The A-share market has been under fluctuation since mid-November. As the market gamin becomes difficult, the market performance in spring is highly expected by institutional investors. According to research reports released by securities companies, the A-share market saw “red envelope” performance in each spring of previous years. Most growth stocks saw outstanding performance. Many fund managers believe that the market risks have been fully released and the valuation of many individual stocks matches their performance. Based on the time and space factors, the strategic investment opportunity for spring performance has come.
Based on the spring performance in previous years, Sinolink Securities found that it generally lasts about two months. Past performance shows that the spring performance initiated in December and January. In terms of styles, financial stocks were generally weak and most growth stocks saw outstanding performance.
The quantitative research of GF Securities also certified certain views of Sinolink Securities. Based on the quantitative research on 13 samples from 2005 to 2017, it found that 67 percent of the SZSE SME Price Index and 46 percent of the main board index hiked before January 1. Over 50 percent of the SSE Composite Index and the SZSE SME Price Index hiked in January.
“Fund companies have completed annual appraisals at the time and will make plans on the investment for the new year, which contributed to the spring performance. Besides, the GDP growth has been at the highest level in the first quarter since 2012. The market is optimistic about the whole year at the beginning. It can be called the best period of the market without the influence of annual reports and other factors.” A Shanghai-based fund manager indicated.
In terms of capitals, banks will set targets in the issuing of loans at the beginning of the year and capitals are relatively loose in the first quarter, indicated Wang Wei, chief researcher with Noah. Besides, the risk preference of investors is high at the beginning of the year, which also contributed to the spring performance.
However, some fund managers indicated that companies will release annual reports after the spring performance. Subjects with outstanding and stable performance will be favored in the market.
Many institutes believe that the market risks have been fully released and the valuation of many individual stocks matches their performance after the market adjustment since mid-November. Based on the time and space factors, the strategic investment opportunity for spring performance has come.
“Public funds have no obvious changes in positions at the end of the year. The stocks held by public funds with high positions saw higher fluctuations. Public funds have different views. It is widely argued whether there will be changes in styles and growth stocks will perform well in spring. Public funds have fewer voices in the market due to the size. But they are sensitive and can capture the latest changes in the market,” Wang indicated.
Great Wall Securities indicated in a research report that the performance of A shares in spring has been widely expected in recent years. Investors are advised to seek industries meeting the direction of reform with the valuation matching the performance.
“For the next spring, I will pay more attention to sectors with changes in fundamentals, such as aviation, military engineering and property. I believe that such sectors may see benefits in spring,” a Shanghai-based fund manager indicated.
Morgan Stanley Huaxin Fund believes that it is difficult to judge whether the adjustment has come to an end, but the market style determined by the performance will not change. Individual stocks with more declines in the chain reaction caused by the adjustment are good choices for the investment in next year.
Translated by Star Zhang
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