[Today's Guide]
○ Insurance companies’ focus on market timing of tradable stocks issued through private placement
○ New medicine policies to introduced, industrial valuation shows advantages
○ Editor’s Thought: Market remains unstable, risk of fluctuation still exists...
[XFA View]
○ Stock market: back to normal
------
The two-week policy bailout plan has made partial achievements that the severe market liquidity has been eased and the stock index fights back instead of being trapped in a downward spiral. A series of unconventional bailout measures recently indicates that after the drastic fluctuation of stock index, the market will gradually return to the normal combat between the bullish and bearish sides and the normal track.
XFA reminded investors on July 5 that the primary goal of the policy bailout plan is to rapidly stabilize investors’ confidence, restore market liquidity and prevent failure in market pricing. Thereafter the serial policy combination including some necessarily special measures at special period was fast, accurate and effective. As the market is gradually out of the special period, investors should shift their focuses.
Firstly, investors should clearly know that the policy bailout plan is to save the market but not to ensure the rise in stock index. The bailout doesn’t aim to keep the stock index at a certain interval or even boost it to increase continuously by the powerful policy. Its purpose is to prevent systematic risks and restore the normal market functions of pricing and resource allocation. It is unwise to think that the policy will promote the stock index to climb and to hope to gain profits with the help of the bailout plan.
Secondly, the primary goal of the bailout is to stabilize investors’ confidence and restore market liquidity, and the ultimate goal is to make the market return to the normal track. At present, there are still a number of individual shares suspending trading, and the boards, industries and individual shares need revaluation after the plunge in the stock index. Therefore, it will take quite a long time for the market to regain self-adjustment function. By considering this, the policy bailout plan will be gradually phased out based on the market consolidation situation.
Lastly, after the drastic ups and downs, the overall risks, capital leverage level and even the irrational investment expectation all get relieved to some extent. When making decisions, the investors should rationally consider the economic fundamentals, the release of dividend from reform achievements and the endogenous development motivation of capital market.
[Institutions’ Movement]
○ Insurance companies focus on market timing of tradable stocks issued through private placement
------
According to XFA’s investigation, in addition to buying blue-chip stocks and blue-chip ETF funds to help stabilize the stock market, some medium and small insurance companies are actively focusing on market timing for arbitrage. In particular, after the substantial adjustment, stock prices are far below the initial offering prices of private placement and stocks issued through private placement that are allowed to trade. Based on historical statistics, in order to ensure stock prices’ stability when being allowed for trading, listed companies are of high probability to release good news on fundamentals. So there will be opportunities to time the market.
[Data Reference]
○ Companies with stock prices falling below offering prices of private placement catch attention during rebound
------
Many companies have seen their stock prices falling below the offering prices of private placement during this bearish run, but performed strongly during the recent rebound. According to XFA’s statistics, among companies whose private placement will be unlocked in the second half year, except companies suspending trading, seven companies - Shenzhen Capchem Technology Co., Ltd. (300037. SZ), Zhejiang Hisun Pharmaceutical Co., Ltd. (600267.SH), Harbin Electric Corporation Jiamusi Electric Machine Co., Ltd. (000922.SZ), Hunan Chendian International Development Co., Ltd. (600969.SH), Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH), Chongqing Gangjiu Co., Ltd. (300037.SH), and Rising Nonferrous Metals Share Co., Ltd. (600259.SH) - currently have stocks prices lower or slightly higher than the offering prices of private placement. Major shareholders of Jiamusi Electric Machine and Rising Nonferrous Metals Share have participated in private placement.
Besides, among companies approved for private placement, Taiyuan Twin Tower Aluminum Oxide Co., Ltd. (000795.SZ) and Iflytek Co., Ltd. (002230.SZ), have witnessed their latest stock prices up by 1.81 percent and 5.28 percent from their initial offering prices of private placement. The controlling shareholders of Taiyuan Twin Tower Aluminum Oxide have increased in shareholding up to 2% during July 8 to 9.
[XFA Viewpoint]
○ New medicine policies to introduced, industrial valuation shows advantages
------
XFA learnt that pharmaceutical policies will see intensive adjustment this year. New policies, such as medical insurance payment and system of prospective payment by disease and total amount, will be successively introduced. This will gradually change the existing pattern and benefit chain of the pharmaceutical industry, and bring more benefits to pharmaceutical enterprises with unique competition advantages. In addition, after the previous rapid adjustment, quality pharmaceutical stocks have again demonstrated advantages in their valuation. XFA has sorted out these stocks via data statistics from multiple perspectives.
The bailout capital was invested to blue-chip ETF, including quality pharmaceutical blue-chip stocks. According to XFA’s statistics, three pharmaceutical stocks - Kangmei Pharmaceutical Co., Ltd. (600518.SH), Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. (600332).SH), Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (600196.SH) – are included by the four largest blue-chip ETFs.
