In early trading today (26th), the three major A-share stock indexes collectively opened higher, the Shanghai Composite Index rose 0.07%, the Shenzhen Component Index rose 0.22%, and the ChiNext rose 0.17%.

　　On April 25, the Shanghai Composite Index fell below 3,000 points, and more than 96% of individual stocks fell.

Under the combined influence of repeated epidemics, exchange rate fluctuations, unclear profit expectations, and the gradual advancement of financial anti-corruption, investors are worried and worried, and some institutions even use "zero" to describe the decline in the broader market.

　　So, after A shares fall below the 3,000-point mark, will it go up or down?

Can not be ignored "kill the leader"

　　From the trend point of view, since April, the major indexes have continued to fall with shocks.

On April 21 and April 22, the broader market fell below 3,100 points in a row.

Specifically, on April 21, the Shanghai Composite Index fell 2.26% to 3079.81 points. On April 22, the Shanghai Composite Index closed slightly up 0.23% to 3086.92 points, failing to break through 3100 points.

　　U.S. stocks plummeted after the close of A-shares last Friday, and the formal implementation of a comprehensive RRR cut also failed to boost market sentiment. Several major A-share indexes fell sharply and hit new lows since this round of adjustment.

Sectors including the Internet, basic metals, education, chemical principles, leisure products, aerospace and military industries fell by more than 8%, while popular concept sectors including photoresist, sodium-ion batteries, industrial metals, semiconductor equipment, aluminum industry, and online education down more than 9%.

Even the new crown antigen testing, large infrastructure, generic drugs and other sectors that once became the concept sector of A-shares rising against the trend, fell by more than 3.5% today.

　　In the case of a general decline, it is a "kill" for the leaders of various sectors. Today's northbound funds sold a net 4.397 billion yuan, including China Merchants Bank, Wuliangye, Hengrui Medicine and other leading companies, which were sold by a net of 2.412 billion yuan. , 722 million yuan, 572 million yuan.

A number of heavyweight stocks fell sharply, including China Merchants Bank, Xinhua Insurance, Wuliangye, Ningde Times, LONGi and other stocks all fell by more than 5%.

　　Among them, Hengrui Medicine, a leading pharmaceutical stock, plummeted at the opening, and quickly fell by the limit during the session, closing at 29.7 yuan per share.

The stock price hit a new low in three years, and the total market value was only 189.5 billion yuan.

　　On October 11, 2021, the stock price of Hengrui Medicine reached a maximum of 55.53 yuan per share, with a total market value of 354.226 billion yuan, and the current market value has evaporated by 164.73 billion yuan.

In the current A-share market, there are only 67 companies whose current market value can be compared with the market value evaporated by Hengrui Medicine within half a year.

　　According to the financial report disclosed by Hengrui Medicine, the company's revenue and net profit attributable to the parent in the first quarter of 2021 and 2022 are both declining.

The data shows that in 2021, the company achieved revenue of 25.906 billion yuan, a year-on-year decrease of 6.59%, and net profit attributable to the parent was 4.53 billion yuan, a year-on-year decrease of 28.41%; in the first quarter of 2022, Hengrui Medicine achieved revenue of 5.479 billion yuan, a year-on-year decrease of 20.93% , the net profit attributable to the parent was 1.237 billion yuan, a year-on-year decrease of 17.35%.

　　Another example is LONGi shares, which also fell by more than 6% at the opening today after many days of decline, and then closed down at 8.69% at 56.61 yuan per share, with a single-day market value of 29.176 billion yuan evaporated.

Compared with the price of 103.3 yuan per share on November 1, 2021, LONGi's share price has nearly halved in less than 5 months, and its market value has evaporated by as much as 252.733 billion yuan.

　　According to the reporter's carding, on the 25th, the city's 4,799 listed companies had a total evaporated market value of 4.58 trillion yuan.

According to the closing price on the 24th, there are a total of 255 listed companies with a market value of more than 50 billion yuan, basically covering leading companies in all walks of life.

　　The total market value of the above-mentioned 255 listed companies is as high as 47.37 trillion yuan, with an average decline of 4.9% today.

