanagement, such as soaring food and fuel costs and the depletion of foreign exchange reserves, may be the direct cause.
tension brewing, can A-Shares counter attack
Earlier, protests broke out in Sri Lanka due to a shortage of natural gas and other basic commodities. Peru’s recent anti-government protests triggered by rising fuel prices have killed at least six people. However, political conflicts are not expected to be limited to these countries.
Last year, nearly three quarters of Lebanon’s population lived in poverty as a result of the political and economic collapse. 70 to 80 per cent of the country’s wheat imports come from Russia and Ukraine. In the explosion of Beirut port in 2020, key granaries were also destroyed.
The African continent, where 70 per cent of the world’s poor live, is also very vulnerable to rising food and energy prices. The International Committee of the Red Cross says drought and conflict in Ethiopia, Somalia, South Sudan and Burkina Faso have caused a food security crisis for more than a quarter of the population of the African continent. Things could get worse in the coming months. Political instability has intensified in parts of the continent. Since the beginning of 2021, a series of coups have taken place in West and Central Africa.
in Europe, in addition to France, thousands of protesters recently gathered in cities across Greece to demand higher wages to combat inflation.
It can be said that with the soaring prices, tensions are brewing. So, in this context, can the A-share market have some counter attack performance
Analysts believe that the current A-share market response to inflation is not significant, but there is a strong problem of unclear expectations. At this stage, the undervalued sector may be easier to run out. In particular, some sectors with high dividend yield, such as banks and steel, may bring some support to the market.
Tianfeng Securities Co.Ltd(601162) believes that with the accelerated inflow of foreign capital into A-Shares in 2016, the correlation coefficient between the all a index and the 10-year real interest rate of the United States (hereinafter referred to as tips) has increased significantly from -0.43 before 2016 to -0.85 (20162022). From the perspective of real interest rate, many members of the Federal Reserve still predict that they will continue to take a more tightening position. By implication, the upward trend of real interest rate is likely to continue. Moreover, considering that it is the first time for the Federal Reserve to raise interest rates and has not yet started the stage of table contraction, there may be a large upward space for tips of real interest rate in the future. In the A-share equity market, tips rose rapidly and significantly impacted the industries with the highest growth in the previous period. From the perspective of the overall category style, in the rapid upward stage of tips, the undervalued value and value categories are relatively resistant to decline.
Gf Securities Co.Ltd(000776) daikang team said that in 2021, the direction of structural wide credit is mainly focused on new energy, hard technology and other directions. The direction of stock price is dominated by the style of emerging industries, but the promotion of the overall economy is limited; In 2022, the marginal change of structural wide credit will point more to the direction of traditional economy, while the direction of stock price is dominated by value style. In addition, the current epidemic changes in China have increased the possibility of steady growth and further overweight, thus further enhancing the winning rate of value style. The yield of US Treasury bonds has an inhibitory effect on growth stocks.
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