Since the Shanghai Composite Index reached 2440 points, A-shares have experienced a sharp rise in the first half of 2019. The market has changed from the 5178-point shock in 2015, and A-shares have shown a strong trend away from the bottom in the early stages of the bull market.

However, in early April, after the Shanghai Stock Index hit a stage high of 3,288 points, due to profit-taking and some off-market uncertainties, the Shanghai Stock Index dropped to a low of 2,822 points, almost giving up. Nearly half of the gains at the beginning of the year.

However, this phenomenon is generally not uncommon after the lowest point of the bear-bull transition occurs, because the long-short game at the end of the bear period and the beginning of the bull period is still relatively intense. Recently, the Shanghai Composite Index has rebounded from around 2822 points, crossing the medium and short-term sideways fluctuation range of the Shanghai Composite Index from 2822 points to 2956 points. It has once again increased its volume and moved upward. The second wave of rising bull market has officially started.

The specific reasons include the following ten aspects:

The market’s bear market thinking has gradually turned into bull market thinking

Since early May, A-shares have experienced a decline in the past one and a half months. The trend of sideways shrinkage and shock is maintained for a period of time, and generally in a bear market, the long-term market often turns into a continuous decline. However, the Shanghai Stock Index rebounded strongly after hitting a low of 2822 points on June 6, and even more so on June 19. In order to jump short and open higher, the long-term decline will turn into a long-term rise. The bear market thinking from 2015 to 2018 is expected to change into the bull market thinking starting from 2440 points of the Shanghai Composite Index.

The technical support of the Shanghai Index at 2822 points is obvious

In early May, since the A-shares fell back and adjusted, the Shanghai Index has been running above the annual line. Therefore, the technical support of the annual line for the index is very obvious. . Although, on June 6, the Shanghai Stock Index adjusted to a low of 2822 points and once fell below the support of the half-year line, however, the subsequent rebound helped the half-year line maintain the upward trend. The half-year line formed a golden cross with the annual line, and the upward trend has not changed. , furthermore, the technical support at the low level of the market is obvious, and the space for further downward exploration is limited.

The Federal Reserve issued dovish remarks

Federal Reserve Chairman Powell said that the previous actions to shrink the balance sheet to shrink the currency are nearing the end of the original plan.

Powell said the Fed would act quickly if needed to maintain economic growth. The Federal Reserve issued dovish remarks and hinted at interest rate cuts, which was good for global stock markets.

Global stock markets and commodity markets have both experienced gains, and the A-share market, which is gradually promoting international development, will naturally benefit from expectations of a reduction in U.S. dollar interest rates.

Bond prices continue to rise

The decline in risk-free yields increases stock valuations.

The yields to maturity of the 10-year and 30-year U.S. Treasury bonds dropped to 2.03% and 2.54% respectively. The yield to maturity of the 30-year U.S. Treasury bonds hit a new low in the past three years. Yields to maturity are near 2017 lows.

The S&P 500 Index continued to rise after breaking out of the sideways range in 2016, and the valuation level of U.S. stocks subsequently increased as a whole.

The domestic 10-year treasury bond yield to maturity also dropped to 3.2426%. The money market liquidity is relatively abundant, and the decline in risk-free yield will help increase the valuation of A-shares.

Figure 1: Yield to maturity of 10-year government bonds from China and the United States

The strength of high-quality blue-chip stocks has not changed

Since early April, the adjustment range of high-quality blue-chip stocks has been Extremely limited, and as the market continues to rise in this round, these large-capitalization varieties that underestimate performance are still the main force of many parties in the market.

At present, many low-valued blue-chip stocks with a market value of more than 100 billion and strong performance during the year have continued to hit new highs in stock price. The flying bull flag further strengthens the market's bullish confidence.

Shanghai-London Stock Connect launched

Nine opening-up policies promote the international development of domestic capital markets.

On June 17, the Shanghai-London Stock Connect was launched. The Global Depositary Receipts (GDRs) issued by Huatai Securities were listed for trading on the London Stock Exchange, and the launch of the Shanghai-London Stock Connect announced the launch of the east-west capital market interconnection mechanism.

Different from the Shanghai-Hong Kong Stock Connect mechanism, the Shanghai-London Stock Connect adopts the principle that the original listed companies on the Shanghai Stock Exchange and the London Stock Exchange issue depositary receipts and list on the other exchange, and the Shanghai Stock Exchange listed on the London Stock Exchange Corporate depositary receipts are called Global Depositary Receipts (GDR), and the London Stock Exchange-listed company depositary receipts listed on the Shanghai Stock Exchange are called Chinese Depositary Receipts (CDR). Investors can directly buy and sell these depositary receipts through the currency of the country where the financial market is located. There is no exchange risk.

The launch of Shanghai-London Stock Connect has broadened the channels for opening up the financial market to the outside world, increased the options for domestic funds to invest abroad, enhanced the linkage effect between the Shanghai Stock Exchange Index and the FTSE 100 Index, and further promoted the market-oriented development of A-shares. It is conducive to China's outstanding listed companies going global to achieve international development, it is conducive to standardizing the governance behavior of domestic listed companies, and it is conducive to further cultivating investors' rational investment and value investment concepts.

