The repeated impact of the epidemic, the twists and turns of Russia Ukraine peace talks, the spillover of the tightening policy of the Federal Reserve… The smooth operation of the capital market has faced many challenges since this year. On April 25, A-Shares were significantly adjusted, and the Shanghai index fell below 3000 points, a new low since July 2020. On April 26, the Shanghai index continued to fall below 2900 points, and the “cold spring” of A-Shares has not passed.
However, whether it is the “cold spring” or the defense war of 3000 points of the Shanghai stock index, it is not difficult to find that from the medium and long-term point of view, A-Shares have better investment opportunities, medium and long-term capital market entry expectations are good, China’s economic fundamentals are still good, and all policies focus on boosting market confidence.
enhance confidence one: increase financial investment to ensure infrastructure construction
Accelerating the construction of new infrastructure is an important measure to expand effective investment. On April 26, Xi Jinping presided over the 11th meeting of the central financial and Economic Commission and stressed that we should comprehensively strengthen infrastructure construction, build a modern infrastructure system and lay a solid foundation for building a modern socialist country in an all-round way.
Not long ago, the general office of the State Council recently issued the “opinions on further releasing consumption potential and promoting sustainable recovery of consumption”, which put forward 20 key measures in five aspects to comprehensively implement policies to release consumption potential and promote sustainable recovery of consumption.
enhance confidence 2: inactivated vaccine is approved and the epidemic situation can be improved
On the one hand, on April 26, the inactivated covid-19 virus vaccine of Sinopharm China biological Omicron mutant was approved by the State Food and drug administration. On the other hand, the increase in social aspects of the epidemic in Shanghai has dropped to about 200, and the epidemic may usher in an inflection point. Some analysts said that with the completion of the clearing of social aspects in different cities, this will enhance the society’s confidence in the victory of the clearing policy over Omicron and the expectation of returning to work and production in an orderly manner.
enhance confidence 3: standardize the development of public offering industry and ensure to increase the proportion of medium and long-term funds
On the 26th, the CSRC issued the opinions on accelerating the high-quality development of the public fund industry, which boosted confidence in the smooth operation of the capital market from the details. The “opinion” proposes to increase the proportion of medium and long-term funds, do a good job in the implementation of the policy of individual pension investment in public funds, guide industry institutions to make steady preparations for products, systems, investment and education, and encourage industry institutions to develop all kinds of fund products with lock-in period and service life cycle of investors.
The Opinions also proposed to actively participate in the design of various pension investment, operation and management policies, promote the introduction of pension market-oriented and long-term investment policies in cooperation with relevant departments, study and establish a multi-level supplementary pension system based on individual accounts, and support more excellent public fund managers to participate in pension management. Continue to promote insurance, financial management, trust and other asset management institutions to increase the actual proportion of equity investment through direct investment, entrusted investment, public funds and other forms, and implement long-term assessment. Promote fund managers to increase investment in human, capital, research and other resources, strengthen multi asset allocation and investment and research capacity-building, and effectively improve the medium and long-term capital service level.
enhance confidence 4: strengthen the support of prudent monetary policy to the real economy
On April 26, the people’s Bank of China stated that it would strengthen the support of prudent monetary policy to the real economy, maintain reasonable and sufficient liquidity, promote the healthy and stable development of financial market and create a good monetary and financial environment. The people’s Bank of China will strengthen the support of prudent monetary policies to the real economy, especially support industries seriously affected by the epidemic, small, medium-sized and micro enterprises and individual industrial and commercial households, support agricultural production and energy supply and increase supply, launch scientific and technological innovation refinancing and inclusive pension special refinancing, increase RMB 100 billion refinancing, support the development and use of coal and enhance energy storage, and increase small refinancing for agriculture and special refinancing for civil aviation
enhance confidence 5: promote the development of individual pensions and encourage medium and long-term funds to enter the market
Not only that, the opinions of the general office of the State Council on promoting the development of individual pensions, which is related to people’s livelihood, was also launched a few days ago. As an important institutional arrangement in the top-level design of China’s social security system, this supplementary old-age insurance system with government policy support, individual voluntary participation and market-oriented operation will bring a more positive and long-term social impact.
enhance confidence 6: China’s economic fundamentals are still improving
Supply and demand go both ways, and China’s economic fundamentals are still good. On the 26th, Yang Changcheng, chief economist of Shenwan Hongyuan Group Co.Ltd(000166) securities, made it clear in an interview with the financial associated press that “the recent adjustment of the A-share market has indeed exceeded expectations, but from an overall and long-term perspective, the long-term stability of China’s stock market has not changed in the general direction of good, whether from the fundamentals of China’s economy, market liquidity, enterprise performance, epidemic prevention and control, macro policy layout and other aspects.”
Recent analysis by many institutions pointed out that with the growth and decline of negative and positive factors, China’s capital market will gradually stabilize and return to track. At present, the factors conducive to market stability are increasing.
enhance confidence 7: Russia Ukraine peace talks may usher in an inflection point
Zhongtai Securities Co.Ltd(600918) researchers Xu Chi and Zhang Wenyu pointed out that the twists and turns of the Russian Ukrainian peace talks may “come to an end” after the battle of Donbas in the next week, and the suppression of global risk appetite caused by the continuous disturbance of geographical turbulence and anxiety may have room for periodic repair.
China Securities Co.Ltd(601066) chief strategist Chen Guo believes that this year’s golden pit is near the 2900 point of the Shanghai index. Considering that the epidemic situation in China is gradually improving, the logic of stable economic growth in China is strengthening, and the inflation data in the United States seems to be peaking, the improvement of the overall internal and external environment is a high probability event in the next quarter.
improve confidence 8: the first quarterly report is expected
It is worth mentioning that the reporter of the financial Associated Press noted that, as the base of the capital market, the recent quarterly results of listed companies have reported good results. According to the statistics, up to now, there are 1705 listed companies that have published the first quarterly report, of which 1438 have achieved profits, accounting for more than 80%.
