Economic Observer reporter Ouyang Xiaohong
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On January 29, China's capital market staged two days. On the same day, treasury bonds** closed up across the board, and the main 30-year contract rose 0.19%, the main 10-year contract rose 011%, the main 5-year contract rose 005%, the main 2-year contract rose 003%。
The A-share Shanghai Composite Index closed at 288336（-0.92%), and the Shenzhen Component Index closed at 858176（-2.06%), the GEM index closed at 162381（-3.49%), a new low in the stage; Zhongzitou and beverage manufacturing sectors are among the top gainers; The turnover of the two cities was 805.2 billion yuan, a decrease of 23.5 billion yuan from the previous day. On the same day, northbound funds sold a net of 59.2 billion yuan.
The next day, the market was still diverging. The main 10-year Treasury bond** contract rose to a record high of 103505, breaking through the all-time high of 103485。The Shanghai Composite Index, the Shenzhen Component Index, and the ChiNext Index closed respectively77(-2.47%)。The turnover of the two cities was 663.6 billion yuan, a decrease of 141.6 billion yuan from the previous day; Northbound funds are net **174.2 billion yuan.
Bonds are generally seen as a safer investment, especially when market uncertainty increases or the economic outlook is uncertain. Treasuries*** may be a sign that investors are seeking a safe haven and moving towards more stable assets.
The situation is pressing. On the eve of the Spring Festival in the Year of the Dragon, this seems to be a "defense war" that cannot be lost. Recently, the regulator has intensively introduced a series of measures to activate the capital market and boost investor confidence.
On January 22, the National Standing Committee emphasized that it is necessary to further improve the basic system of the capital market, pay more attention to the dynamic balance of investment and financing, vigorously improve the quality and investment value of listed companies, increase the intensity of medium and long-term capital entry into the market, and enhance the internal stability of the market. It is necessary to strengthen the supervision of the capital market, "zero tolerance" for violations of laws and regulations, and create a standardized and transparent market environment. It is necessary to take more effective measures to stabilize the market and confidence.
On January 24, at the press conference of the State Council Information Office, the State-owned Assets Supervision and Administration Commission (SASAC) said that it would further study the inclusion of market value management in the performance appraisal of the person in charge of the enterprise. On the same day, the China Securities Regulatory Commission issued an article entitled "Building an Investor-oriented Capital Market - Wang Jianjun, Vice Chairman of the China Securities Regulatory Commission, Accepted an Interview". According to the article, work should be carried out from vigorously improving the quality of listed companies, such as promoting repurchase and dividends, giving full play to the role of first-class institutions to return investors, and sorting out and improving basic institutional arrangements such as issuance pricing and inquiry. On this day, the central bank announced a RRR cut, which will release about one trillion liquidity.
Under the joint action of multiple departments, A-shares rose sharply. From January 23 to January 26, the Shanghai Composite Index rose from 2,724 points to 2,910 points by nearly 6%.
On January 28, the China Securities Regulatory Commission (CSRC) announced that in order to implement the investor-oriented regulatory concept and strengthen the supervision of the lending of restricted shares, the CSRC has further optimized the securities lending mechanism after full demonstration and evaluation.
On January 29, Vice Premier He Lifeng attended the National Conference on Deploying Visits to Listed Companies and Promoting the High-quality Development of Listed Companies in Beijing. He Lifeng emphasized that all relevant localities and departments should seriously solve the specific difficulties and problems faced by listed companies in the development of listed companies through research, and increase support for high-quality listed companies, so as to promote the high-quality development of listed companies to boost confidence, stabilize the capital market and develop the economy with high quality.
In January, the net outflow of northbound funds continued, and the market activity declined. According to Ping An**, on the supply side, as of January 26, the financing balance in January fell slightly from the previous month, to 154 trillion yuan, about 95900 million shares, with a net outflow of 193 northbound funds600 million yuan, an increase from the net outflow of the previous month. On the demand side, the cumulative scale of IPO+ additional issuance in January fell from the previous month, and the scale of major shareholders increased slightly to 57200 million yuan. On the trading side, the market turnover rate continued to decline to 2 in January9%。
Despite the frequent blowing of warm policies and the continuous purification of the market ecology, A-shares, which have recovered most of the "lost ground", have not been able to stabilize. On January 29, the Shanghai Composite Index fell below 2,900 points, and the ChiNext Index hit a new low since October 2019.
What is the haze hovering over A-shares? How can investor confidence be boosted?
A senior private equity person said that ** also has its own rules, once technically it falls below, it must fall into place. ** and reverse pumping can't change the trend, only the rhythm and speed are affected.
In this person's view, the Shanghai Composite Index 3731 to 2863 is wave A**, and 2863 to 3424 is wave B**, and now it may be the worst wave C. He believes that the strength of the Shanghai market is essentially the small increase in the Shanghai market since the bailout in October 2018. At the same point in time, since 2440 points, the Shanghai Composite Index has risen by 16%, and the ChiNext Index has risen by 34% from 1184 to 1583. Therefore, the GEM fell the fastest because of its large increase.
Lu Ting, chief economist of Nomura** China, analyzed that with the real estate industry showing little signs of recovery, regulators have pledged to speed up new real estate financing programs coordinated by the city, expand the use of commercial real estate loans to repay debt, and Guangzhou has lifted most restrictions on home purchases.
