[Today’s Guide]
○ Unconventional measures to save investor confidence
○ Institutions of Pearl River Delta region: stocks rebound after plunge
○ Beijing speeds up administrative sub-center planning and construction
○ Integrated circuit design industry welcomes new opportunities...
[XFA View]
Unconventional measures to save investor confidence
------
The policy makers successively launched a package of measures to stabilize the stock market last weekend, including to postpone issuing new stocks and securities brokerages to invest in blue-ship ETF. The correct understanding of the purpose and logic of this bailout plan is quite crucial for making next investment decision. We believe that what the decision-makers need to save is not stock index but investor confidence, and the fundamental logic of the bailout plan is not to pay attention to how many points the stock index decreases but to stem steep market plunge and to prevent the approaching systematic risks and market failure.
The measures to postpone IPO with returning the off-line subscription payment and not to reduce proprietary position, are unconventional at current unusual period. They are even beyond market expectation, revealing that the regulators are determined to maintain market stability. Therefore, it is conceivable that the securities regulators are not fighting alone for bailout now; the higher-level authorities make overall plans and many ministries work hand in hand to put forward extensive measures so as to stabilize market confidence, which could become an event with big probability.
Looking back at this round of slump, the continuous decline by the daily limit of 10 percent in most stocks resulted in more panic selling and also destroyed the normal market valuation system, pricing function and the precious investor confidence. The features of this round of leveraged bull run aroused market risks during the slump. The logical starting point of this bailout is to destroy the continuously self-reinforcing vortex of market slide, and to prevent systematic risks and the failure in market pricing, financing and resource allocation function.
Confidence is more important than gold. It is believed that the irrational market slump will end due to the intervention of decision-makers, but investors should have psychological anticipation on the complexity of the following market trend. It is one-sided to regard policy bailout as the guarantee for stock index increase, because the ultimate goal of bailout is not to support or maintain the stock index not lower than a certain point; securities brokerages’ promise not to sell their positions for their self-operational business as long as the stock index is below 4,500 points, does not mean 4,500 point is the psychological mark of stock index.
[Institutions’ Movement]
Institutionsin the Pearl River Delta: stocks to be oversold bounce gradually
------
Both public and private funds interviewed in the Pearl River Delta indicated that with explicit policy support, the stock market is reaching its bottom gradually. Stocks that have fallen by less than 50 percent over the past week will accelerate hitting the bottom or still have signs for lagged declining. Yet stocks that have slumped by over 50 to 60 percent, such asLeshi Internet Information & Technology Corp. (300104.SZ) and Guangdong Qtone Education Co.,Ltd.(300359.SZ), will rebound to stabilization. Over the next week, more stocks that have suffered excessive price decrease will rebound. It is a general trend that stock manipulation will disappear. Investors will focus more on fundamental factors and performance of stocks.
Insurance funds: SSE Composite Index likely to climb back to 4000 points
------
According to a latest survey to insurance asset management institutes, including Taikang Asset Management Co., Ltd., A-share market is expected to rebound over the next week, due to substantial short-term market adjustment and vigorous administrative assistance. Driven by blue chips, the SSE Composite Index is likely to jump back to 4000 points and see a period of vibration and consolidation.
[Authoritative Voice]
Beijing speeds up administrative sub-center planning and construction
------
Beijing will hold meetings to deliberate on implemental measures of ‘Integrated and Coordinated Development Plan of Beijing, Tianjin and Hebei Province’. The measures specify that Beijing shall orderly relieve its non-capital functions, particularly accelerate the planning and construction of an administrative sub-center of Beijing Municipality, and push the whole or part of administrative institution of Beijing Municipality relocating in the sub-center. It is learnt that Beijing Municipality has prepared funds to construct office facilities after its relocation in Tongzhou. Local state-owned enterprises in Beijing also launched to build necessary infrastructure.
[XFA Viewpoint]
Chip manufacturing concentration improved; integrated circuit design industry welcomes new opportunities
------
Global Foundries announced on July 2 that it had completed the acquisition of the chip manufacturing department of IBM with the product line expanding to mobile terminal and automobile chip, etc., thus further improving the concentration of the industry. Meanwhile, under the support of the national integrated circuit industry fund, the concentration ratio of the domestic integrated circuit industry is also gradually increased. The higher concentration of the chip manufacturing industry will set higher requirement on the integrated circuit design enterprises of which the superior ones will receive more positive stimulation. As the integrated circuit design level of China keeps upgrading, more and more products will realize import substitution, and the industry will become the fastest-growing subsector in the electronic science and technology field in the future.
