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​A-share investors suffer from “rebound anxiety”

中国证券网
2016-02-25 16:41

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Many investors turn cautious again after the A-share market saw repeated failures to recover. Three-day rally will change their view on the market. But now they seem not so sure any more.

Some market opinions suggested investors’ moderate participation when the A-share started to rebound after the Spring Festival holiday. A weak trend has worsened the cautious market sentiment. “The rebound brings precious breathing opportunities for investors, but they also suffer from anxiety, tensely counting down for the rebound.” Based on various analysts, the market should adapt to the fluctuation, a new normal status, as soon as possible, flexibly take moves and wait for opportunities during the short-term weak rebound and expected fluctuation. 

Up to the closing on Feb. 24, the SSE Composite Index has accumulatively increased 6 percent after the Spring Festival. In terms of growth rate in the latest ten trading days, less than 100 individual stocks declined at the closing in Shanghai and Shenzhen bourses when compared to the closing position of previous trading day; and nearly 300 individual stocks accumulatively increased by over 20 percent during this period. The rebound in the A-share market also rebuilds the market confidence. Plus with expectation for a market trend related to “the two sessions”, the market sentiment obviously picks up. 

Based on the result of 483 investment status questionnaires released by Shenwan Hongyuan Securities at last weekend, fluctuation is still investors’ main expectation, but pessimistic sentiment has relaxed to some extent: crash expectation on SSE Composite Index declines to current 42 percent from 60 percent at the end of January. Additionally, weighted average position of current investors has increased 5 percent. Partially, 15 percent of investors hold the position over 90 percent, up by 6 percentage points compared to that at the end of January. 

The sentiment related to on-market leveraged capital is obviously repaired. Data shows that balance of margin trading and short selling fell back to 871.7 billion yuan on Feb. 5 before the holiday, setting a new low since nearly one year; the figure soared all the way to 887.1 billion yuan as of Feb. 23 after the Spring Festival holiday, up by 15.4 billion yuan, and buying by margin financing has obviously increased. Up to Feb. 19, the buying amount by margin financing had accumulated 216.3 billion yuan in that week, up by 64.6 billion yuan compared to 151.7 billion yuan of previous week. 

In terms of this round rebound, it is commonly believed in the market that phased repair after over-drop supports the rebound, but catalyst obviously changes compared to that before. According to the said statistics of Shenwan Hongyuan Securities, influencing factors attracting investors’ attention in a short term include easing pace of Fed’s interest rate raising, de-capacity of overcapacity industries and etc. Obviously, the investors’ expectation on economic recovery has improved, but they pay less attention to China’s easing monetary policy expectation. 

A-share investors have experienced crash-rebound-crash for many times since last June. Referring to initiated rebound of this round, the changes cover not only factors supporting the rebound, but also that market environment and sentiment have improved.

Relevant statistics of investment status also shows that cautious market sentiment intensifies without easing. Investors’ expectation on lows in next one month is basically and averagely in a range of 2,400 points to 3,000 points. 70 percent of investors do not believe that the market high will exceed 3,200 points. Furthermore, although the expectation on crash again has improved, 58 percent of investors in the questionnaire still pointed out that a fluctuation trend will maintain in the future. 

Referring to changes of current market sentiment, Chen Jie, analysis of GF Securities (000776.SZ), indicated that it is not likely for a market lacking of optimistic expectation to arouse panic dump again, and the most possible result of this rebound is market fluctuation and slow decline with decreased turnover after the growth rate slows down. And “fluctuation with slow and bearish market trend” is possibly a new normal status. Based on this expectation, right operations will not gain too many profits, and wrong ones will not loss too much, neither. The difference between results brought by different operational concepts will not vary too much. 

“There are only one or two ‘decisive’ time-points for us to vary the true gains or losses,” said Chen. Previous market crash in January was the first chance in this year, investors rapidly or slowly decreasing the positions have gotten different results; and such time-point may be in the second half year. Therefore, investors now should not be worried or anxious. 

Xun Yugen, analyst of Haitong Securities (600837.SH), also stressed that, due to complicated variables at home and abroad influencing domestic stock market this year, the market expectation will change repeatedly; since the beginning of this year, the expectations on Fed’s interest rate raising, RMB depreciation and China’s economic growth have changed for various times. It is now a window period for buying, but in terms of situation in the whole year, operations should be more flexible, and investors could “gain short-term profits during the expected fluctuation”. 

Translated by Jelly Yi


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