Historical performance of Valuation: since 2022, the A-share market has generally fallen sharply. As of the closing on April 27, 2022, the decline of major stock indexes since the beginning of the year is in the range of 20% - 40%. The decline of China's stock market is greater than that of the international stock market, and the valuation performance is also relatively lower. From the perspective of industry style differences, the coal and precious metal industries rose, while the stock indexes of other industries generally fell, but the decline of upstream industries related to energy and infrastructure was relatively small.
Why has the recent A-share market fluctuated greatly? The impact of the epidemic superimposed on the conflict between Russia and Ukraine has further blocked the global supply chain, and the prices of energy, metals, Shenzhen Agricultural Products Group Co.Ltd(000061) and other bulk commodities have soared, pushing up the level of global inflation. The Federal Reserve and other central banks have started the interest rate increase cycle, the yield of US bonds has risen, the US dollar index has strengthened, the interest rate gap between China and the United States has narrowed, the pressure of capital outflow has increased, and China's stock market is under pressure. The epidemic situation in China has been repeated, with great downward pressure on the economy and rising inflationary pressure, but it is generally controllable. In terms of policy, the monetary policy remained loose, the interest rate and reserve requirement cuts were carried out in an orderly manner, and the market liquidity was abundant; Active and promising fiscal policies, early issuance of special bonds, and greater efforts to reduce taxes and fees; The marginal relaxation of real estate regulation policy is conducive to stabilizing market expectations and favorable stock market valuation. The transmission of commodity price rise is not smooth, and the operating performance of middle and lower reaches enterprises is relatively poor, which reduces the profitability of the stock market. The growth gap between M2 and GDP has widened, the growth gap between M1 and M2 has remained negative, the real economy is less dynamic, but the overall market capital is abundant. The circulating market value of A-Shares continued to decline, which deviated from the sufficiency of funds, which was mainly affected by the pessimistic expectations of investors.
Whether the short-term valuation of the A-share market has bottomed out periodically. Since 2022, the global commodity prices have soared, the prices of gold, crude oil, Shenzhen Agricultural Products Group Co.Ltd(000061) and other assets have performed relatively well, and inflation has reduced the valuation of the A-share market; The Fed's expectation of raising interest rates continues to heat up, the US dollar index continues to strengthen, the RMB exchange rate is under pressure, and the proportion of foreign holdings continues to decrease, increasing the impact on the A-share market.
This year, the turnover and turnover rate of A-Shares have decreased significantly, the financing balance of Shanghai and Shenzhen stock markets has also decreased, and the market activity has decreased significantly. However, the margin ratio of Shanghai and Shenzhen stock markets has gradually increased, indicating that the power to do more has increased relatively. In the case of abundant liquidity, with the orderly recovery of economic production and the change of investor expectations, the valuation of A-share market is expected to rebound in the short term.
Risk tip: Overseas geopolitical conflicts, increased global stagflation risk, sharp turn in monetary policies of central banks, strong epidemic uncertainty and fragile market expectations.
