How to interpret the hot market

Few people would have expected that the market in May was so smooth and dripping that the stock index "Qianwu Mountain" could be captured so quickly.

May 8 was the first trading day after the "May Day" holiday. The stock market broke out in a long-lost market. The Shanghai Composite Index rose by more than 50 points, approaching the 1,500-point integer level; the next day, it was even more The momentum was like a broken bamboo, and it continued to rise by 34.06 points, easily stood at 1531.16 points, and continued to increase the volume to 36.7 billion yuan. More than 100 stocks reached the daily limit or close to the daily limit, and the market was in a frantic state of making money. On the third day, the stock index was still stubbornly upward, and continued to consolidate the results above the thousand five. Although the stock market fluctuated up and down on Thursday, and finally closed with a small yin, in just a few days, the city has conquered more than 100 points, and "the light boat has passed ten thousand mountains." People could not help exclaiming: the bull market is really coming!

The bull market is coming

The bull market is coming. The recent surge in the index has made the view that the stock market has entered a bull market has been widely recognized by the market. Wang Hongyuan, investment director of China Southern Asset Management Co., Ltd., made it clear that the five-year-long bear market in the A-share market has ended.

Wang Hongyuan is quite optimistic about the future market. He believes that from about 2,000 points in the index in 2001 to the lowest point of 1,000 points, the index fell by about 50%. Considering the index distortion factor, most individual stocks actually fell by about 70%, which is very important for our Chinese investment market. In other words, it is the first global decline. The above adjustment is comparable to the average level of bubble release before the stock market in the 22 countries and regions of MSCI emerging markets. The systemic risks in our A-share market have basically been released.

He said that the A-share market has basically met the conditions for a 30-year bull market. From now on, we can make long-term investments in this market.

First of all, since the reform and opening up 28 years ago, China's economy has maintained a growth rate of 9% to 10%, which has laid the material foundation for the long-term bull market of China's A-share market.

The listing of super-large state-owned enterprises will inject fresh blood into the A-share market, and the correlation between the A-share market and the economy will be significantly improved. In the next 20 to 30 years, China's economy will continue to develop steadily and rapidly, and the quality of development will be further improved, which is the source of the long-term bull market in the A-share market.

In addition, the internationalization of the A-share market will be further accelerated. QDII and QFII will accelerate the consistency of pricing between domestic and overseas Chinese companies. The H-share and ADR markets are competing with the A-share market for the pricing power of Chinese concept stocks, and the healthy competition between the two will make the valuation of Chinese concept stocks more rational. The strategic layout of overseas funds in China's A-share market and the domestic savings of 16 trillion yuan will jointly become the source of funds to support the long-term bull market in the A-share market.

Three reasons support the continued rise of the stock market

From the perspective of the characteristics of the rising sector and the internal driving force, Guosen Securities believes that a strong breakthrough indicates that the market is entering a stage of accelerated growth, and this strong feature is expected to continue after short-term shocks in the near future. maintain. The rise in the stock indexes may have just begun.

They believe there are at least three reasons for stock market strength right now.

First, due to the promotion of the external market and the elimination of internal uncertainties, the main market leaders such as resources, financial real estate and other sectors will continue to be bullish in this round. Brand consumer goods, equipment manufacturing, and technologically superior companies are scarce. The "asset" valuation premium is expected to expand under the impetus of a steady stream of funds. Leading companies in these industries are about to start refinancing based on private placement and are also expected to drive the strength of their sectors.

Secondly, the valuation of power and transportation infrastructure sectors led by Changjiang Power is reasonable or even lower than that of Hong Kong stocks, and the previous increase was not obvious. In addition, there are many high-quality companies that have not undergone share reform, and power stocks are also linked to coal and electricity. The industry is expected to be good, and it is easy to become the key target for new funds to open positions, and it is expected that there will be a phased increase in the market.

Third, this round of market A shares are regarded as a "shadow" market in which Hong Kong stocks are mainly Chinese stocks. The Hang Seng Index and China Enterprises Index are currently 6.3% and 5.2% away from their historical highs. Sustained near all-time highs.

Resumption of refinancing will not cause negative impact

In the current super-popular market, the management's upcoming refinancing to restore the market's financing function once caused people to worry, but the recent market has continued to rise Expressed its approval of refinancing.

The A-share market has always been characterized by a capital push. For the upcoming "new and old division", there have been concerns that the market will face financial pressure. But the high volume of the market shows that the market is not short of funds. It is generally believed that the rhythmic refinancing will not have a negative impact on the market, on the contrary, it is expected that the entry of high-quality companies will attract more funds to the market.

According to the specific practice of "dividing between the old and the new", the first step is to resume the private placement that does not increase the pressure of immediate capacity expansion and the refinancing in the form of equity warrants; the second step is to choose an opportunity to resume other methods for the public. The third step is to choose a high-quality company and start an initial public offering under the condition of full circulation.

Why did the market change from fear to welcome the "cut between the old and the new"? According to analysis, this is mainly because investors have high psychological expectations for the management's follow-up refinancing policy.

Media reports said that recently, the leaders of the State Council organized a special meeting on stabilizing the securities market. The message conveyed at the meeting was positive, and management hoped that future refinancings and IPOs would not drag down the stock market. In other words, in order to maintain the important results that have been achieved in the share reform and maintain market stability, investors' consistent worries about "financing" and "expansion" may be reversed by the current thriving rise.

The Securities Regulatory Commission will hold a meeting in the near future to make arrangements for the follow-up issues of the share reform, and to make arrangements for strengthening the supervision and regulation of the securities market.

Observers believe that if the new financing policy disappoints the market again, the result will be extremely serious and even devastating. It can be said that on this issue, the management basically has no way out, and must properly "financing", It truly turns the money invested by investors into capital and into an investment that can earn returns.

