On April 27, the A-share market “saw the sun through the clouds”, the sectors and individual stocks rose in a large area, and the volume and energy were also enlarged. The growth enterprise market index rose by almost 5.52% to catch up with the positive signal of the growth enterprise market. Market participants generally believe that yesterday’s sharp rise will help the stock market alleviate panic, avoid “blood loss” and repair the form. Behind this is the accumulation of good news in all aspects and the resonance of positive factors in the market.
The emotional factors that dominate the short-term market are often unpredictable and uncertain. In the medium and long term, the fundamental factors and valuation factors of the current market are still relatively favorable and stable. In the market fluctuation, if investors want to stabilize their mentality, they should understand the decision-making level’s determination to “stabilize” the economic work and market operation, strengthen their confidence in the long-term improvement of the fundamentals of the capital market, and maintain the patience of rational investment and long-term investment.
In the face of the changes of the century and the interweaving of the epidemic in the century, and under the “triple pressure” of economic development, the decision-making level and financial supervision department have always been firm in their determination to meet challenges, prevent risks and maintain stability for a period of time.
Face up to difficulties and strengthen confidence. “The environment facing China’s economy in 2022 is not optimistic, but China still has enough policy space to support stable economic growth.” Ruize, director of the China Bureau of the world bank, said recently.
From “accelerating the construction of a unified national market”, to “20 measures to promote consumption”, to “comprehensively strengthen infrastructure construction”, smooth China’s large cycle, expand domestic demand and stabilize growth, with clear and detailed implementation; From the overall RRR reduction, to the central bank’s efforts to accelerate the payment of balance profits to the central government, to the frequent use of structural tools such as refinancing, a prudent monetary policy takes into account internal and external balance and stimulates market vitality; From the special meeting of the financial committee to “actively introduce policies conducive to the market”, to “12 articles to support the development of listed companies” to “16 articles to support the development of public funds”, the foundation for the smooth operation of the capital market has been continuously consolidated; From the “30 services” of Shanghai Stock Exchange, to the promotion of resumption of work and production by local governments and enterprises, to the deployment of “strengthening job stabilization and employment promotion” and “further opening up the blocking points and smooth circulation” at the executive meeting of the State Council, the impact of the epidemic on the economy and market is controllable
Chen Li, chief economist of Chuancai securities and director of the Research Institute, told the Shanghai Securities News, “the recent intensive policies, documents and measures show the determination of” stabilizing the word “and will play a very strong role in boosting the recovery of the economy.”
Central China Securities Co.Ltd(601375) managing director and chief economist Deng Shubin also believes that with the implementation and effectiveness of a series of policies, China’s economy will make steady progress. It is expected that after the phased achievements in the battle of epidemic prevention and control, the short-term impacted economy will gradually recover and market sentiment will improve.
The continuous collection of favorable policies and increasing efficiency “underpin” the market confidence, and the various positive factors of the market itself are also the “foundation” for its stable operation.
In terms of funds, since this week, the north direction funds have changed from net selling to net buying, and the buying intensity has increased in the past two days. Its preference of “deep strength and Shanghai weakness” for many consecutive days was also verified in yesterday’s market rebound, and its guiding role for other funds is increasing. Looking at the two financing funds, in the first two trading days of this week, the financing balance decreased by 23 billion yuan to 28 billion yuan, but the total financing was at a low level in recent years, and the proportion of financing transaction volume in the transaction volume of A-Shares was not high, which had a limited impact on the market. The agency believes that there will be no market liquidity crisis caused by “deleveraging” in 2015.
In terms of valuation, research institutions generally believe that the current valuation of A-Shares is low and attractive. Chen Li said that after excluding financial stocks, the current valuation level of the Shanghai stock index is close to the 2018 level and has high allocation value. Deng Shubin also stressed that the current price earnings ratio of wind a is 14.5 times, which is at the lowest 10% quantile level in history. The valuation and risk appetite quantile of A-share broad-based index have been adjusted to the bottom of history, and A-share has entered the “deep value range”. Zhong Zhengsheng, chief economist of Ping An Securities, believes that at present, A-Shares are superior to U.S. stocks in terms of absolute valuation or relative valuation. He added that the risk of economic recession in the United States is increasing, and at least the slowdown in economic growth is certain. If China’s economy can “bottom” in the second quarter, it will help stabilize the confidence of global investors in China’s economy and RMB assets.
From a long-term perspective, Deng Shubin said that the in-depth promotion of the market-oriented reform of China’s capital market in terms of market system, basic system, product innovation, team construction of institutional investors and securities supervision is conducive to enhancing the attraction of long-term funds. Recently, the correction of A-share market can be regarded as short-term disturbance. “We have reason to be confident and optimistic about the long-term investment value of the A-share market.”
In the general trend of long-term improvement, medium and short-term fluctuations will inevitably be interspersed, and various factors and uncertainties are complex, disturbing the mood of investors. At this time, it is more necessary to have the patience of rational investment and long-term investment, not afraid of clouds to cover your eyes and not block your eyes due to one leaf. This is just like sowing and cultivation. The change of weather and rain in a day will certainly have some impact, but in terms of the final harvest, seeds, soil, climate and environment are the more decisive factors.
