(Economic Observation) Where will China's A shares go in the second half of the year after the first half of the year?

  China News Service, Beijing, June 30 (Reporter Chen Kangliang) On the last trading day of the first half of 2022, China's A-shares ended in red, and all major stock indexes rose. Among them, the representative Shanghai index rose by more than 1%, approaching again. 3400 points mark.

  As of the close of the day, the Shanghai Composite Index reported 3,398 points, an increase of 1.1%, with a turnover of 510.3 billion yuan (RMB, the same below); the Shenzhen Component Index reported 12,896 points, an increase of 1.57%, with a turnover of 649.5 billion yuan; the ChiNext Index reported 2,810 points, an increase of 649.5 billion yuan. 1.52%.

  Since the beginning of this year, affected by factors such as the new crown pneumonia epidemic and the decline of overseas markets, the A-share market has fluctuated significantly. Still out of the dazzling independent market, especially in May and June, there was a clear rebound, and in the case of "gloomy clouds" in the European and American markets, it showed strong resilience.

  Overall, as of 3:00 pm Beijing time on the 30th, the Shanghai index fell by more than 6% in the first half of the year, the Dow Jones Industrial Average in the United States fell by more than 14%, the German DAX index fell by nearly 20%, and the Paris CAC40 index fell by more than 17%. The Nikkei 225 fell more than 8% and the Korea Kospi fell more than 21%.

  According to Huang Cendong, an analyst at Sinolink Securities, since May, the performance of the A-share market has been more resilient than overseas, mainly because China's economic and policy cycles are more favorable.

Under the pressure of high inflation, overseas central banks have to increase the rate of interest rate hikes. In order to control inflation expectations, the risk of economic "hard landing" may increase at the expense of economic recession.

China's policy is "me-based", and monetary and fiscal policies are actively exerting force. As the epidemic is brought under control, the policy focus has shifted from "epidemic prevention and control" to "stabilizing the economy." The gradual strengthening of economic growth has led to a recovery in capital risk appetite.

Secondly, the RMB exchange rate entered a two-way fluctuation range after experiencing a round of sharp depreciation in April, and gradually stabilized and rebounded, which also increased the attractiveness of A-shares to capital.

Thirdly, the major A-share stock indexes are more attractive than major overseas equity markets such as US stocks, and the lower valuation allows A-shares to maintain a certain degree of resilience in the fluctuation of the external market.

  For the second half of the trend, most analysts are optimistic.

Dongguan Securities analyst Fei Xiaoping said that the adjustment of A shares in the first half of the year was caused by the impact of internal and external factors, and it was also to digest the valuation pressure that the market continued to rise before. With the gradual accumulation of market corrections and time, the downward pressure has also weakened, especially for Negative factors are fully digested. Although there is still pressure from the Fed to raise interest rates and the growth rate of listed companies’ performance in the second quarter to decline, with the acceleration of China’s official growth policy, the steady recovery of China’s economy and the high-quality development of the capital market With the continuous advancement of the "policy bottom", it is expected to gradually get out of the "market bottom" after the "policy bottom" is gradually consolidated, ushering in the opportunity to stabilize and rebound in stages. The market recovery and rebound in the second half of the year is worth looking forward to.

  Qin Peijing, an analyst at CITIC Securities, also holds a similar view.

Qin Peijing believes that since the beginning of this year, China's A-shares have been hit by sudden internal and external "black swan" events, and the market has experienced a concentrated vent of extreme pessimism and has been severely oversold.

With the effective prevention and control of the domestic epidemic, the joint efforts of policies to support the rapid recovery of the economy, and the easing of external risk pressures, the A-share slow bull has reappeared.

  Guohai Securities analyst Hu Guopeng also said that China's economy will stabilize in the second half of the year. In the process of abundant currency liquidity, A shares may deduce the performance of US stocks in 2011-2012, that is, after the European debt crisis jumped out of the "golden pit" ”, this time A shares are impacted by the “new crown pneumonia epidemic and the Ukraine crisis”, the adjustment of valuation has been relatively sufficient, the subsequent economic stabilization, the domestic liquidity is ample and the policy is active, the valuation will usher in repair, and the market will usher in a Nice investment opportunity.

  However, Hu Guopeng reminded that we need to pay attention to risks such as the unexpected deterioration of the global and domestic epidemics, the phased deterioration of relations between major countries, and the slower-than-expected progress of industrial policies.