After the "May 1st" holiday, the China Securities Regulatory Commission officially issued the "Administrative Measures for the Issuance of Securities by Listed Companies", starting the "new and old division". The private placement of Suning Electric and CITIC Securities has taken the first step of "cutting the gap between the old and the new". In the face of the "bad" news of traditional thinking, the two bull stocks responded almost the same, and they were locked at the daily limit at the opening. This seems to indicate that the market is extremely welcoming of refinancing of quality stocks.

Abundant supply of funds through multiple channels

Will the worrying market funds become unbalanced due to the "cutting off between the old and the new"?

An analysis by Ping An Securities believes that in 2006, the domestic refinancing and IPO demand for funds will be between 60 billion and 100 billion yuan. It is estimated that from 2007 to 2008, the capital demand for stock financing in the domestic A-share market will reach the level of 120 billion to 150 billion, returning to the level of 2000-2001.

Since June 17, 2006, the restricted tradable shares of companies that have completed the share structure reform have been allowed to enter the market. According to preliminary estimates, from 2006 to 2008, the demand for funds for thawing of restricted tradable shares was about 60 billion, 100 billion and 260 billion respectively.

From the analysis of market capital supply, there are four main sources.

The first is to increase the quota of QFII. This part has a space of 4 billion US dollars, which can increase the supply of funds by about 30 billion yuan.

Secondly, newly established fund management companies and existing fund companies issue new funds. Last year, it was 60 billion yuan. This year, it will not be lower than this level. It is expected to increase the supply of funds by more than 30 billion yuan in the second half of the year.

The third is the use of funds by insurance companies. The investment limit of insurance funds is 5% of the total assets. Now the capital invested in the stock market is more than 80 billion yuan, accounting for about 2%, and there is still 3% of the space from the upper limit, which is an increment of 120 billion yuan.

Fourth, the funds that can be used by securities companies, including collective wealth management, targeted wealth management, special wealth management and the trial implementation of financing. Since the development of new business of securities companies is mainly limited to the scope of innovative pilot securities companies, limited to the strength of domestic securities companies and the requirements of risk management centered on the net capital indicator system, the current amount of new funds in this area will not be large, and it is estimated that it can bring A new fund of about 10 billion yuan.

Five is the new capital of existing investors and the capital of new investors.

As of the end of the first quarter of 2006, the balance of savings deposits of urban and rural residents in my country has reached 15.29 trillion, so there is huge room for new funds to invest in the stock market in the future. When the market trend is strong and the profit-making effect is obvious, the amount of new capital in this area will be very large.

Therefore, from the perspective of capital, the domestic stock market in 2006 can basically withstand the pressure of refinancing, IPO expansion, and the release of G shares into circulation.

Market participants also believe that the resumption of cash subscriptions for new shares will attract capital to join. Around 2000, when the stock market was booming, the total amount of funds specializing in lottery in the primary market once exceeded 200 billion yuan. The resumption of cash purchases may bring back the lottery funds that have withdrawn from the market, as long as the price difference in the primary and secondary markets is profitable.

Perhaps it is because of abundant funds that the market is getting higher and higher. On Tuesday, the Shanghai and Shenzhen stock markets hit a record high since the "6.24" market in 2002. The total transaction volume of the two markets was nearly 59.1 billion yuan. This also shows that as long as the market goes well, there will be capital inflows. "Funds don't need to worry at all. In the medium and long term, the market still has upward momentum." A fund manager said.

Five concerns of "Red May"

For the stock market, this year's May start can truly be called "Red May", and it is fundamentally different from the previous May market, not only a bull market Since the beginning of the year, and the market financing mechanism has begun to turn, the rise and fall of the market is increasingly closely related to the fundamentals, which makes the market in May particularly interesting.

There is no doubt that the question that people are most concerned about at the moment is, how high can the "stock index mountain" climb under this wave of market conditions? Market participants are more optimistic that China's stock market is recovering, and although it has risen to 1,500 points, it has only reached the level of 1992. In fact, the price-earnings ratio of the 50 index and the 100 index is still around 15 or 16 times, which is not high. Considering the economic growth of our country, it is normal for the price-earnings ratio to reach 30 times. The market still has a lot of room to go higher.

In addition to the impact of refinancing on the stock market, another concern is how much the central bank's interest rate hike will affect the market? The rate hike shows the government's concerns about overheating of the economy, which will certainly affect the profitability of some listed companies. For example, banking companies may benefit from profits from the widening deposit-loan gap, while real estate companies may experience funding pressure. Analysts suggest that investors should keep up with market hotspots and respond to market developments with a positive attitude.

Specifically to the hot sector, how long can the most powerful non-ferrous metal sector continue to be strong this year? From the current point of view, the non-ferrous financial sector, which is connected to the international market, is still upsurge. Analysts said that the bull market pattern of non-ferrous metal prices is far from over, and the continued high prices have not had a substantial impact on consumption. A long-term depreciation of the dollar will also help prices rise. It is believed that at least in 2006, the price of non-ferrous metals will remain a one-year bull market.

The stock market has changed from bear to bull. While investors are cheering, they are also facing a question, whether to make a big change in the operation idea? Indeed, in the bear market of the past 5 years, people also seem to be accustomed to replacing offense with defense, looking around for "safe havens", but in a bull market environment, it seems that people can take a more aggressive attitude, especially for some good companies. The "leaders" of the hot sectors supported by performance often have higher growth than expected. If they still adopt the idea of making small profits and short-term speculation, they will often lose good investment opportunities. Of course, even if the market turns bullish, there will be fluctuations in the market. Investors may wish to spread their funds in several different sectors, so that even in the rotation of hot spots, good returns can be guaranteed.