Expected mid year market volatility remains significant, with A-shares facing the last 5 trading days of the first half of the year | Index | A-shares
On the last trading day before the Dragon Boat Festival holiday, the three major indexes in Shanghai and Shenzhen all fell by more than 1%, and the Shanghai Composite Index fell below 3200 points. On June 26th, A-shares will enter the last 5 trading days of the first half of the year. What will be the trend?
According to CITIC Securities, currently, the triple expectation of economy, policy, and market sentiment is at a bottom, and the three major games of theme, policy, and position adjustment are becoming increasingly fierce, with market fluctuations still significant.
"The policy will not be absent in the end, but it will be difficult to exceed aggressive market expectations." CITIC Securities still believes that the more cautious economic growth goals and the idea of "not making up for a big illness" make the focus of this year's policy to achieve high-quality development for a long time, promote social stability and the restoration of endogenous power, and the probability of pursuing strong stimulus and recovery is not high.
In terms of configuration, CITIC Securities suggests adhering to performance as the main focus, ignoring fluctuations and fluctuations in the intense game process, and continuing to adhere to varieties with catalytic or performance advantages in the three major security fields of technology, energy resources, and national defense.
Haitong Securities also believes that from the perspective of valuation and sentiment indicators, the market is at a low level, and the underlying fundamental expectations of price indices are low. Compared to the bond market, the stock market has a higher cost-effectiveness. The correlation between industry performance and fundamentals was weak in the first half of the year, and this phenomenon has occurred periodically in history. With the confirmation of the turning point of fundamentals, the market is expected to be dominated by fundamentals in the second half of the year.
Haitong Securities suggests that industry opportunities be laid out along the main line of high-quality development, with the digital economy as the main line for the whole year. At present, emphasis should be placed on pharmaceuticals and basic consumption with lower valuations and improved fundamentals.
Looking ahead to the second half of the year, China International Capital Corporation (CICC) believes that the profit recovery of A-share listed companies may continue. The valuation level implied by the current index performance has been included in many cautious expectations. Based on the benchmark judgment of a slow overseas economic recession and a mild recovery of the Chinese economy, CICC maintains a neutral and positive view of the A-share market in 2023. The index still has some upward space compared to its current position, and the medium-term market opportunities outweigh risks. In the second half of the year, combined with China's growth recovery and policy expectations, it attaches importance to rhythm and structure.
Zhang Xia, a strategic analyst at China Merchants Securities, reminds that there have been some positive changes in both internal and external factors in the A-share market recently. Internally, driven by factors such as stable growth, sustained recovery of consumer travel, policy support, and technological cycles, the prosperity of midstream equipment, consumption/travel, and information technology industries is still relatively high, and there may be signs of marginal improvement. Externally, the probability of the Federal Reserve continuing to raise interest rates in July has decreased, and the marginal impact of the tightening external liquidity environment on A-shares has begun to weaken. A-shares have also gradually stabilized and rebounded, and it is expected that the market will attack around the direction of the highest performance growth rate and the largest improvement slope. From the perspective of major industry trends, opportunities will continue to emerge in areas such as AI+, digital economy, advanced manufacturing, and independent controllability.
