Economic Observer Network Reporter Liang Ji Northbound funds surged and net purchases exceeded 13 billion yuan. The three major A-share indexes fluctuated and closed in the red across the board. The Shanghai Composite Index once again stood at 3,300 points.
As of the close of trading on June 15, 2022, the Shanghai Composite Index reported 330.541 billion yuan, up 0.50%; the Shenzhen Stock Exchange Component Index reported 12137.76 points, up 0.95%; the GEM Index reported 2575.09 points, up 1.05%. The net buying of northbound funds was 13.359 billion yuan, of which the net buying of and Shanghai Stock Connect was 7.760 billion yuan, and the net buying of Shenzhen Stock Connect was 5.599 billion yuan.
For the fourth consecutive trading day, the transaction volume of the Shanghai and Shenzhen Stock Exchanges exceeded RMB 1 trillion. Among them, the Shanghai Stock Exchange’s turnover was 621.973 billion yuan, and the Shenzhen Stock Exchange’s turnover was 676.953 billion yuan. The total turnover of the two cities was 1,298.926 billion yuan, which was higher than the previous trading day’s 1,099.472 billion yuan. .
On the market, the non-bank financial sector led the market, with an increase of 4.07%; the banking sector also increased by 1.86%. Wind data shows that the non-bank financial and banking sectors had net inflows of 13.303 billion yuan and 3.562 billion yuan respectively on June 15. In terms of stocks , among the 41 A-share listed securities firms, only Bank of China Securities (601696.SH) fell by 1.99%, and the rest all rose. Great Wall Securities (002939.SZ), Everbright Securities (601788.SH) and Hongta Securities (601236) rose nearly 10%.
The insurance sector also rose collectively. As of the close, China Life (601628.SH) rose 9.99%, Xinhua Insurance (601336.SH) rose 8.11%, China Pacific Insurance (601601.SH) rose 7.29%. PICC (601319.SH) and Ping An (601318.SH) also increased by more than 5%.
Recently, the financial sector has performed well, and individual stocks have collectively risen frequently. TEDA Manulife Fund believes that the current rapid rise of securities companies and non-bank sectors is the result of the reselection of funds. The valuation of securities companies is relatively safe, and the domestic short-term funding interest rate has declined, and the market liquidity is abundant, which constitutes the prerequisite for the rebound of securities companies. .
also believes that since the recovery of domestic economic fundamentals in the third quarter will lead to a reversal in the A-share market, there will be no shortage of funds to "jump away". After all, before each market starts, securities firms are the first to bear the brunt.
Everbright Securities 6 days 5 board
Wind data shows that the stock price of Everbright Securities has increased by 53.78% in the last 6 trading days. From June 8 to 15, the gains of Everbright Securities on each trading day were 10.02%, 10.03%, 10.03%, respectively. 4.97%, 10.02% and 9.99%, and the market value rose to 91.893 billion yuan.
Everbright Securities’ booming market has attracted market attention.
htmlOn the evening of June 14, Everbright Securities issued the "Announcement on Abnormal Stock Trading Fluctuations", stating that after self-examination and a written letter to the controlling shareholder, the company found that there were no major matters or major information that should be disclosed but had not been disclosed.Recently, Everbright Securities has experienced turmoil in its senior management personnel. On June 14, Everbright Securities announced that it would convene the 2021 Annual General Meeting of Shareholders on that day and elect Zhao Ling and Liang Yi as executive directors of the company's board of directors and supervisors of the board of supervisors respectively; on the same day, Everbright Securities held a board of directors election to elect Zhao Ling and Liang Yi respectively. Chairman and Chief Supervisor of the company. Prior to this, Zhao Ling served as vice president and secretary of the board of directors of Everbright Bank, and Liang Yi served as deputy general manager of the Internal Control and Compliance Department of Everbright Group.
On April 19, the Party Committee of Everbright Securities was held accountable for not resolutely and thoroughly implementing the instructions from superiors, violating the spirit of the eight central regulations, and lax implementation of expense management ; Yan Jun, Secretary and Chairman of the Party Committee of Everbright Securities He was removed from his position within the party and demoted to a deputy position in the group department; Chairman of the Board of Supervisors Liu Jiping stayed on party probation for one year and was demoted to a deputy position in the Everbright Securities department; President Liu Qiuming was given a warning; Secretary of the Discipline Inspection Commission Fan Hongbo was given a warning; Company Vice President Wang Zhong and Mei Jian were criticized and educated.
