Can we welcome a new round of rising prices after the A-share festival？ Experts explain this.
On October 1st, data released by institute for supply management (ISM) showed that the PMI of the United States hit a 10-year low in September, and the risk rose again. Affected by this, US stocks plunged. Last night, US stocks continued to decline. The Dow fell more than 400 points and the Nasdaq fell nearly 1.5%.
However, according to the latest data from the National Bureau of Statistics of China, the manufacturing PMI in September was 49.8%, up 0.3 percentage points from last month. Although it was still below threshold, the overall prosperity index improved from last month, and both production and demand improved. This also means that under the background of strengthening the countercyclical adjustment of macro policies, China’s economic operation has maintained a generally stable, steady and progressive development trend. Therefore, in the capital market, it is worth looking forward to whether A-shares can get out of a new round of rising after continuous adjustment, especially the emerging science and technology enterprises with brand, technology, efficiency and leading social progress are expected to stand out.
Text/Guangzhou Daily All-Media Reporter Zhang Zhongan
The PMI of the United States in September was 47.8, which was significantly lower than expected, the lowest level since June 2009, and the PMI of ISM manufacturing in the United States was below 50 for the second consecutive month. A reading below 50 indicates that the manufacturing industry is shrinking. Before the superposition, the yield of government bonds was upside down, and the market’s concerns about the weakening or even recession of the US economy quickly warmed up, and the three major stock indexes collectively plummeted.
According to ISM data, the index of new export orders was only 41% in the PMI classification index of the United States in September, which was the lowest level since March 2009, especially since July 2019. Timothy Fiore, chairman of ISM, said in a statement that global trade remains the most critical issue. Moreover, due to insufficient demand, the employment index of the ISM industry is the lowest level since January 2016. At the same time, the indexes of new orders, backlog orders, import and export of raw material inventory in September also contracted comprehensively.
Therefore, the market is worried about the recession risk of the US economy. For example, the chief economist of Deutsche Bank said in a report published on Tuesday that the current economic slowdown in the United States is not over and the risk of recession has already occurred.
In addition, according to the latest data, the economic situation in Europe seems to be not very optimistic. Among them, the final PMI of the manufacturing industry in the euro zone in September was 45.7, the lowest level since October 2012. The final value of new orders was 43.4, the lowest level since October 2012.
The economic situation in Europe and America has put pressure on the capital market. Meng Yun, an analyst at CICC, pointed out that the global economic slowdown has made the capital expenditure of American manufacturing and enterprises weak, which will inevitably drag down the relatively stable consumption and real estate demand at present. If this happens, the risk of recession may rise significantly. Therefore, in the eyes of many people, after ten years of continuous rise, the US stock market is also facing the pressure of peaking in stages.
It is worth noting that in the process of strengthening the countercyclical adjustment of macro-policies, paying close attention to the implementation of policies to stabilize employment, finance, foreign trade, foreign investment, and expectations, China’s economic operation has maintained a generally stable, steady and progressive development trend.
The improvement of macroeconomic indicators also makes the market have more expectations for the capital market. Some institutional sources predict that A shares are expected to usher in a new round of rise under the influence of many favorable factors.
Expert opinion
Wang Delun, chief strategist of Industrial Securities: Looking back on the 40-year history of reform and opening-up, the dividend of the first round of commodity market opening, China’s entry into WTO and the opening of current account made China’s economy successfully rank second in the world. The next dividend for the transformation and upgrading and the second round of capital account opening is very important, and it has already started, which will also have an all-round impact on the stock market, financial market and economy. Drawing on the experience of Japanese and Korean economies, the dividend of financial opening will support China’s high-quality assets such as the stock market for a long time, among which the stock market is the most beneficial. Wang Delun even believes that the stock market is expected to usher in the first "long cow" in history.
Li Xunlei, Chief Economist of Zhongtai Securities: Looking at the world, not only the developed economies showed signs of recession, but also the Indian economy slowed down, while China’s economy actually took the lead in the process of slowing down. He also pointed out that the new kinetic energy of domestic economic growth should mainly come from scientific and technological progress, such as information technology industry, artificial intelligence, aerospace, biotechnology, photoelectric chips, new energy, new materials and other emerging industries.
Looking into the future, China’s economy can at least maintain a moderate growth rate, and China’s position as a major contributor to global economic growth cannot be shaken. Of course, under the background of accelerating population aging, industrialization and urbanization, the characteristics of stock economy will become more and more obvious, and the old routine of stimulating by investment is no longer sustainable. Stock economy can only rely on restructuring, and only by increasing reform and opening up and vigorously developing high technology can we overcome all kinds of difficulties.
Guan Qingyou, President of Financial Research Institute: In the future economy, there are still many good cards to play in China’s economy. At present, in the era of stock, differentiation and concentration are the general trend. Head enterprises should be bigger and stronger, and become the leader of sub-sectors; Waist enterprises have to survive, because it is the most difficult to get on or off, and it is easy to get off if they can’t get on; Many foot enterprises will be eliminated and submerged in the torrent of history. Specifically, the head is bigger, the waist is thinner and the feet are more swollen.
