The A-share market will resume trading today after one-week break for the Spring Festival. During the holiday season, overseas market generally strengthened. The Hong Kong stock market rose 1.81% yesterday.
A number of institutions believe that the A-share market is very likely to fluctuate within a narrow range. As for the future market, some brokerages expect that dramatic structural divergence before the holiday will recede. Investors will gradually shift their focus to the performance of individual stocks. Institutions frequently hint buy-in opportunities in cyclicals, consumption and real estate stocks.
Haitong Securities analyst Xun Yugen believes that the overseas stock markets have risen during the Spring Festival holidays. Their short-term impact on the A-share market gradually eased. The A-share market has adequate room to pull back. As corporate earnings maintain high growth and asset allocation prefers the stock market, along with its low valuation, the upward trend of the stock market will remain unchanged in the medium term. In the long term, as the stock market enters the sowing season, to refer to the CSI 300 index will be a simple and efficient strategy.
There are plenty of institutions holding similar views. Private equity Starrock Invest believes that the valuation of blue-chips in the A-share market, represented by the CSI 300, is still in a middle and low level worldwide. Earnings of growth stocks represented by the CSI 500 are consistent with their valuation. The A-share market is attractive among all other global assets. Capital continues to flow in to the A-share market at a faster pace.
Some institutions believe that that dramatic structural divergence before the holiday will recede. Eastmoney Securities analyst Dai Yu said that although the blue chips may remain to be a main line after the holidays, the divergence between blue chips and small-cap stocks is expected to further weaken. Blue chips still have valuation advantages after adjustment. Capital will be more willing to allocate blue chips, which will drive up the broader market.
A large brokerage in Shanghai holds a similar view. "After the holiday, the divergence between small-cap stocks and blue chips may weaken. Investors will be more focused on the performance of individual stocks. Some blue-chips that had declined back to valuation range, no matter small caps or large caps, will see upward opportunity."
As for sectors, cyclicals are focused by a large number of institutions. A number of brokerages said that as the coal and steel inventories remain at low levels, steel, building materials and other cyclical industries are about to enter the peak season, which will push industrial added value to a periodic high.
In addition, Guotai Junan Securities said that the consumer industry is also very likely to receive excess returns after the holiday. The traditional consumption habits during the Spring Festival will drive sales in agriculture, forestry, animal husbandry and fishery, home appliances and other industries to a new high, forming a strong support for their performance.
The real estate sector is focused. Eastmoney Securities said that with strict regulation in in the real estate, resources continue to concentrate to industry leaders. Meanwhile, large real estate companies have more prominent advantages in financing and land purchasing than middle and small real estate companies. Therefore, the market has a stronger earnings growth expectation.
However, some private equities that have cut positions said that as the concerns on risks brought by volatility of the external stock market, they will not significantly add positions. They will remain cautious and hold cash in hand to prepare for upcoming opportunities.
"I had cut my positions to a very low level before the holidays. Now I will wait and see out of concerns about the volatility of overseas markets and other risks." A Shenzhen-based private equity investment manager said that as channel and investors are much concerned about the retracement of private equity products, they will remain low positions before the external risks disappear.
A number of institutions believe that the A-share market is very likely to fluctuate within a narrow range. As for the future market, some brokerages expect that dramatic structural divergence before the holiday will recede. Investors will gradually shift their focus to the performance of individual stocks. Institutions frequently hint buy-in opportunities in cyclicals, consumption and real estate stocks.
Haitong Securities analyst Xun Yugen believes that the overseas stock markets have risen during the Spring Festival holidays. Their short-term impact on the A-share market gradually eased. The A-share market has adequate room to pull back. As corporate earnings maintain high growth and asset allocation prefers the stock market, along with its low valuation, the upward trend of the stock market will remain unchanged in the medium term. In the long term, as the stock market enters the sowing season, to refer to the CSI 300 index will be a simple and efficient strategy.
There are plenty of institutions holding similar views. Private equity Starrock Invest believes that the valuation of blue-chips in the A-share market, represented by the CSI 300, is still in a middle and low level worldwide. Earnings of growth stocks represented by the CSI 500 are consistent with their valuation. The A-share market is attractive among all other global assets. Capital continues to flow in to the A-share market at a faster pace.
Some institutions believe that that dramatic structural divergence before the holiday will recede. Eastmoney Securities analyst Dai Yu said that although the blue chips may remain to be a main line after the holidays, the divergence between blue chips and small-cap stocks is expected to further weaken. Blue chips still have valuation advantages after adjustment. Capital will be more willing to allocate blue chips, which will drive up the broader market.
A large brokerage in Shanghai holds a similar view. "After the holiday, the divergence between small-cap stocks and blue chips may weaken. Investors will be more focused on the performance of individual stocks. Some blue-chips that had declined back to valuation range, no matter small caps or large caps, will see upward opportunity."
As for sectors, cyclicals are focused by a large number of institutions. A number of brokerages said that as the coal and steel inventories remain at low levels, steel, building materials and other cyclical industries are about to enter the peak season, which will push industrial added value to a periodic high.
In addition, Guotai Junan Securities said that the consumer industry is also very likely to receive excess returns after the holiday. The traditional consumption habits during the Spring Festival will drive sales in agriculture, forestry, animal husbandry and fishery, home appliances and other industries to a new high, forming a strong support for their performance.
The real estate sector is focused. Eastmoney Securities said that with strict regulation in in the real estate, resources continue to concentrate to industry leaders. Meanwhile, large real estate companies have more prominent advantages in financing and land purchasing than middle and small real estate companies. Therefore, the market has a stronger earnings growth expectation.
However, some private equities that have cut positions said that as the concerns on risks brought by volatility of the external stock market, they will not significantly add positions. They will remain cautious and hold cash in hand to prepare for upcoming opportunities.
"I had cut my positions to a very low level before the holidays. Now I will wait and see out of concerns about the volatility of overseas markets and other risks." A Shenzhen-based private equity investment manager said that as channel and investors are much concerned about the retracement of private equity products, they will remain low positions before the external risks disappear.
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