A-shares welcome the opening of the "spring agitation" market is expected to continue

2020/01/03 08:59:30 Source: China Securities Journal 2020/01/03 08:59:30

On January 2, the first trading day of A shares in 2020 ushered in a good start. The large financial sector continued its strength, and the Shenzhen Stock Exchange Index and the ChiNext Index

On January 2, the first trading day of A shares in 2020 ushered in a good start. The large financial sector continued its strength. The Shenzhen Stock Exchange Index, the GEM Index, the Shanghai Stock Exchange 50, and the Shanghai and Shenzhen 300 Indexes all broke the 2019 high in their 2020 debut. Analysts believe that the central bank ’s overall RRR cut is superimposed with the “spring agitation” factor, and the upward trend of A shares in January is expected to continue.

Expected start

In 2020, the first trading day of A-shares appeared as an unexpected “starter”. The performance of the weighting sector was spectacular.

The Shanghai Composite Index closed up 1.15% to 3085.20 points, a new high for the current round; the Shenzhen Stock Exchange Index rose 1.99% to 10638.82 points, a new one-and-a-half-year high; the GEM Index rose 1.93% to 1,832.74, a new one-and-a-half year high. The two cities significantly increased volume, with Shanghai's turnover reaching 327.197 billion yuan and Shenzhen's turnover reaching 424.347 billion yuan. The stocks of the two cities rose by nearly 3,400, and the daily limit of nearly 100 stocks. The internet celebrity economic sector led the rise in the concept sector, and the large financial sectors, including banks and non-bank financial sectors, made significant contributions.

Analysts at Galaxy Securities said that in the short term, the RRR cut will directly benefit bank stocks, indirectly benefit the brokerage sector, and then also benefit industrial stocks and raw materials stocks such as building materials and machinery.

Net inflow of northbound funds exceeds 10 billion yuan

Since 2014, after the central bank announced the news of the RRR cut, A shares are likely to rise. Within 30 days after the announcement of the RRR cut, A shares are more likely to rise. This brings more expectations to the market in January 2020.

From the perspective of funds, in the first trading day of A shares in 2020, northbound capital inflows. Data show that the net inflow of northbound funds was 10.148 billion yuan, of which the net inflow of Shanghai Stock Connect funds was 5.045 billion yuan and the net inflow of Shenzhen Stock Connect funds was 5.103 billion yuan. Since the opening of the Shanghai-Shenzhen-Hong Kong Stock Connect, the cumulative net inflow of northbound funds has exceeded 1 trillion yuan, reaching 10036.25 billion yuan.

In the context of the opening up of the financial industry, foreign "smart money" will also increase the allocation of A shares. Tong Yugen, chief strategy analyst of Haitong Securities, predicts that foreign investment inflows will be about 250 billion yuan in 2020.

In 2019, foreign capital inflows accelerated into A shares and reached the highest annual net inflow of northbound funds. Analysts said that on the one hand, this phenomenon reflects that A-shares are in a valuation depression in the global capital market; on the other hand, it reflects the increasing demand for foreign capital for the allocation of A-shares.

As of the end of 2019, Beifang Capital held a total of 2122 stocks, holding a stock market value of more than 10 billion yuan for 22 stocks including Guizhou Maotai, Ping An of China and Midea Group. The holdings of 24 stocks including China Test, Shanghai Airport, and Founder Securities exceeded 10%. The stocks that are "buy, buy and buy" by foreign capital are mostly concentrated in the two major areas of consumption and finance.

Probability of market continuation

Analysts said that the market "spring turmoil" is likely to appear. The "spring agitation" just happened to resonate with the news of overall RRR cuts, so the market sentiment on the first trading day of 2020 A shares was high.

So, can the "spring restlessness" market continue?

Guotai Junan Securities believes that this reduction in the protection of funds and the issuance of local debt will help stabilize the economy, increase investor confidence, support the rise of the equity market center, and the probability of the stock market continuing the "spring turmoil" market is high. Huang Fusheng, president of the Pacific Securities Research Institute, said that the A-share hub is expected to move up in the first quarter, and it is recommended to lay out financial, cyclical, and growth stocks.

Yang Liu, chief strategy analyst of Minsheng Securities, said that the current RRR cut is a continuation of a series of previous policies and measures to reduce the financing cost of the real economy and will provide strong support for the growth of the real economy and the rise of A-share valuations. The recent improvement in economic data, stimulated by multiple positives, A shares are expected to break through important resistance. We are optimistic about the improvement of the economic and technological stocks and securities stocks.

(Article source: China Securities Journal)

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