All Winner Technology Co., Ltd. (300458.SZ) is a leading enterprise engaged in the design of intelligent terminal processor and intelligent power management chip, occupying the majority share of market (excluding the iPad tablet processor market) in China. The company is seeking to be listed for a transition to be less dependent on the tablet business and is stepping up efforts in the design of vehicle-mounted chips, security chips and the chips for the Internet of Things. The output of processors H8 and H64 for OTT BOX is expected to gradually boost.
Nationz Technologies Inc. (300077.SZ) leads the design of security chips of intelligent mobile terminals in China. As the top trusted computing chips design enterprise within the country, the company benefits from the Internet of Things’ explosive growth of demand for security chips. The company launched the restricted stock incentive plan in the last ten days of June and set a relatively high performance growth rate as the condition for unlocking.
Jiangsu Changjiang Electronics Technology Co., Ltd. (600584.SH) is the leading enterprise in packing of integrated circuit & discrete device and chip design of discrete device, The revenue from packaging business contribute increased weight in its total income, with monthly output of 400,000,000 WLCSP chips. Its 12-cun-Bumping (cun, a unit of length=1/3 decimetre) production line, cooperated with Semiconductor Manufacturing International Corporation (00981.HK; SMI.NYSE), masters the middle encapsulation technology, even the most core technology of semiconductor packaging and testing.
[Editor’s Thought]
Rationality always to be the ‘proper attitude’ for investment
------
During the recent two weeks, the daily psychological trading hours of investors greatly exceeds 4 hours, while investors pay close attention to price at daytime, and to policies at night, eager to draw a K-line chart tracking the combat between both bullish and bearish sides in the public opinion. The most ridiculous joke is ‘the new bullish measure: invalidate the trading after June 26, all restart new trading’. But, it is just a joke. And can it be restarted? Hence, rationality is the correct 'posture' for investing.
Introspecting the bull market, we may obscure the initial investment objective, facing dramatic surge and drop in the market, and gain and loss in the book value. Excessive discussion and attention on government attitude and policies lead to mental exhaustion, as investors are struggling between hope and disappointment, just based on nonsense rumor. Therefore, investor confidence comes up quickly and tumultuously, just like how it fades away.
It is not a proper attitude for a mature investor to be blindly optimistic when profiting, or expect the bailout measures when losing. We should respect the market and rules, ignore the rumors, not simply operate by regarding the non-implementation of groundless policy expectation as bearish signals. We should learn lessons from the experience. It is a rule for market to both rise and fall, and we should start a new investment with more rational attitude and manner.
○ Unconventional measures to save investor confidence
○ Institutions of Pearl River Delta region: stocks rebound after plunge
○ Beijing speeds up administrative sub-center planning and construction
○ Integrated circuit design industry welcomes new opportunities...
[XFA View]
Unconventional measures to save investor confidence
------
The policy makers successively launched a package of measures to stabilize the stock market last weekend, including to postpone issuing new stocks and securities brokerages to invest in blue-ship ETF. The correct understanding of the purpose and logic of this bailout plan is quite crucial for making next investment decision. We believe that what the decision-makers need to save is not stock index but investor confidence, and the fundamental logic of the bailout plan is not to pay attention to how many points the stock index decreases but to stem steep market plunge and to prevent the approaching systematic risks and market failure.
The measures to postpone IPO with returning the off-line subscription payment and not to reduce proprietary position, are unconventional at current unusual period. They are even beyond market expectation, revealing that the regulators are determined to maintain market stability. Therefore, it is conceivable that the securities regulators are not fighting alone for bailout now; the higher-level authorities make overall plans and many ministries work hand in hand to put forward extensive measures so as to stabilize market confidence, which could become an event with big probability.
Looking back at this round of slump, the continuous decline by the daily limit of 10 percent in most stocks resulted in more panic selling and also destroyed the normal market valuation system, pricing function and the precious investor confidence. The features of this round of leveraged bull run aroused market risks during the slump. The logical starting point of this bailout is to destroy the continuously self-reinforcing vortex of market slide, and to prevent systematic risks and the failure in market pricing, financing and resource allocation function.
Confidence is more important than gold. It is believed that the irrational market slump will end due to the intervention of decision-makers, but investors should have psychological anticipation on the complexity of the following market trend. It is one-sided to regard policy bailout as the guarantee for stock index increase, because the ultimate goal of bailout is not to support or maintain the stock index not lower than a certain point; securities brokerages’ promise not to sell their positions for their self-operational business as long as the stock index is below 4,500 points, does not mean 4,500 point is the psychological mark of stock index.
