On April 25, the A-share market opened low and went low. The Shanghai index, Shenzhen Component Index and gem index fell 5.13%, 6.08% and 5.56% respectively. The Shanghai index fell below 3000 points and closed at 292851 points. The trading volume of the market has been enlarged compared with that before. The turnover of the two markets exceeds 890 billion yuan, including 427077 billion yuan in Shanghai and 469817 billion yuan in Shenzhen.
Analysts said that the internal risks of A-Shares are fully released, and it is not appropriate to be overly pessimistic at the current time. In the medium and long term, the market opportunities have exceeded the risks.
multi factor catalysis
On April 25, the A-share market was fully adjusted. In terms of individual stocks, 147 stocks in Shanghai and Shenzhen rose, 31 stocks rose by the limit, 4539 stocks fell, and 682 stocks fell by the limit.
Data show that as of the closing of the 25th, the total market value of A-Shares was 76.64 trillion yuan, a decrease of 4.48 trillion yuan compared with the previous trading day.
Shenwan level industries were adjusted across the board. The non-bank financial industry with the smallest decline fell by 3.64%, and the non-ferrous metals, national defense and military industry and electronics industries led the decline, falling by 8.45%, 8.05% and 7.84% respectively.
In the non bank financial industry with the smallest decline, Minsheng Holdings Co.Ltd(000416) , Huaan Securities Co.Ltd(600909) , Anhui Xinli Finance Co.Ltd(600318) bucked the market limit, among which Minsheng Holdings Co.Ltd(000416) staged the trend of “Earth Sky board”, and the stock has risen for four consecutive trading days.
In terms of capital, the data showed that on the 25th, there was a net outflow of 4.396 billion yuan from the north, including a net outflow of 4.846 billion yuan from the Shanghai Stock connect and a net inflow of 450 million yuan from the Shenzhen Stock connect. On that day, the net outflow of main funds was 59.432 billion yuan, 1010 stocks had a net inflow of main funds, and 3682 stocks had a net outflow of main funds.
Since April, the A-share market has continued to adjust. As of the closing on the 25th, the Shanghai index, Shenzhen Component Index and gem index have fallen by 9.95%, 14.35% and 18.44% respectively. As for the reasons for the recent market adjustment, Chen Li, chief economist of Chuancai securities and director of the Research Institute, told China Securities News that first, Contemporary Amperex Technology Co.Limited(300750) announced to postpone the disclosure of the first quarterly report, which is expected to be pessimistic. In addition, several first quarterly reports released last weekend showed that the performance of listed companies was average due to the impact of commodity prices and the epidemic, which affected the market sentiment; Second, under the expectation of the Fed’s interest rate increase and table contraction, the high interest rate market has a siphon effect on global funds, and the strengthening of the US dollar has a certain impact on market liquidity; Third, the epidemic situation in China is widespread, and there are some concerns in the market. Overall, a variety of factors have led to a large range of market adjustment.
“old and new 3000 points” are quite different
On June 25, the Shanghai stock index fell below 3000 points. Looking back on the last time that the Shanghai stock index closed below 3000 points, it was on June 30, 2020. On that day, the Shanghai stock index closed at 298467 points. Compared with the previous Shanghai composite index below 3000 points, the market has changed greatly.
First, the total number of A-share listed companies increased by nearly 1000. The data show that as of June 30, 2020, the number of A-share listed companies was 3842. As of April 25, 2022, the total number of A-share listed companies is 4799.
Second, the total market value of A-Shares increased by more than 7 trillion yuan. As of June 30, 2020, the total market value of A-Shares was 69.13 trillion yuan. As of April 25, 2022, the total market value of A-Shares was 76.64 trillion yuan, an increase of 7.51 trillion yuan. At the two time points, the stocks with the largest market value of A-Shares are Kweichow Moutai Co.Ltd(600519) , with a market value of 1837667 billion yuan on June 30, 2020 and 2145586 billion yuan on April 25, 2022.
Third, from the perspective of valuation, the data show that as of April 25, 2022, the dynamic P / E ratio of all a is 15.46 times. As of June 30, 2020, the dynamic P / E ratio of all A-Shares is 19.62 times, and the current valuation of A-Shares is lower than that on June 30, 2020. For a longer time, the lowest dynamic P / E ratio of all a in 2020 is 15.64 times on March 23, 2020. The closing point of Shanghai stock index on that day is 266017, and the valuation is still higher than that on April 25, 2022.
Fourth, from the perspective of transaction volume, the transaction volume of all A-Shares on June 30, 2020 was 746502 billion yuan and that on April 25, 2022 was 896958 billion yuan.
Fifthly, judging from the financing balance of the active funds in the market, as of April 22, 2022, the financing balance of the two cities was 1516997 billion yuan. As of June 30, 2020, the financing balance of the two cities was 1131374 billion yuan.
Xia Fengguang, manager of Rongzhi investment fund under private placement paipai.com, told the China Securities Journal that after the adjustment in April, the overall market valuation further fell from the low position to the undervalued position. The valuations of all broad-based indexes were below the median, and the Shanghai Composite Index and China Securities 500 were in a very low position. The rapid release of market sentiment on the 25th helped A-Shares to find the bottom in the short term.
“At present, the market valuation adjustment is basically in place. From the perspective of two or three years, the investment cost performance is prominent. Taking the Shanghai and Shenzhen 300 index as an example, the expected dynamic P / E ratio in 2022 / 2023 has dropped to 10.5 / 9.3 times, which is lower than the average level of the past five years.” Said Lang Chengcheng, general manager of the research department of Furong fund.
institutions are not pessimistic
Although the Shanghai stock index fell below 3000 points, institutions are not pessimistic about the future market of a shares.
Lang Chengcheng said that from a dynamic point of view, there is still room for growth of the CSI 300 index in the next two or three years, the market valuation is gradually moving from reasonable to undervalued, and the medium and long-term investment opportunities of the broad-based index appear again.
Chen Li said that in the medium and long term, under the background of “stable growth”, the annual monetary and fiscal policies are expected to continue to exert force, thus supporting the economic fundamentals. There is no need to worry too much about the current time node. It is suggested to focus on areas with low valuation, good performance in the first quarter and policy support from the perspective of value, such as infrastructure, energy industry chain, agriculture, logistics (ensuring supply and dredging supply chain).
China International Capital Corporation Limited(601995) chief strategist Wang Hanfeng believes that at present, the bottom characteristics have appeared in terms of policy, valuation, capital and market signals. Combined with the current market environment, it may take time to wait for a clearer turning point. The market is still in the “bottom grinding” period. Although there may be repeated in the short term, the opportunities gradually outweigh the risks in the medium and long term. In terms of investment structure, the undervalued “steady growth” field still has a certain allocation value, and pay attention to the bottom-up investment opportunities in the consumption field.