html On April 20, Everbright Securities issued an announcement stating that due to work adjustments, Yan Jun resigned from the company's chairman, director and convener of the board's strategy and development committee; Liu Jiping resigned from the company's chief supervisor, supervisor and member of the governance supervision committee of the board of supervisors. The company's director and president Liu Qiuming performed the duties of chairman on his behalf, and the company's supervisor Wu Chunsheng convened and chaired the meeting of the supervisory board on his behalf.Everbright Securities' 2021 annual report shows that the company achieved revenue of 16.707 billion yuan during the reporting period, a year-on-year increase of 5.30%; net profit was 3.484 billion yuan, a year-on-year increase of 49.28%; non-net profit after deducting was 4.027 billion yuan, a year-on-year increase of 9.67%. Previously, Everbright Securities made provisions of nearly 6 billion yuan in four years due to the MPS incident, which triggered a round of high-level personnel changes.
Everbright Securities is on the board, brokerage stocks are leading the market . There is speculation in the market whether brokerage stocks, as the "bull market standard bearers", will lead A-shares into a new round of bull market. Li Meicen, chief strategist of at Caitong Securities, believes that looking back at history, from 2014 to 2022, Everbright Securities experienced similar short-term continuous daily limit phenomena in November 2014, November 2015 and June 2020 respectively.
Li Meicen said that overall, the above-mentioned time points are related to the expectation or substantial implementation of interest rate cuts, the Shanghai Composite Index achieved positive returns within one month thereafter. In 2014 and 2020, expectations for interest rate cuts were materialized, driving the Shanghai Composite Index and major financial institutions (brokerages, banks) to see significant "index-level" market conditions. In November 2015, after the "8·11" exchange rate reform, coupled with a series of "rescue" measures in September, expectations of an interest rate cut were fermented, but they did not materialize. The market was dominated by shocks, and the Shanghai Composite Index , Big Finance achieved positive single-digit returns.
Everbright Securities commented in the non-bank research report released on June 12 that from the current point of view, capital market reforms are accelerating, the secondary market is stabilizing, and the industry's leverage ratio is relatively low. Taken together, the fundamentals of the securities industry show a stabilizing and improving trend. Capital market reform has entered a period of acceleration, and the differentiation between "supporting the good and limiting the bad" has intensified. The policy dividends of the capital market have opened up space for industry development, brought new business growth points to securities companies, and helped catalyze the recovery of sector valuations. In addition, the China Securities Regulatory Commission "supports the good and limits the bad" to guide the industry's compliance operations, and industry differentiation may further intensify under the guidance of supervision. Therefore, overall, the current decline in valuations of the securities industry is due to industry transformation and the superposition of various short-term factors. In the long term, there is greater room for recovery in valuations.
TEDA Manulife Fund believes that this round of strong market gains is mainly driven by big finance, especially the brokerage sector. On June 14, the brokerage sector suddenly emerged, and banks and insurance companies quickly followed suit. In theory, a rise in the brokerage sector often means loose liquidity. The domestic inter-bank pledged 7-day repurchase weighted interest rate has been falling since the beginning of April, and the financial market has abundant funds, creating prerequisites for the rise of securities stocks.
Can the loose liquidity situation continue?
On June 10, the central bank released financial data for May. Data show that new RMB loans in May were 1.89 trillion yuan, a year-on-year increase of 392 billion yuan, an increase of nearly 2 times from the historical low of 645.4 billion yuan last month; new social financing scale was 2.79 trillion yuan, a year-on-year increase of 839.9 billion yuan. It also increased nearly 2 times from 910.2 billion yuan last month.
The strategy team of CICC pointed out that since the Political Bureau meeting at the end of April, policies have continued to increase to stabilize growth and stabilize expectations. The latest social financing and M2 data show that liquidity has been relaxed and increased, and market interest rates did not rise but fell after the data. At the same time, from the beginning of the year to the end of April, the Chinese market has been adjusted significantly and valuations are at relatively low levels. Recently, the domestic epidemic situation has improved significantly, the resumption of work and production has deepened, and market sentiment has gradually improved, making it more stable than overseas.
Jin Yi, chief analyst of fixed income at Guohai Securities, believes that in April and May, liquidity was extremely loose and funding interest rates dropped significantly. The first factor behind this is that the profits handed over by the central bank are superimposed on a large-scale retained tax refund , which effectively supplements excess reserves. This is equivalent to a 0.4 percentage point RRR cut; second, the central bank lowered RRR, releasing excess reserves of 530 billion yuan; third, credit is not provided smoothly, resulting in a low growth in the scale of "required deposits" and a small consumption of excess reserves.
