The benchmark Shanghai Composite Index climbed to above 3,300 points again amid fluctuation this Tuesday. The ChiNext Board Index also reported gain in the afternoon despite sluggish performance in the morning. Declining tendency of medium and small-cap stocks in previous trading days thoroughly changed with several sub-new stocks hiking to the daily limit of 10 percent on Dec. 26. Hotspot theme stocks all picked up and market sentiment improved. Analysts believe that market sentiment might recover in early 2018.
Medium and small-cap stocks were weak in the morning of Dec. 26, but they surged in the afternoon. Sub-new stocks were undoubtedly the most outstanding with over 30 sub-new stocks, including Guangdong Wanlima Industry Co., Ltd. (300591.SZ), Qinhuangdao Port Co., Ltd. (601326.SH), Foshan Gas Group Co., Ltd. (002911.SZ), Hunan Goke Microelectronics Co., Ltd. (300672.SZ) and Cig Shanghai Co., Ltd. (603083.SH), soaring to the daily limit of 10 percent. Many of these sub-new stocks are involved with “gas, 5G and chips”. Therefore, technology stocks, which rose and then fell in the morning, hiked again in the afternoon. Technology-themed stocks concerning domestic chips and holographic technique, which were weak earlier, recovered gradually too in the afternoon.
According to the trading volume ranking list after trading hours, several sub-new stocks were heavily bought through institutional seats. Focus Lightings Tech Co., Ltd. (300708.SZ), a sub-new stock engaged in chips, was bought through the business department of Haitong Securities located on Zhujiang West Rd, Guangzhou with 51.6057 million yuan, accounting for 10.37 percent of its intraday turnover. Goke Microelectronics was bought through the business department of Northeast Securities located on Wuning Rd, Putuo District, Shanghai with 23.4363 million yuan, accounting for 10.83 percent its intraday turnover.
In addition, some business departments were listed on the trading volume ranking list of several sub-new stocks. For instance, the business department of Caitong Securities located on Zhonghua Rd, Wenling bought Focus Lightings Tech with 13.7755 million yuan, ranking the second on the list, and bought Lanzhou Zhuangyuan Pasture Co., Ltd. (002910.SZ) with 8.897 million yuan, ranking the first on the list.
Industry insiders hold that medium and small-cap stocks keep retreating since the second half of 2017. Many blue chips suffered decline. Therefore, leading technology enterprises with sound performance, involving semiconductor, 5G and data security, will enjoy more advantage in valuation and flexibility next year.
Institutions are divided about the timing to invest in stocks listed on the Small and Medium-sized Enterprises (SMEs) Board and the ChiNext Board. Industry insiders believe that investors can invest in medium and small-cap stocks with high performance expectation, or those whose valuation were greatly affected by financial liquidity. Bohai Securities suggests investors to stick to the investment principles of performance and valuation match, and pay attention to medium and small-cap stocks with stable performance.
But based on current market performance, Everbright Securities suggests investors to be cautious about individual medium and small-cap stocks.
Besides sub-new stocks, stocks concerning Shanghai Free Trade Zone (FTZ) also showed strong performance on Dec. 26. Shanghai Shine-link International Logistics Co., Ltd. (603648.SH) soared by the daily limit of 10 percent, while Shanghai Material Trading Co., Ltd. (600822.SH) and Shanghai Jin Jiang International Industrial Investment Co., Ltd. (600650.SH) reported a gain over 4 percent. Mechanical equipment sector also climbed amid fluctuation in the afternoon. Stocks like First Tractor Company Limited (601038.SH) and Xcmg Construction Machinery Co., Ltd. (000425.SZ) soared by the daily limit of 10 percent. Home appliances and food & beverage sectors dived amid fluctuation. Midea Group Co., Ltd. (000333.SZ), Hangzhou Robam Appliances Co., Ltd. (002508.SZ), Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH) and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. (002304.SZ) dived over 2 percent.
For market outlook, Everbright Securities believes that after policy and liquidity strike, market environment tends to be mild in the short run. Therefore, under the support of corporate profit, the market might report great performance in the spring of 2018. Investors can eye on growth sector which sees continuous policy support and whose performance might bottom out.
TF Securities is also optimistic about the performance of A shares in Q1, 2018. According to the institute, uncertainties are gradually removed and the central bank will release liquidity through targeted RRR cut in early 2018; therefore, risk preference might gradually recover in the market.
Translated by Jennifer Lu
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