Recently, listed pharmaceutical companies frequently increase their holdings. As of July 9, there had been 57 pharm. companies who had implemented or published their holdings increase plan. Among them, the companies that have a current price lower or close to the price of holdings increasing include China Resources Wandong Medical Equipment Co., Ltd. (600055.SH), Hybio Pharmaceutical Co., Ltd. (300199.SZ), Zhejiang Medicine Co., Ltd. (600216.SH), Staidson (Beijing) Biopharmaceuticals Co., Ltd. (300204.SZ), etc.
[Overseas Information]
○ Pharm. and technology stocks top the list of US stocks evaluation
------
Statistics of XFA show that the latest average PE ratio of US stocks is 23.54 with that of the listed pharm. companies, technology companies and public utility companies respectively being 31.32, 26.25 and 17 times, ranking the 1st, 2nd, and 3rd correspondingly among all sectors.
[Editor’s Thought]
○ Market remains unstable, risk of fluctuation still exists
------
In the past week, A shares was riding on a roller-coaster: the first three trading days saw “a jam of sales” while “buying stagnancy” keynotes the last two trading days. With the national bailout measures successively enforced, the market liquidity was gradually improved and some investors started to get prepared and even to trade using leverage. XFA editors also received several financing canvass calls per day and couldn’t help exclaiming over people’s forgetfulness while reminding investors that the foundation of the market hasn’t turned solid yet and so the risk of fluctuation still exists.
It’s undeniable that viewed from the short-term stock market, the “national forces” have won staged victories. Also, as the suspended stocks haven’t been resumed yet and the bailout measures are far from finishing their task, the market’s rally may continue. But it’s perhaps too early to predict just basing on this fact that the stock market crash has been over and the bull market is on the way.
Firstly, the trading data show that the capital that entered the market in the recent two days is mostly the hot money that takes advantage of the bailout of national forces and waits for bottom fishing. Their logic for entering the market is “the stocks will go up” rather than “the stocks have investment value”. Whether the rally of the stock index will continue is still subject to observation. Secondly, influenced by financing and funding and the too rapid adjustment of this round, the public and private funds are “injured” heavily and need time for recuperation. So investors shouldn’t be blindly optimistic but should reflect on the experience and lessons drawn from this stock disaster and pay close attention to the stocks that have sound fundamentals but whose price has dropped sharply even to below their inner value. It’s advised that investors should manage their accounts for the purpose of “investment” rather than as if in a gamble because there are no forever winning gamblers in the stock market but only those rational investors who are responsible for their own assets survive.
○ Insurance companies’ focus on market timing of tradable stocks issued through private placement
○ New medicine policies to introduced, industrial valuation shows advantages
○ Editor’s Thought: Market remains unstable, risk of fluctuation still exists...
[XFA View]
○ Stock market: back to normal
------
The two-week policy bailout plan has made partial achievements that the severe market liquidity has been eased and the stock index fights back instead of being trapped in a downward spiral. A series of unconventional bailout measures recently indicates that after the drastic fluctuation of stock index, the market will gradually return to the normal combat between the bullish and bearish sides and the normal track.
XFA reminded investors on July 5 that the primary goal of the policy bailout plan is to rapidly stabilize investors’ confidence, restore market liquidity and prevent failure in market pricing. Thereafter the serial policy combination including some necessarily special measures at special period was fast, accurate and effective. As the market is gradually out of the special period, investors should shift their focuses.
Firstly, investors should clearly know that the policy bailout plan is to save the market but not to ensure the rise in stock index. The bailout doesn’t aim to keep the stock index at a certain interval or even boost it to increase continuously by the powerful policy. Its purpose is to prevent systematic risks and restore the normal market functions of pricing and resource allocation. It is unwise to think that the policy will promote the stock index to climb and to hope to gain profits with the help of the bailout plan.
Secondly, the primary goal of the bailout is to stabilize investors’ confidence and restore market liquidity, and the ultimate goal is to make the market return to the normal track. At present, there are still a number of individual shares suspending trading, and the boards, industries and individual shares need revaluation after the plunge in the stock index. Therefore, it will take quite a long time for the market to regain self-adjustment function. By considering this, the policy bailout plan will be gradually phased out based on the market consolidation situation.
Lastly, after the drastic ups and downs, the overall risks, capital leverage level and even the irrational investment expectation all get relieved to some extent. When making decisions, the investors should rationally consider the economic fundamentals, the release of dividend from reform achievements and the endogenous development motivation of capital market.
[Institutions’ Movement]
○ Insurance companies focus on market timing of tradable stocks issued through private placement
------
According to XFA’s investigation, in addition to buying blue-chip stocks and blue-chip ETF funds to help stabilize the stock market, some medium and small insurance companies are actively focusing on market timing for arbitrage. In particular, after the substantial adjustment, stock prices are far below the initial offering prices of private placement and stocks issued through private placement that are allowed to trade. Based on historical statistics, in order to ensure stock prices’ stability when being allowed for trading, listed companies are of high probability to release good news on fundamentals. So there will be opportunities to time the market.