In this context, companies and investors need to pay attention to hard-core assets for a long time. I sum up the characteristics of hard-core assets as: scarcity, standard and stability.
Market forecast: technology stocks are still expected to become market protagonists after the callback.
The driving force of economic growth will shift from demographic dividend and capital factors to technological progress and efficiency improvement, and the structural characteristics of the capital market will also be obvious. Traditional industries such as real estate will gradually return, and a number of high-quality listed companies with high profitability are expected to be born in the scientific and technological fields with technical and efficiency advantages. Since the beginning of this year, although the three indexes of A-shares have risen collectively, their structural characteristics are very obvious. Among them, consumer stocks represented by liquor and condiments and technology stocks represented by semiconductors and integrated circuits have performed brilliantly. The real estate, steel, coal and other cyclical sectors are obviously backward.
Take real estate as an example. In the first eight months of this year, the cumulative year-on-year decline in the national real estate sales area narrowed again. Many optimists began to be optimistic about real estate stocks. Yang Rongcheng, a researcher at China Merchants Bank, said that the sales data variable in August was due to the pressure of housing enterprises to tighten financing, thus accelerating the push and sales, but "we think that as buyers’ expectations of rising house prices gradually fall, the mood of holding money and waiting to see may spread."
Different from traditional industries, consumption and technology sectors have been sought after this year, especially technology stocks. Even if there was a rapid adjustment last week, most stocks doubled their gains during the year.
As of the close of September 30, among the 30 A-share 100-yuan stocks, there are 15 technology stocks such as Internet, components, semiconductors, communication equipment and information software, accounting for 50%.
Caitong Securities analyst pointed out that "short-term disturbance will not change emerging industries as China’s strategic development direction." High-quality emerging industry stocks will gradually enter the performance release period, with good performance superimposed with policy support, and layout opportunities will still be ushered in after the adjustment of the science and technology sector. According to the data of the straight flush ifind system, as of September 30, 495 A-share listed companies disclosed the performance forecast for the third quarter of 2019, with a pre-happiness ratio of 43.67%. According to the "lower limit of forecast net profit growth year-on-year", the number of high-growth companies in computer, communication, electronics, food and beverage industries is mostly.
Therefore, emerging science and technology enterprises with brand, technology and efficiency advantages and leading social progress in the future are expected to stand out.
Guangqianyan
Driving force 1
Profitability of listed companies
The profitability of A-share listed companies is improving. In the first half of this year, all A-shares achieved operating income of 23.37 trillion yuan compared with listed companies, up 10.40% year-on-year. The net profit attributable to shareholders of listed companies was 2.13 trillion yuan, a year-on-year increase of 7.56%. Compared with the first quarter of this year, although there was a decline, the ROE of listed companies was 9.36%, which was 0.06 percentage points higher than that in the first quarter. Some experts predict that the implementation of the large-scale tax reduction and fee reduction policy this year will not only bring "real money" to listed companies, but also promote transformation and upgrading and increase the performance of listed companies.
Driving force 2
Interest rate and market liquidity
"Interest rates, liquidity and the stock market, although macro, are closely related. With lower interest rates and sufficient liquidity, the stock market tends to perform well. And vice versa. " A person in charge of Sunshine Private Equity in Shenzhen believes that the impact of interest rate and liquidity on individual stocks is second only to the profitability of listed companies.
"The core of the stock price rise is to have funds to buy. The lower interest rate directly reduces the cost of capital and will stimulate or attract OTC funds to enter the market. However, only the decline in interest rates does not necessarily bring about a bull market. If the superimposed fundamentals improve, the probability of a stock market rising is greater. " The person in charge of the above-mentioned sunshine private placement pointed out.
Some analysts believe that from the current trend, monetary policy is persistent, and it is expected that the difference between the growth rates of M1 and M2 will rise in 2019, which is a high probability event. Therefore, the market index is also expected to maintain a volatile upward trend.
Driving force 3
Expectation of opening and reform policy
The market’s expectation of reform and opening up has become one of the important factors driving the stock market to rise. It is worth looking forward to whether this year’s intensive opening-up actions can once again enhance market activity.
On July 20th, the Office of the State Council Financial Stability and Development Committee announced 11 measures for opening up the financial industry. On September 10th, the State Administration of Foreign Exchange announced its decision to cancel the investment quota restrictions of QFII and RQFII, and at the same time cancel the restrictions of RQFII pilot countries and regions.
MSCI, FTSE Russell and S&P International all include A shares. Morgan Stanley announced that the total passive and active inflow of foreign capital into A shares will reach 70 billion to 125 billion US dollars, much higher than the average of 35 billion US dollars in the previous three years.