Key investment points:
On April 25, the major indexes of the market dropped sharply, of which the Shanghai Composite Index fell 5.13% and the gem index fell 5.56%; In terms of size, the CSI 500 fell 6.47%, while the CSI 300 fell 4.94%. In terms of transaction volume, the two cities traded 896.9 billion yuan throughout the day, an increase of 143.6 billion yuan over the previous trading day; In terms of funds going north, the net outflow throughout the day was 4.396 billion yuan. In terms of industries, shenwanyi industries fell to varying degrees, led by nonferrous metals, national defense and military industry, electronics and basic chemical industry, while the decline in non bank finance, household appliances, building decoration and building materials was relatively small, but still more than 3.0%.
On the 25th, the important market index fell sharply. The main reasons are as follows: (1) the epidemic spread locally again, raising the pessimistic expectation of the market on fundamentals. Since March, affected by the epidemic control in Shanghai, Jilin and other places, some industries and logistics transportation have been at a standstill, and the production and demand of enterprises have been impacted; At the same time, residents’ consumption is also suppressed by factors such as lack of scenes and poor expectations, and the economic data is obviously under pressure. On the 24th, there were 14 + 5 new local cases in Beijing, and the epidemic data released in Shanghai at the weekend also rebounded. The fermentation superposition of the epidemic in Beijing and the epidemic in Shanghai are still repeated, causing the market to worry about the fundamentals and gradually revise the expectations of the fundamentals. (2) The devaluation of RMB and the subsequent interest rate hike by the Federal Reserve raised the market’s concerns about capital outflow. Although historically, northbound funds only flowed out of the A-share market in the process of the trend depreciation of RMB against the US dollar from 2014 to 2016, the recent sharp depreciation of RMB against the US dollar, coupled with the market’s expectation that “the Federal Reserve will continue to raise interest rates by 75bp in June and July respectively after a high probability of raising interest rates by 50bp in May”, led to the short-term market still worried about the pressure of foreign capital outflow caused by the continued depreciation of RMB in the future.
Looking ahead, short-term A shares will still face risks such as the epidemic, the final stage of performance release and the landing of the Fed’s interest rate hike boots, and the negative factors remain to be cleared. However, judging from the current risk premium, the risk return of the Shanghai index exceeding the risk-free return has reached 6.0%, close to the historical extreme level since 2015. The extremely high risk return means that once the future economic expectation stabilizes, the potential return of the market is high. It is suggested that investors actively prepare the midline layout process, and look for sectors with medium and long-term allocation value in combination with the first quarterly report and future performance expectations.
Risk tip: there is a risk of fluctuations in the overseas market, the economic downturn is higher than expected, and the development of the epidemic in China is higher than expected.