[Data Reference]
○ Companies with stock prices falling below offering prices of private placement catch attention during rebound
------
Many companies have seen their stock prices falling below the offering prices of private placement during this bearish run, but performed strongly during the recent rebound. According to XFA’s statistics, among companies whose private placement will be unlocked in the second half year, except companies suspending trading, seven companies - Shenzhen Capchem Technology Co., Ltd. (300037. SZ), Zhejiang Hisun Pharmaceutical Co., Ltd. (600267.SH), Harbin Electric Corporation Jiamusi Electric Machine Co., Ltd. (000922.SZ), Hunan Chendian International Development Co., Ltd. (600969.SH), Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH), Chongqing Gangjiu Co., Ltd. (300037.SH), and Rising Nonferrous Metals Share Co., Ltd. (600259.SH) - currently have stocks prices lower or slightly higher than the offering prices of private placement. Major shareholders of Jiamusi Electric Machine and Rising Nonferrous Metals Share have participated in private placement.
Besides, among companies approved for private placement, Taiyuan Twin Tower Aluminum Oxide Co., Ltd. (000795.SZ) and Iflytek Co., Ltd. (002230.SZ), have witnessed their latest stock prices up by 1.81 percent and 5.28 percent from their initial offering prices of private placement. The controlling shareholders of Taiyuan Twin Tower Aluminum Oxide have increased in shareholding up to 2% during July 8 to 9.
[XFA Viewpoint]
○ New medicine policies to introduced, industrial valuation shows advantages
------
XFA learnt that pharmaceutical policies will see intensive adjustment this year. New policies, such as medical insurance payment and system of prospective payment by disease and total amount, will be successively introduced. This will gradually change the existing pattern and benefit chain of the pharmaceutical industry, and bring more benefits to pharmaceutical enterprises with unique competition advantages. In addition, after the previous rapid adjustment, quality pharmaceutical stocks have again demonstrated advantages in their valuation. XFA has sorted out these stocks via data statistics from multiple perspectives.
The bailout capital was invested to blue-chip ETF, including quality pharmaceutical blue-chip stocks. According to XFA’s statistics, three pharmaceutical stocks - Kangmei Pharmaceutical Co., Ltd. (600518.SH), Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. (600332).SH), Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (600196.SH) – are included by the four largest blue-chip ETFs.
Recently, listed pharmaceutical companies frequently increase their holdings. As of July 9, there had been 57 pharm. companies who had implemented or published their holdings increase plan. Among them, the companies that have a current price lower or close to the price of holdings increasing include China Resources Wandong Medical Equipment Co., Ltd. (600055.SH), Hybio Pharmaceutical Co., Ltd. (300199.SZ), Zhejiang Medicine Co., Ltd. (600216.SH), Staidson (Beijing) Biopharmaceuticals Co., Ltd. (300204.SZ), etc.
[Overseas Information]
○ Pharm. and technology stocks top the list of US stocks evaluation
------
Statistics of XFA show that the latest average PE ratio of US stocks is 23.54 with that of the listed pharm. companies, technology companies and public utility companies respectively being 31.32, 26.25 and 17 times, ranking the 1st, 2nd, and 3rd correspondingly among all sectors.
[Editor’s Thought]
○ Market remains unstable, risk of fluctuation still exists
------
In the past week, A shares was riding on a roller-coaster: the first three trading days saw “a jam of sales” while “buying stagnancy” keynotes the last two trading days. With the national bailout measures successively enforced, the market liquidity was gradually improved and some investors started to get prepared and even to trade using leverage. XFA editors also received several financing canvass calls per day and couldn’t help exclaiming over people’s forgetfulness while reminding investors that the foundation of the market hasn’t turned solid yet and so the risk of fluctuation still exists.
It’s undeniable that viewed from the short-term stock market, the “national forces” have won staged victories. Also, as the suspended stocks haven’t been resumed yet and the bailout measures are far from finishing their task, the market’s rally may continue. But it’s perhaps too early to predict just basing on this fact that the stock market crash has been over and the bull market is on the way.
Firstly, the trading data show that the capital that entered the market in the recent two days is mostly the hot money that takes advantage of the bailout of national forces and waits for bottom fishing. Their logic for entering the market is “the stocks will go up” rather than “the stocks have investment value”. Whether the rally of the stock index will continue is still subject to observation. Secondly, influenced by financing and funding and the too rapid adjustment of this round, the public and private funds are “injured” heavily and need time for recuperation. So investors shouldn’t be blindly optimistic but should reflect on the experience and lessons drawn from this stock disaster and pay close attention to the stocks that have sound fundamentals but whose price has dropped sharply even to below their inner value. It’s advised that investors should manage their accounts for the purpose of “investment” rather than as if in a gamble because there are no forever winning gamblers in the stock market but only those rational investors who are responsible for their own assets survive.
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