According to the weighted average calculation, 1.99 trillion yuan was evaporated on the 25th alone, accounting for 43.45% of the city's evaporated market value.

　　Since the beginning of the year, the average decline of the above-mentioned 255 listed companies is as high as 19%, and the evaporation behind it is even more astronomical.

Two-way dislocation inside and outside

　　If measured by the common stock fund index and the CSI 300, both the fund and the index have exceeded 20% in terms of retracement so far this year, which is indeed close to the bear market level of 2008, 2011 and 2018.

　　A number of institutions told reporters that the sharp drop in A shares was the result of the failure to effectively hedge external risks and internal benefits.

　　"It is precisely because the weak rebound expectation is broken that the market moves in an extreme direction." Yan Kevin, chief strategist at Huaxin Securities, said: "Because of concerns about future risk points, the market may not have fully priced in, so it needs an explicit release process.”

　　Li Meicen, chief strategist of Caitong Securities, also put forward the idea of ​​"dislocation".

He told reporters, "At the moment, the external economy is at a high level, the Chinese economy is at a low level, and the economic fundamentals are most dislocated. The external is closing, we are releasing, the pressure on exchange rate expectations is high, the stock market is in a game, and the liquidity is relatively pessimistic." The two-way dislocation inside and outside, coupled with the repeated epidemics, the continuous "thunder" of the first quarter report, the recovery of the supply chain, and the recovery of consumption have not improved, so the Shanghai Composite Index is again close to the previous low, and investors are more pessimistic.

　　In the feedback from many institutional interviews, the main factors mentioned by the interviewees many times include US bond interest rates, fluctuations in the exchange rate of RMB against the US dollar, and economic fundamentals.

　　Obviously, the current Fed rate hike schedule and the unpredictability of the expected balance sheet reduction have become the core factors that suppress market investors from going long in the medium and long term.

The minutes of the Fed meeting and the speeches of officials earlier prompted the acceleration of the reduction of the balance sheet and the advance of interest rate hikes.

　　The 10-year U.S. Treasury bond rate has risen by more than 100bp since March, and is currently maintained at 2.9%, just one step away from 3%.

According to historical statistics, it can be found that the "shrinking balance sheet" superimposed interest rate is expected to quickly push up the US bond interest rate.

"If the Fed raises interest rates by 50bp every month in the future, the inversion of the interest rate gap between China and the United States may become the norm, which will significantly suppress the valuation of growth stocks," said Kevin Yan.

　　In addition, the recent rapid depreciation of the RMB against the United States has further increased market concerns, and the pressure on RMB depreciation has been released in a concentrated manner.

　　Since 2010, there have been 8 relatively obvious small cycles of RMB depreciation. During these 8 short cycles, A-shares rose 4 times and fell 4 times.

Specifically, after the 811 exchange rate reform in 2015, the RMB exchange rate has experienced a total of four relatively obvious depreciations. The first two times were the tightening of the Federal Reserve and the narrowing of the interest rate gap between China and the United States. In terms of stock market performance, both the broader market and the industry mostly closed lower.

　　Although through pure historical backtesting, the probability of a positive correlation between RMB depreciation and A-share decline is 50%, and the stock market and exchange rate are not directly causal, but the exchange rate is usually a reflection of the fundamental market. The impact of foreign capital flows on A-shares has continued to increase.

Therefore, Yan Kaiwen believes that the rapid depreciation of the RMB exchange rate in the past 18 years has a dominant impact on A-shares, and at the same time, in the weak stage of A-shares, such effects will be magnified.

　　Yuan Huaming, general manager of Huahui Chuangfu Investment, also said that the domestic epidemic, overseas geopolitical conflicts and the tightening of the Fed's liquidity are still severely suppressing the market. Although a favorable and stable growth policy has been recently introduced, the intensity and rhythm are not enough to reverse the downward trend. Investor sentiment became more cautious, and there was a situation where the decline led to the decline.

　　"The market is looking forward to stronger growth-stabilizing policies and measures to stabilize the economy and market expectations, thereby boosting investor sentiment. The current market uncertainty is relatively prominent. Seeing more and doing less is a more suitable investment strategy for ordinary investors. After the direction is determined, The opportunity is easier to grasp." Yuan Huaming said.

