Ignoring the small rhythm, what to do with A-share volatility? Institutions say: We need to pay attention to major direction policies | Section | A-shares
Recently, A-shares have experienced a temporary rebound driven by policies, but how long will this rebound last? How to deal with volatile market conditions?
"We should focus on major directions and ignore small rhythms." CITIC Securities has always believed that it is currently the third long window period of the year. During this window period, the overall direction is to continuously strengthen policies, improve the economy, and restore profits; The speed of policy implementation, market expectation fluctuations, and sector rotation trading are all at a low pace.
On the one hand, from a general perspective, policies in the second half of the year will continue to focus on expanding domestic demand, boosting confidence, and preventing risks. Driven by policy intensification and price factors, the trend of the economy continuously improving is clear, and the turning point of profits for listed companies is approaching. The business situation is expected to continue to recover. On the other hand, from a small perspective, the pace and intensity of policy implementation vary in different fields and regions. During the long window period, there is a potential increase in active funds, and all three main lines have shown positive changes. After the securities firms warm up, they may gradually rotate upwards without the need for high-frequency switching. CITIC Securities suggests that investors should actively participate in the three major industry themes of real estate, technology, and energy resources, and ignore short-term intense expectation games.
China International Capital Corporation (CICC) also believes that in the near future, the A-share market has rebounded in combination with growth and policy expectations, and investors have gradually improved their cautious expectations in the early stage. Looking ahead to the future, considering the rebound, the current A-share market valuation is still at a historically low level, and there is still significant room for improvement. The policies related to stable growth are also continuing to intensify. In this context, although the index continues to rise, there is a possibility of short-term fluctuations. However, the rebound trend is expected to continue, and the market performance in the next one to two months is expected to be more positive. The index is expected to fluctuate upwards, and we will continue to pay attention to the implementation and effectiveness of policies in the future.
Taking history as a lesson, in the view of the strategy team of Haitong Securities, the pace of this market recovery can refer to the end of October 2022, which is a policy recovery when expectations are very low. Looking back at the industry recovery path from real estate brokerage to consumption, and then to technological growth since the end of October last year, it can be found that policies are an important variable driving the industry's cyclical performance. In mid July this year, A-share valuation, risk premium ratio, stock to bond yield ratio, turnover rate and other indicators were close to historical lows, and market sentiment was relatively low. However, the Politburo meeting on July 24th set a positive tone, and after the meeting, the A-share market also turned positive, ushering in a wave of recovery. Real estate and securities firms have taken the lead in performance, comparing industry excess returns and fund allocation structures, and the consumer sector has a better cost-effectiveness.
Against the backdrop of steadily recovering domestic fundamentals and the stock market moving towards performance driven growth, the strategy team of Haitong Securities suggests that the industry focus should be on consumption, with short-term economic recovery catalyzing and the medium to long-term trend remaining positive. The digital economy remains the main focus of the medium-term dimension of the stock market, focusing on the direction of performance release from the policy and technical aspects. The performance in areas such as digital infrastructure and innovation driven by policies is expected to improve. Under technological change, enterprises will increase their capital expenditures, benefiting fields such as artificial intelligence and upstream semiconductors.