In addition, the China Securities Regulatory Commission will also introduce nine major opening-up measures, including:

In accordance with the principle of consistency between domestic and foreign capital, the net asset requirements for controlling shareholders of comprehensive securities companies will be reasonably set.

These nine measures will facilitate the entry of overseas long-term funds into the domestic capital market and encourage high-quality overseas securities, fund and futures operating institutions to develop their businesses in China, which will have a positive effect on the marketization, internationalization and standardized development of A-shares.

The implementation of the Science and Technology Innovation Board

Uncertainty factors have been reduced.

On June 13, the Science and Technology Innovation Board was launched. Chairman Yi Huiman reminded investors to pay attention to five new changes in the early stage of listing on the Science and Technology Innovation Board, namely: normalization of delisting; market-oriented pricing mechanism; imbalance of supply and demand in the early stage of listing and the need to adapt to new trading mechanisms; technology of science and technology innovation enterprises Iteration is fast, the investment cycle is long, and the uncertainty is great, requiring investors to make rational judgments; the innovation of the Science and Technology Innovation Board system still has a running-in process.

Obviously, regulatory agencies are prudent and rigorous in designing and supervising systems related to the issuance, listing, trading, and delisting of companies on the Science and Technology Innovation Board. It is expected that in the early stage of the issuance and listing of the Science and Technology Innovation Board in July, the advancement of relevant work will still be based on the word "stability", and investors' worries and concerns are expected to be gradually alleviated.

The Shanghai Composite 50 Index has taken the lead in strengthening

The Shanghai Composite 50 Index has been the main force of many parties since the Shanghai Composite Index reached 2850 points in 2015. Since early April, the Shanghai Composite 50 Index has retreated by 12.5%, while the Shanghai Composite Index has retreated by 14.17%.

Obviously, the adjustment range of low-valuation blue-chip stocks is lower than that of all A-shares in the Shanghai stock market. During the market consolidation process in May, the Shanghai Composite 50 Index bottomed earlier than the Shanghai Composite Index.

Recently, during the market rise, the Shanghai Composite 50 Index rose more than the Shanghai Composite Index. Obviously, the Shanghai Composite 50 Index has long been the main bullish force, causing the market investment style to change, with funds preferring varieties with good performance and low valuations.

Monetary policy tends to be looser

Improved liquidity is good for A-shares.

Faced with the uncertainty of trade friction, Central Bank Governor Yi Gang said that there is sufficient policy space to respond, including adjusting interest rates and deposit reserve ratios, and is confident in maintaining the RMB exchange rate at a reasonable and balanced level. basically stable.

Currently, the inter-bank lending rate remains at a low level, with the one-week shibor at 2.488%, and the money market liquidity is moderately abundant.

In addition, the Fed’s expected monetary policy adjustments may affect other major economies around the world. The Fed’s interest rate cuts may create space for further reductions in domestic interest rates, and expectations of interest rate reductions are good for A-shares.

Foreign capital continued to flow into the A-share market.

In June, foreign capital continued to flow into the A-share market. As of June 20, northbound capital inflows into A-shares through the Shanghai-Shenzhen-Hong Kong Stock Connect reached 37.858 billion yuan, while the scale of northbound capital inflows into A-shares throughout the year was 91.623 billion yuan.

Obviously, during the recent continuous consolidation of the A-share market, foreign capital has not slowed down its entry into A-shares, and more and more overseas funds will participate in investment in the A-share market.

As the domestic capital market continues to expand its opening to the outside world and the channels for foreign investment in A-share listed companies increase, the financial market of the world's second largest economy will receive more attention from international capital.

Figure 2: The continued inflow of northbound funds in June

This is a vigorous juvenile bull, starting again from 2833 points, and the juvenile bottom 2 has been welded firmly at 2822 points with a soldering iron , China's stock market will be proud of the world. Cherish, cherish. Hug the young cow.

(The author of this article is Li Daxiao, director of Yingda Securities Research Institute)

Market outlook analysis>>>

CITIC Securities strategy Focus: Time and space for the second round of rise this year

CITIC Construction Investment Strategy Chief: It is recommended to increase allocation to non-bank financials to welcome the second stage of the bull market

Industrial Securities Strategy Wang Delun: Long window As expected, the two major sectors are the main direction of the rebound at this stage

GF Strategy Dai Kang: In the third quarter, A-share sparks broke through the autumn cold. The downward discount rate drove the financial supply-side slow bull to rise

" "Seven Turnovers" is coming ahead of schedule? The position structure may be more important than regaining 3,000 points

Click to view >>> How the A-shares ended in June, the latest interpretations of the top institutions and top experts

(Source of the article: Kung Fu Finance ) Solemn statement: The purpose of publishing this information is to spread more information and has nothing to do with the position of this site.