Property sales and construction activity continue to show sharp contractions. Lu Ting said. His logic is that the growth in the 7-day moving average of new home sales in 21 major cities has dropped significantly to -51 as of January 28, 2024, compared to the same period in 20196%, up from -42 a week ago8% further decreased, which is based on data from the lunar calendar. The growth of first-tier cities, second-tier cities, and lower-tier cities fell to -6., respectively7%、-44.2% and -861%, compared to 18 a week ago8%、-38.6% and -804%。In terms of real estate construction, the annual growth rate of cement transportation volume from January 17 to 23 was -326% to -344%。
However, the negative feedback projected by the real estate market to A-shares is not the whole story; International investors are still focusing on A-shares.
II. II. II
What happened to A-shares? Looking back at 2023, in the context of the world's **universal** year, A-shares and Hong Kong stocks bucked the trend and closed down, which inevitably makes people worry about whether China** has been forgotten by global investors?
No, Huang Senwei, a strategist at AllianceBernstein, pointed out that global investors are still focused on China.
Huang Senwei stressed that global investors are still quite concerned about investment opportunities in China**. BofA** conducts a monthly survey of managers and investment managers around the world, and one of the questions is: "What do you think is the most crowded deal right now?" According to the latest survey report released in mid-January, "short China equities" is currently the second most crowded trade among managers around the world, after "long magnificent seven".
In other words, Huang Senwei believes that for more and more international institutional investors, selling China** has become a market consensus, but it may be difficult to produce expectations if such an investment strategy continues, let alone make a profit. Therefore, this is the time to think backwards and look back for investment opportunities in A-shares.
From the perspective of international investors and global monetary policy, AllianceBernstein** believes that 2024 will be a favorable year for A-shares. When U.S. interest rates rise, money tends to flow out of China**; Conversely, when U.S. interest rates move lower, money tends to flow back into China**.
Huang Senwei explained that it is not difficult to understand this reason, when the US dollar interest rate is higher than the RMB interest rate, the US dollar is usually relatively strong, and the US dollar-denominated assets (US stocks, US bonds, etc.) are more attractive, so funds usually tend to redeem Chinese assets and ** US dollar assets, and vice versa.
At present, many investors are worried about foreign investors selling China**, are they not optimistic about China? In fact, from the perspective of historical experience, this is not the first time that foreign capital has sold China**, and the entry and exit of foreign capital to China** is the same as the business cycle, with ups and downs.
The Fed is now widely expected to cut interest rates in 2024, and US Treasury yields have also reached a high level in October 2023 and reversed their decline, which means that the probability of capital flowing back to China** is higher, and incremental funds will be beneficial to the trend of A-shares.
Of course, there are also concerns that geopolitical factors will affect the willingness of foreign investors to invest, especially China's certain degree of uncertainty in the global ** chain.
Huang Senwei said that from a rational point of view and reality, the transfer of the ** chain cannot be completed overnight. China is one of the few emerging markets with excellent infrastructure and a large population base. Compared with other emerging countries with similar populations, China's population group is highly educated and hardworking, and these "nutrients" that have been cultivated for decades are likely to be difficult to replicate in the short term. Therefore, despite the uncertainty of geopolitical factors, AllianceBernstein** believes that most of this is reflected in the current low valuation of A-shares.
However, there are also experts who warn that it is necessary to guard against the investment logic that the more A-shares fall, the cheaper the valuation; It's not that the lower the valuation of A-shares, the more investors will**; On the contrary, we need to be wary of downside risks.
This time and that time. As the saying goes, ** is the eye of the economy. Is that really the case?
China's economy over the past 20 years can be roughly divided into three phases. According to Tianfeng** analysis, the first stage is the 2000-2007 period of rapid growth, at this time, relying on the dividends of globalization, China's rapid rise to become the "world's factory", exports to GDP (gross domestic product) contribution rate once exceeded 50%, GDP growth once exceeded 10%. The second stage is the medium-to-high-speed growth period from 2009 to 2016, when exports weakened the driving force of the economy, and real estate and infrastructure were the starting point, and investment replaced external demand as the engine of domestic economic growth. GDP growth gradually fell back to around 5%-6%.
The third stage is the L-shaped deceleration and shift period since 2018, as the real estate industry ushers in a long-term cycle inflection point, the traditional investment-driven model gradually becomes invalid, and the policy begins to emphasize promoting the high-quality development of China's economy by giving full play to the advantages of the domestic super-large market and manufacturing industry.
In the process, the difficulties of the real estate industry have put pressure on A-shares. As an important pillar of China's economy, the instability of the real estate sector has also put additional pressure on the market.
The challenge is that it may still take time for the effects of measures taken to stabilize the market, such as speeding up new property financing schemes and adjusting restrictions on home purchases, to become apparent.
In addition, the policy has not yet taken effect, probably because the market needs time to absorb and react to the policy changes. At the same time, geopolitical tensions, such as the threat of US ex-Trump and the Red Sea shipping attack, could increase market uncertainty. In this case, ** and regulators need to maintain transparency in communication to reduce panic and uncertainty in the market.
In this way, how to dispel the haze hovering over A-shares and boost market confidence may not be achieved overnight; The key is to first let A-shares "stop the bleeding". Some people have questioned that the major shareholders of listed companies have endless chips, and the company will peak as soon as it is listed, which is the starting point for major shareholders to cash out, and A-shares are like a financing market, not an investment market.
In addition, it is "policy coherence and stability, and long-term stable economic policy". The need to ensure policy coherence and transparency so that market participants can understand and act on it, including the implementation of fiscal and monetary policies that are conducive to economic growth; The second is to improve market infrastructure, enhance market transparency and fairness, promote the quality of listed companies, and proactively respond to economic challenges and reduce uncertainty.
Building a more stable, healthy and attractive investment environment requires coordination and cooperation among policymakers, regulators and market participants. The haze hovering over A-shares will eventually dissipate, if we really know how to respect the market and respect the laws of common sense, ......