Many institutions also said in an interview with the financial associated press that the policy of stable growth in the future will make greater efforts to promote the recovery of the real economy. Yang Changchang is firmly optimistic about the long-term trend of the stock market. He further pointed out that the current market decline is still a matter of confidence, and excessive pessimism is not desirable. Investors should treat the investment stage scientifically and rationally and the current macro environment. Value investment is still effective, and they should look at short-term fluctuations from a long-term perspective.
improve confidence nine: the rumor that the clearance of the national team was refuted
A shares continued to adjust, causing panic among investors. In this regard, on April 26, in view of the recent fluctuations in the financial market, the relevant person in charge of the people’s Bank of China said that it was mainly affected by the expectations and emotions of investors.
The financial Associated Press reporter also noted that the spread of panic also led to the distortion of public opinion. Recently, some people from the media said that the market value of A-Shares held by the national team decreased from 3.2 trillion at the end of December last year to more than 60 billion yuan at the end of March this year, and there was a clearance reduction in one quarter.
The financial Associated Press learned from people close to regulators on the 26th that the news was seriously untrue. At present, the so-called “national team” counted by some market information institutions mainly refers to China Securities Finance, China Securities Financial customized fund, Central Huijin and other institutions. The data of the top ten circulating shareholders of each stock in the A-share market are only published in the annual report, semi annual report and quarterly report. The statistics of the shareholding market value of the above institutions in the market are mainly based on the periodic reports of publicly disclosed listed companies. The reason why the statement of “clearance reduction of national team in the first quarter” is seriously untrue is that most of the first quarterly reports of listed companies this year have not been disclosed. Therefore, there is a data deviation in the statistics and comparison of shareholding and reduction of relevant institutions. There were only 11993 listed companies in the quarterly report of 2023, while there was only one listed company in the quarterly report of 20225. In other words, at the end of the fourth quarter of last year, most of the data on the shareholding of relevant institutions have been disclosed, while at the end of the first quarter of this year, only a small part of the data has been disclosed. The person said that in the first quarter of this year, the overall shareholding of relevant institutions was stable and there was no reduction.
Yang growth: firmly optimistic about the healthy development of China’s capital market
For the continuous adjustment of A-Shares since this year, Yang growth believes that it is mainly affected by two aspects. On the one hand, it is affected by the external environment. The global economic and political turmoil represented by the conflict between Russia and Ukraine, with sharp fluctuations in commodity prices, exceeded market expectations to a certain extent and had a certain impact on the market.
On the other hand, Chinese investors have a process of re understanding the hot spots of the stock market. It is difficult to find that China’s “high-tech economic growth” is due to the lack of understanding of the logic of “high-tech market growth” in the past two years. However, it is difficult to find that it is difficult to focus on these issues, such as the lack of correct understanding of China’s “high-tech market growth” and “long-term economic growth”, which is caused by the incorrect recognition of China’s “high-tech market growth”. The present is a process of adjustment.
In Yang’s view, the expectation of China’s capital market for the current market adjustment is very sufficient, both for the epidemic and the liquidity of the market. Yang Changcheng is firmly optimistic about the healthy development of China’s capital market. He talked to the financial associated press about four reasons:
first, it is unnecessary to be pessimistic about the economic situation in March and even April this year, affected by the rebound of the epidemic, the logistics industry and some industries in the service industry decreased significantly. However, with the continuous promotion of epidemic prevention and control, the general trend is to gradually turn to stability. Relevant departments have also actively issued a series of policies to promote the logistics industry to return to normal and promote the resumption of work and production, which has created positive conditions for the recovery and growth of the economy in the next step. In addition, if the short-term impact of the epidemic is put aside, the data are stable in expanding domestic demand, industrial investment and consumption growth.
In addition, there is a lot of room for macro-control policies to play in the future. It can be seen that China’s fiscal deficit rate has decreased year by year. At present, the fiscal deficit rate is relatively low all over the world, which has fallen to the level of 2.8%. Appropriately reducing the deficit rate is conducive to enhancing fiscal sustainability. In addition, although there may be relatively large price fluctuations in the future, there is no pressure of inflation expansion. In addition, the monetary policy is relatively stable. Even if the whole economy deviated from the normal growth track in the second quarter and even later, our current state and preparation have left sufficient policy space and room for maneuver for subsequent adjustments and changes. At present, we have ways to deal with the changes in the future economic situation.
second, there is no need to worry about liquidity risk many investors are worried about the situation of western countries in China, that is, the liquidity contraction due to inflation will affect asset prices. In essence, there is no such problem in China. Since the outbreak, China’s two major ways to attract funds, direct financing and financial investment, have seen good growth.
third, don’t worry about enterprise performance overall, the performance of enterprises has increased steadily in the past two years. In fact, the overall start of this year is also very good. Why did some companies have a year-on-year performance decline? That is because the performance growth of listed companies was particularly prominent last year. In this comparison, there may be fluctuations, but excluding such factors, the fundamentals of the company have not changed greatly.
fourth, there is no need to worry about valuation at present, individual sectors have fallen sharply, because market-oriented self-regulation is playing a role. In the long run, these sectors with high valuation in the past are accurate and scientific large investment directions, such as high-tech, digital economy, “double carbon” transformation and so on. It can be seen that the range of stocks that A-Shares can invest in is wider and deeper than in the past.
