Our reporter Wu Xiaolu
Recently, with the gradual improvement of the epidemic situation and the continuous increase in macro policies, foreign investors' expectations for A shares have gradually improved.Wind information data shows that in May, northbound funds bought a net 16.867 billion A shares.In the first five months of this year, except for March, the other four months were net inflows of northbound funds.After entering June, northbound funds continued to inflow.As of June 2, the net inflow of northbound funds has been 3.269 billion yuan this year.
Foreign institutions interviewed by reporters said that they are optimistic about the medium and long-term trend of China's stock market for five reasons, namely, the gradual improvement of the epidemic situation, the current low valuation of A shares, the introduction of domestic macro measures, the stabilization of the RMB exchange rate, and the mitigation of supply chain disturbances.In terms of sectors, foreign investors are generally optimistic about infrastructure and consumption.
Five reasons to be bullish on A shares
According to the statistics of Wind Information, the reporter found that as of June 2, since March 17, the accumulated net purchase of A shares by northbound funds was 47.123 billion yuan.
Wang Xinjie, chief investment strategist of Standard Chartered China Wealth Management Department, said in an interview with the "Securities Daily" reporter, "When we talk about the allocation value of A-shares, we all focus on low valuation and cost performance. At present, the valuation quantiles of various industries of A-shares have come to Historically low levels, and Treasury yields have reached the historical average + 2 standard deviations, which means that the stock index is very cost-effective."
"The general direction of all policies is to stabilize economic growth, and when implemented into the real economy, it is to stabilize credit expansion, or to stabilize credit demand. Before seeing the overall stock market trend upward, we must see the expansion of credit, or the policy level has already Increased financing demand." Wang Xinjie further said.
Meng Lei, a China strategist at UBS Securities, also said in an interview with a reporter from Securities Daily that since mid-May, China's macro policy support has continued to increase, and the stock market sentiment has recovered.
"Currently, the static price-earnings ratio of the A-share CSI 300 Index has been lower than one standard deviation below the historical average of the past five years. Considering the recent increase in macro policy support, including the five-year LPR cut by 15 basis points more than expected, and an additional tax rebate of more than 1,400 100 million yuan, a phased reduction of 60 billion yuan in the purchase tax of some passenger cars, and a series of policy stimulus to encourage consumption at the local level, the market valuation this year is already at the bottom. In addition, the promotion of Shanghai's resumption of work and production will help China's economy rebound. These positive factors will attract foreign capital to return to the A-share market." Meng Lei further said.
When Citibank responded to the Securities Daily, it said that it is optimistic about the medium and long-term trend of the Chinese market.Citi analysts believe that supported by five reasons, the Chinese stock market is expected to stabilize and rebound.First, the epidemic situation is gradually improving; second, high-frequency data shows that the supply chain situation continues to improve, and industrial production is showing signs of recovery. The economic weakening trend caused by the impact of the epidemic may be close to the bottom; third, the central and local governments have issued a number of stimulus policies. The effect of the policy may gradually appear from the end of the second quarter; fourth, the RMB exchange rate has gradually stabilized, and since May, both A shares and Hong Kong stocks have shown signs of stabilization, indicating that market investment sentiment has recovered; The capital market is still low, and it is still attractive to global investors for long-term investment. The improvement of economic conditions in the second half of the year will also help the A-share market continue to attract international capital inflows.
Generally optimistic about infrastructure and consumption
Wind information data shows that as of June 2, since the rebound from the low point on April 27, the Shanghai Composite Index, Shenzhen Component Index and ChiNext Index have all increased by more than 10%.
Wang Xinjie believes that the current market must see an increase in financing needs before experiencing a trend reversal.Since 2018, the Shanghai Composite Index has fallen below 3,000 points three times, and when the Shanghai Composite Index rebounds from a low point, it is accompanied by a year-on-year increase in social financing stock.Before the credit data expands, it is difficult to see the stock index showing a trend reversal, but with the release of various policies, it is expected to see an increase in financing demand in the near future, as well as the medium and long-term trend of the A-share market. good run.
Recently, northbound funds have clearly flowed into the consumer sector.Wind information data shows that in the week from May 30 to June 2, the net inflow of northbound funds into the food and beverage industry (Shenwan 2021) was 7.066 billion yuan, ranking first.From May 3 to June 2, the net inflow of northbound funds into the banking sector was the highest, at 6.268 billion yuan.
Talking about the medium and long-term optimistic sectors, Citi analysts said that in the long run, the policy may accelerate the focus on infrastructure investment, focus on new infrastructure, and strengthen the construction of weak links in traditional infrastructure.It is expected that the year-on-year growth rate of infrastructure investment in this year and next year may reach 7.7% and 5.0% respectively. The infrastructure, raw materials and renewable energy sectors may gradually benefit. Investors can pay attention to related layout opportunities.
Meng Lei predicts that the earnings of A-share listed companies in the second quarter may be the lowest in the whole year. After this round of corporate earnings revision is basically completed, the A-share market will usher in a good opportunity.Optimistic about industries with relatively high earnings visibility and stability, strong pricing power and attractive valuations, it is recommended to overweight food and beverage, power batteries, renewable energy and military industries in the A-share market.
Wang Xinjie said that following the logic of demand to find related sectors, what is more certain at present is the demand for stable growth and the demand for consumption recovery after the epidemic.In terms of sectors, it is more inclined to the core sectors with steady growth such as infrastructure; in addition, the large consumption of post-epidemic repair and supply chain optimization, as well as the investment opportunities in the agriculture, forestry, animal husbandry and fishery sector, are also relatively large.