[Institutions’ Movement]
Institutionsin the Pearl River Delta: stocks to be oversold bounce gradually
------
Both public and private funds interviewed in the Pearl River Delta indicated that with explicit policy support, the stock market is reaching its bottom gradually. Stocks that have fallen by less than 50 percent over the past week will accelerate hitting the bottom or still have signs for lagged declining. Yet stocks that have slumped by over 50 to 60 percent, such asLeshi Internet Information & Technology Corp. (300104.SZ) and Guangdong Qtone Education Co.,Ltd.(300359.SZ), will rebound to stabilization. Over the next week, more stocks that have suffered excessive price decrease will rebound. It is a general trend that stock manipulation will disappear. Investors will focus more on fundamental factors and performance of stocks.
Insurance funds: SSE Composite Index likely to climb back to 4000 points
------
According to a latest survey to insurance asset management institutes, including Taikang Asset Management Co., Ltd., A-share market is expected to rebound over the next week, due to substantial short-term market adjustment and vigorous administrative assistance. Driven by blue chips, the SSE Composite Index is likely to jump back to 4000 points and see a period of vibration and consolidation.
[Authoritative Voice]
Beijing speeds up administrative sub-center planning and construction
------
Beijing will hold meetings to deliberate on implemental measures of ‘Integrated and Coordinated Development Plan of Beijing, Tianjin and Hebei Province’. The measures specify that Beijing shall orderly relieve its non-capital functions, particularly accelerate the planning and construction of an administrative sub-center of Beijing Municipality, and push the whole or part of administrative institution of Beijing Municipality relocating in the sub-center. It is learnt that Beijing Municipality has prepared funds to construct office facilities after its relocation in Tongzhou. Local state-owned enterprises in Beijing also launched to build necessary infrastructure.
[XFA Viewpoint]
Chip manufacturing concentration improved; integrated circuit design industry welcomes new opportunities
------
Global Foundries announced on July 2 that it had completed the acquisition of the chip manufacturing department of IBM with the product line expanding to mobile terminal and automobile chip, etc., thus further improving the concentration of the industry. Meanwhile, under the support of the national integrated circuit industry fund, the concentration ratio of the domestic integrated circuit industry is also gradually increased. The higher concentration of the chip manufacturing industry will set higher requirement on the integrated circuit design enterprises of which the superior ones will receive more positive stimulation. As the integrated circuit design level of China keeps upgrading, more and more products will realize import substitution, and the industry will become the fastest-growing subsector in the electronic science and technology field in the future.
All Winner Technology Co., Ltd. (300458.SZ) is a leading enterprise engaged in the design of intelligent terminal processor and intelligent power management chip, occupying the majority share of market (excluding the iPad tablet processor market) in China. The company is seeking to be listed for a transition to be less dependent on the tablet business and is stepping up efforts in the design of vehicle-mounted chips, security chips and the chips for the Internet of Things. The output of processors H8 and H64 for OTT BOX is expected to gradually boost.
Nationz Technologies Inc. (300077.SZ) leads the design of security chips of intelligent mobile terminals in China. As the top trusted computing chips design enterprise within the country, the company benefits from the Internet of Things’ explosive growth of demand for security chips. The company launched the restricted stock incentive plan in the last ten days of June and set a relatively high performance growth rate as the condition for unlocking.
Jiangsu Changjiang Electronics Technology Co., Ltd. (600584.SH) is the leading enterprise in packing of integrated circuit & discrete device and chip design of discrete device, The revenue from packaging business contribute increased weight in its total income, with monthly output of 400,000,000 WLCSP chips. Its 12-cun-Bumping (cun, a unit of length=1/3 decimetre) production line, cooperated with Semiconductor Manufacturing International Corporation (00981.HK; SMI.NYSE), masters the middle encapsulation technology, even the most core technology of semiconductor packaging and testing.
[Editor’s Thought]
Rationality always to be the ‘proper attitude’ for investment
------
During the recent two weeks, the daily psychological trading hours of investors greatly exceeds 4 hours, while investors pay close attention to price at daytime, and to policies at night, eager to draw a K-line chart tracking the combat between both bullish and bearish sides in the public opinion. The most ridiculous joke is ‘the new bullish measure: invalidate the trading after June 26, all restart new trading’. But, it is just a joke. And can it be restarted? Hence, rationality is the correct 'posture' for investing.
Introspecting the bull market, we may obscure the initial investment objective, facing dramatic surge and drop in the market, and gain and loss in the book value. Excessive discussion and attention on government attitude and policies lead to mental exhaustion, as investors are struggling between hope and disappointment, just based on nonsense rumor. Therefore, investor confidence comes up quickly and tumultuously, just like how it fades away.
It is not a proper attitude for a mature investor to be blindly optimistic when profiting, or expect the bailout measures when losing. We should respect the market and rules, ignore the rumors, not simply operate by regarding the non-implementation of groundless policy expectation as bearish signals. We should learn lessons from the experience. It is a rule for market to both rise and fall, and we should start a new investment with more rational attitude and manner.
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