In terms of external factors, U.S. inflation in May exceeded expectations and surged to 8.6%, the highest level in 40 years. The continued high inflation has heightened market speculation about the Federal Reserve's aggressive interest rate hikes. The increasingly tightened monetary policy has put pressure on US stocks . Currently, the US government is facing difficulties in curbing high inflation, achieving a "soft landing" for the economy and the valuation of US stocks.Many institutions expect the Federal Reserve to announce a 75bp interest rate hike at its meeting on the 15th local time, deviating from the mild expectations of 50bp interest rate hikes on several previous occasions.
Recently, the U.S. stock market has continued to be turbulent and downward. The Nasdaq index and The S&P 500 index have both fallen by more than 20% from their recent highs, falling into a bear market. U.S. President Biden and Federal Reserve Chairman Powell have previously stated that the primary goal of current work is to curb inflation. However, the recent sharp declines in U.S. stocks have raised concerns about damaging the wealth of American families.
Jianhong Times Investment Director Zhao Yuanyuan believes that the White House spokesman's statement of paying close attention to the U.S. stock market may imply that the progress of the Federal Reserve's monetary tightening may be affected by the decline in U.S. stocks.
Wind data shows that from April 27th to June 10th, funds from the north continued to flow in net, and in the last 10 trading days, continuous net purchases reached 66.073 billion yuan. Looking at the stages, from 4.27 to 5.16, foreign capital outflowed slightly. 9.54 billion yuan; from May 17 to now, the inflow of northbound funds has been 75.64 billion yuan. Since June, global funds have net flowed into the Chinese market of US$373 million, while emerging markets other than China have continued the outflow trend since May. Caitong Securities pointed out that in the past two weeks, Northbound funds have flowed into A-shares on a net basis of 62.1 billion, driving the annual net inflow from -26.4 billion to 39.6 billion. 75% of the funds have flowed into the top 50 companies, and most of them are foreign capital. Heavy positioning of core assets.
As of the end of May, the actual spread between China and the United States was 6.39%, which was at the 96.8% quantile level in 2010. As of June 9, among the world's major currencies, the central parity rate of the RMB against the US dollar has depreciated by 4.57%, second only to the Canadian dollar, but significantly higher than the exchange rates against the US dollar of other developed economies such as the Japanese yen and the euro. In addition, the low proportion of foreign shares held by A-shares also makes it easier for them to get out of the independent market. Data show that as of the end of 2021, A-share foreign investment accounted for only 4.1%. Industrial Securities chief strategist Zhang Yidong said that the actual interest rate differential between China and the United States is still at a high level to support the inflow of funds heading north. Even if subsequent interest rate hikes by the Federal Reserve drive up real interest rates, since inflationary pressure in China is much smaller than that in the United States, the real interest rate differential between China and the United States may remain high. This is also an important support for the continued inflow of foreign capital into A-shares in the future.
TEDA Manulife Fund pointed out that the current question before A-shares is: What is the driving force for this round of rebound in financial stocks, especially brokerage stocks? Has the much-anticipated “reversal” in the third quarter started? It believes that the reversal in the third quarter of this year was driven by economic fundamentals rather than corporate performance. Since too many favorable policies have paved the way in the early stage, and the market has no doubts about the prediction that "the economic decline will narrow in May and the turning point will be reached in June", there is a lack of a landmark event to serve as a reversal of the market. "Starting gun". Therefore, only by relying on time can we effectively "digest the floating chips and travel lightly". And if there is a "jumping" of funds at this time, all kinds of funds are mixed in, and there is no time to change the track for unwinding and profit taking, which is equivalent to "risk post-positioning" and there are still hidden dangers. Therefore, brokerage firms still advise caution in view of the market recovery that is not driven by banks. Because if it continues the rotation trend of technology stocks and since June 2, it is actually a "compensatory increase".
CICC said that looking forward, the Chinese and foreign policy cycles will continue to reverse direction, and the Chinese market may remain relatively resilient compared to overseas markets in the second half of the year. With low inflation, sufficient policy space, and continued repair of fundamentals, the Chinese market already has medium-term investment value. Considering that liquidity easing is still increasing, the overall market recovery space is not yet significant, and there may be a certain degree of inertia in the improvement of market sentiment, the short-term A-share market may still be expected to continue to recover amid fluctuations; but looking at the entire second half of the year, internally and externally, Under the influence of uncertain factors, the market path may not be unilaterally upward. The absolute gain of in the market depends on whether China can achieve sustained stabilization and improvement of fundamentals as soon as possible.