How to break the game?

　　Yan Kevin believes that the rebound may be in May.

　　He said that generally speaking, economic resilience can form an effective hedge, but due to the unpredictability of this round of domestic epidemics, the bottom of the economy did not appear in the first quarter. On the contrary, in the context of the spread of the epidemic across the country, some key micro The high-frequency data has deteriorated significantly, making my country's fundamental market unable to fully and effectively hedge external risks.

"Therefore, the effective rebound of A shares will be postponed to mid-May, waiting for the marginal improvement signal from the domestic economic fundamental data. As the impact of the domestic epidemic gradually comes to an end, after the resumption of work and production, high-frequency indicators will Once again confirming the waywardness of China's economy, the A-share market is also expected to usher in a real rebound."

　　Li Meicen said bluntly that this week is a week of key decisions, and the uncertainty that investors are concerned about is becoming clear.

On the one hand, with the improvement of the domestic epidemic, the recovery of the supply chain, and the recovery of overseas peaks, the domestic economy will run upwards, and corporate profits and Ou.com will gradually stabilize and rebound.

On the other hand, in the case of less incremental funds, the market showed a situation of stock game throughout the first half of the year. If the Fed does not make a more "eagle" statement in the future, as the comparative advantage of China's economy is highlighted, overseas funds may flow back again. Emerging markets, especially the Chinese market with significant mid- and long-term allocation value.

　　Looking forward to the next 1-2 quarters, Li Meicen believes that the market will get better and better, and A-shares are expected to meet the counter-offensive moments of "Normandy landing" and "infinite scenery on the dangerous peak", and the "cheap time" in the current bottom area should be cherished.

　　Haitong Securities also stated in the research report that the bottom of the policy has already appeared, and the bottom of the performance needs to wait for the effect of the policy to appear.

When the CSI 300 fell by 20%, the average rate of return for fixed investment and continued for two years was 13%. After the stock fund index fell by 20%, the average rate of return for fixed investment and continued for two years was 47%. Drawing on historical data, focusing on the future , the current layout period should be cherished.

　　Li Zhenhui, research director of Ambience Fund, believes that both the magnitude and speed of the market's decline are already at the end of the market, but considering the upcoming May Day holiday, market trading has shrunk significantly. Combined with the epidemic and external uncertainties, investment Applicants should choose suitable investment assets according to their risk appetite at the moment.

　　Li Zhenhui said that no matter whether it is assessed through the comparison of historical valuations of A-shares vertically or the global stock market valuations horizontally, the conclusion drawn is that the current market is in a reasonable and undervalued position, and the bottom of the policy and the bottom of the valuation are very obvious.

However, the impact of the ebb in investor sentiment brought about by each round of the decline in risk appetite will take time to correct.

"Long-term investment cycle, the market sentiment cannot be grasped, but the valuation of the invested companies can be assessed and tracked. We firmly believe that the fundamentals of my country's economy are improving in the long run, the industrial chain is stable, and the market size and capacity are sufficient to withstand short-term impacts. ."

　　In the face of one of the biggest disturbance factors today, the exchange rate, Wu Dan, a researcher at the Bank of China Research Institute, believes that the short-term depreciation pressure of the RMB may be maintained, but there is no basis for continued depreciation.

　　First, cross-border capital flows were relatively stable and did not decline significantly. In March, foreign exchange settlement and sales had a surplus of US$26.77 billion, a year-on-year increase of 36%; from January to March, the cumulative foreign exchange settlement and sales surplus was US$58.7 billion, and the foreign-related receipts and payments of bank loans were 62.2 billion surplus. The US dollar is in a reasonable equilibrium.

Second, the fundamentals of my country's long-term economic development have not changed.

　　It is worth noting that the transaction volume of spot inquiries on the RMB exchange rate has an upward trend.

Judging from the USD/CNY spot inquiry volume data, although it fell all the way to USD 156.24 before April 18, it turned upward and rose to USD 36.21 billion on April 22, compared with the average value in April. US$23.507 billion rose by 54%, indicating that the market does not have market expectations for continued depreciation of the RMB exchange rate.