Starting from April 23rd, the market had shown positive signals of warming, which effectively eased the negative effects caused by the complex international situation and the uncertainty of trade war between China and the U.S.. The trend of stabilizing has appeared in both Shanghai and Shenzhen markets in the next four trading days, especially with the significant reduction of trading volume in Shanghai market. During the week, the Growth Enterprise index experienced a roller-coaster ride and finally closed with red on Friday. At the same time, a number of blue-chip stocks sank greatly after the release of quarterly reports.
The main benchmarks ended with little changes, except for the notable gains of the Growth Enterprise Index. The Shanghai Composite index rose 0.35%, or 10.96 points, to end at 3082.23. The Shenzhen Composite declined 84.44 points to 10324.47, a 0.81% loss. The Growth Enterprise index was up 1.28%, or 22.79 points, to finish at 1805.60. The Small and Medium-Sized index landed at 6998.77 by losing 0.94%, or 66.64 points.
The great innovative sector's strong performance contributed to the gains of the Growth Enterprise Index. Among the stocks, the biomedicine sector was the main driving force, which was up 2.37% on Wednesday, and generic drug sector was the biggest winner in the corresponding concept with 4.42% gains. The establishment of Medical Insurance Bureau will help accelerate the reform of health insurance and make the fittest to survive in the industry. Many agencies are betting on the leading enterprises of innovative drug, generic drug, and medical services, and those benefited from the process of differentiated diagnosis and treatment. According to the released annual report of the biomedical sector, the overall performance of 2017 was a great progress, with 191 companies' income increased by 13%. Meanwhile, favorable policies has provided support and benefit for the industry. The good performance with catalysis from the policies, plus the defensive property of the medicine industry in a volatile market, make the biomedicine sector a hot spot with upside potential.
Recently, many blue-chip white-horse stocks (a surname used to refer to the stocks very well-known for good long-term performance, high rate of return, high investment value and information that has been disclosed) slumped. Stocks like Hisense, Yili, and Ping An dropped to the decline limit. The reason behind this decline could be the reported performance that fell short of expectations. Many of the pummeled companies released their quarterly reports recently, some of which were less than that of the same period of last year, and some reported losses on the first quarter. Although the value of blue-chip white-horse stocks have gone through some adjustment previously, in general, the sector has accumulated a great amount of gains since 2017. Given the market is still in the shock stage, many funds chose to cash in before the release of annual report. With the arriving inclusion of A share to MSCI and more attractive evaluation after the retracement, the blue-chip stocks will still be the dominant ones in the market.
Next month, as PBOC cut the required reserve ratio and A share is included into MSCI, more funds will pour into the market. The beginning of the month is usually more relaxing for the supply of money. The impact brought by the cut of required reserve ratio will start emerging next month. The banking system will be the first factor benefited from the cut, and then it will gradually promote the liquidity of the entire market. At the same time, next month is the first stage of the inclusion of A share to MSCI. Currently, there are about $ 4.5 trillion funds following the related index, with A share taking 0.1%-2.5%. In short term, as A share is included into MSCI, approximately ￥100 billion oversea funds will be brought into the market. In this case, the supply of money will continue to have significant improvement, which will promote the development of blue-chip stocks in the market.
The main benchmarks ended with little changes, except for the notable gains of the Growth Enterprise Index. The Shanghai Composite index rose 0.35%, or 10.96 points, to end at 3082.23. The Shenzhen Composite declined 84.44 points to 10324.47, a 0.81% loss. The Growth Enterprise index was up 1.28%, or 22.79 points, to finish at 1805.60. The Small and Medium-Sized index landed at 6998.77 by losing 0.94%, or 66.64 points.
The great innovative sector's strong performance contributed to the gains of the Growth Enterprise Index. Among the stocks, the biomedicine sector was the main driving force, which was up 2.37% on Wednesday, and generic drug sector was the biggest winner in the corresponding concept with 4.42% gains. The establishment of Medical Insurance Bureau will help accelerate the reform of health insurance and make the fittest to survive in the industry. Many agencies are betting on the leading enterprises of innovative drug, generic drug, and medical services, and those benefited from the process of differentiated diagnosis and treatment. According to the released annual report of the biomedical sector, the overall performance of 2017 was a great progress, with 191 companies' income increased by 13%. Meanwhile, favorable policies has provided support and benefit for the industry. The good performance with catalysis from the policies, plus the defensive property of the medicine industry in a volatile market, make the biomedicine sector a hot spot with upside potential.
Recently, many blue-chip white-horse stocks (a surname used to refer to the stocks very well-known for good long-term performance, high rate of return, high investment value and information that has been disclosed) slumped. Stocks like Hisense, Yili, and Ping An dropped to the decline limit. The reason behind this decline could be the reported performance that fell short of expectations. Many of the pummeled companies released their quarterly reports recently, some of which were less than that of the same period of last year, and some reported losses on the first quarter. Although the value of blue-chip white-horse stocks have gone through some adjustment previously, in general, the sector has accumulated a great amount of gains since 2017. Given the market is still in the shock stage, many funds chose to cash in before the release of annual report. With the arriving inclusion of A share to MSCI and more attractive evaluation after the retracement, the blue-chip stocks will still be the dominant ones in the market.
Next month, as PBOC cut the required reserve ratio and A share is included into MSCI, more funds will pour into the market. The beginning of the month is usually more relaxing for the supply of money. The impact brought by the cut of required reserve ratio will start emerging next month. The banking system will be the first factor benefited from the cut, and then it will gradually promote the liquidity of the entire market. At the same time, next month is the first stage of the inclusion of A share to MSCI. Currently, there are about $ 4.5 trillion funds following the related index, with A share taking 0.1%-2.5%. In short term, as A share is included into MSCI, approximately ￥100 billion oversea funds will be brought into the market. In this case, the supply of money will continue to have significant improvement, which will promote the development of blue-chip stocks in the market.
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