Gui Haoming
After several consecutive months of sharp declines, the A-share market made a good start on the first trading day of May, which cheered many investors.
Historically, May is known as the "Red May" because the probability of A-shares rising during this period is relatively high.
So, what will A shares bring to investors in May this year?
At an important meeting at the end of April, high-level officials put forward the goal of "preventing the epidemic, stabilizing the economy, and developing security", and made specific arrangements in related fields.
Immediately after the news came out, the A-share market rose sharply, and the Shanghai Composite Index recovered 3,000 points.
During the May Day holiday, relevant departments also actively implemented the instructions of the central government and studied specific implementation measures.
Before the end of the short holiday, the Shenzhen Stock Exchange announced the "Notice on Several Measures to Support the Real Economy", emphasizing the need to maintain the healthy and stable development of the capital market.
That set the stage for a continuation of the rally seen since the end of April and further upside.
Affected by various factors in the first few months of this year, A-shares fell sharply, causing considerable losses to investors.
However, people have also seen that the fall of the stock market itself is a double-edged sword, which not only brings depreciation of market value to everyone, but also highlights the investment value of the stock market.
Statistics show that the valuation of the A-share market at the end of April is generally at a historically low level. The valuation of the CSI 300 Index is generally lower than when the Shanghai Composite Index was at 998 in 2005.
Obviously, the vast majority of stocks in this position are still worth investing in. Buying and holding them in the medium and long term should yield good returns.
However, in the face of such a situation, why are many investors hesitant and not decisively intervening on dips?
A big reason here is that, while it is true that stock valuations are not high by static metrics, the situation is different when viewed from a dynamic perspective.
Last year, China's economic growth was high and then low, and the downward pressure this year is still very large. In particular, the outbreak of the new crown pneumonia epidemic and the escalating conflict between Russia and Ukraine have brought a great impact on the economy.
Judging from the pilot data, it is difficult to be optimistic about the economic situation in the second quarter of this year, and the operating conditions of listed companies in the first quarter also suggest this.
Therefore, investors also need to consider the shock caused by the emergence of those black swans and gray rhinos.
It is also because of this that the stock market has corrected significantly since April, and the Shanghai Composite Index has fallen below 3,000 points.
Fortunately, a high-level meeting at the end of April put forward countermeasures against the current situation, which is an encouragement for investors, giving them hope that the epidemic will be brought under control and the economy will stabilize and recover.
If stable expectations are formed in this regard, then the current economic situation can be viewed dialectically, and confidence in the long-term positive development trend can be strengthened.
Undoubtedly, the stock market rebound that occurred at the end of April was generated against this background, and as long as the belief in this regard can be maintained, the situation of the continuous weakening of the A-share market can be changed.
Of course, from the introduction of the policy to the effect, there needs to be a process, especially the situation is still very severe and there are still many uncertain factors. In this case, the recovery of investor confidence also needs a process. It is unrealistic to think that a few policy measures can completely change the market outlook.
It is also based on this analysis that the conclusion that can be drawn now is that the stock market in May will first correct the sharp decline that occurred in the previous period. In the process of rebuilding confidence in the market, this is an inevitable trend. The phenomenon.
But at the same time, it should be noted that due to the influence of many factors, the real economy may not be too ideal in the second quarter, and a considerable number of listed companies will experience declines in performance or even huge losses.
Therefore, in terms of individual stocks, the corresponding risk is still quite large.
In the case that this risk has not been fully and effectively released, it will be difficult for the stock market to get out of the strong rally.
Therefore, in May the market is likely to be reparative, that is, to correct the excessive decline in the previous period, and at the same time, according to the policy orientation of stable growth, a certain degree of structural market will be launched, and some dynamic Stocks that are still overvalued see price returns.
And all of these are laying the foundation for the future rally.
In this sense, a good start for the stock market in May is a good sign, but this does not mean that the stock market will rise sharply in May, and investors still need to be cautious in operation.