Geopolitical tensions pushed risk appetite below 3,500 points

2022-06-24 0 By

Our reporter Yi Yanjun guangzhou reported on January 26 opening, A shares swept yesterday’s haze, the three major stock index high open high after the fall.By the midday close, the Shanghai index was up 0.14% at midday, while the Chinext index was down 0.24%.Wind power and UHV are stronger, while photovoltaic, new energy vehicles and electric power are better.Digital economy, pharmaceutical, CRO plate adjustment.Northbound capital net purchase over 2.1 billion yuan.But investors were still spooked by the previous day’s sharp correction.On Jan. 25, the Shanghai Composite index fell 2.58 percent and lost 3,500 points, while the Shenzhen Component index and the Chinext index both lost more than 2.6 percent.Northbound funds turned into net outflows.In the view of institutional personnel, geopolitical tensions became the main trigger for the a-share correction on January 25, which combined with credit concerns of real estate companies and twists and turns of the novel coronavirus outbreak, suppressed investors’ risk appetite.In the short term, peripheral markets or will still disturb A shares.It’s worth noting that as of Jan. 26, the NASDAQ index was down more than 13% since the start of the year, its biggest monthly decline in more than four decades.Yang Delong, chief economist of Qianhai Open Source, pointed out that this round of decline in the US stock market, on the one hand, is due to the Reversal of the Federal Reserve’s monetary policy, from the previous easing gradually to tightening.It hasn’t raised rates yet, but the first rate-setting meeting of 2022 will be held this week, raising concerns among investors that the Fed could send a hawkish message.Mixed results from U.S. listed companies that recently reported fourth-quarter 2021 results also weighed on stock prices.”Riskier assets have been somewhat abandoned in 2022 because of concerns about fed tightening.Russia’s stock market fell more than 10 percent in a day amid the recent turmoil in Ukraine, which also had an impact on European markets.Tensions between the US and Russia will still have an impact on short-term market movements.”He further pointed out.Bad factors at home and abroad led to A shares down nearly more than A month, A shares continuous adjustment.On January 25, the Shanghai Composite Index and The Shenzhen Component Index recorded the biggest decline of 2022 due to the influence of overseas markets.On the evening of January 24, the S&P 500 and NASDAQ indexes fell nearly 4% and 5% respectively in intraday trading, and the 10-year Treasury interest rate also fell to around 1.71%.Although the US stock market staged A V-shaped rally that day, with major indexes turning red by the end of the day, panic still spread to the A-share market.January 25, Shanghai and Shenzhen three indexes early low open after the shock slide, disk hot spot lack;After midday, losses in major indexes widened, with the Shanghai Index down 2.58 percent, the Shenzhen Component index down 2.83 percent, and the Chinext index down 2.67 percent.The CSI 300, SSE 50 and KEChuang 50 also fell more than 2 per cent.From the perspective of the concept sector, according to Wind data, on January 25, only some sectors, such as link-board, air transport, gold and jewelry, rose, while most other concept sectors fell significantly.Traditional industry indexes all fell, among which consumer services, defense, transportation and banking fell relatively small, media, coal, computers, communications and other industries fell more.”China Business News” reporters interview found that institutions generally believe that January 25 market volatility is caused by domestic and foreign bad factors.Golden Eagle fund equity research department strategy researcher Jin Dalai analysis, January 25 A share market correction, geopolitical tensions or the trigger, especially at the end of 2021 market risk appetite is weak, the market has continued to fall in the early fragile stage.Specifically, in terms of external factors, “in the evening of January 24th, major overseas markets were already under the pressure of worrying about the Fed’s acceleration of tightening. The market sentiment was relatively fragile, and geopolitical tensions became the fuse to further suppress risk appetite.”Kindal further points out.Central fund officials said that on the one hand, the recent growing tension in Ukraine, international capital markets have made more intense reaction, main index showed a sharp shock wave, the growing globalisation of the domestic market has also been some impact, led by the subject of substantial performance supports are more sharply lower.On the other hand, since the beginning of the year, the Federal Reserve has taken A hawkish stance, constantly emphasizing the stance of inflation and the prospect of interest rate hikes, which greatly increases the possibility of multiple interest rate hikes within the year. The bottom recovery of the yield of 10-year Treasury bonds in the United States drives the valuation of A-share growth stocks down sharply through the impact of the valuation of growth stocks in the United States.As for the internal factors, the person explained that this week is the last trading week before the Spring Festival, the domestic A-share market tends to shrink the transaction phenomenon before the festival, under the current market style change and institutional investors reallocation, the decline in market capital is easy to magnify the potential volatility before the festival.While domestic easing policies continue to convey confidence to the market, the transmission of substantive measures may still take some time to show results.At the same time, “the credit default risk of real estate companies is still troubling the market. Recently, a real estate developer announced the overall default of overseas debt, and high-frequency data showed that real estate sales, investment and other data in January may further weaken, the market worries about the credit risk of real estate companies may spread.In addition, the market is concerned that the strength of the policy to stabilize growth faces more constraints than expected, or the time point is later than expected.”Although ministries and commissions have made clear efforts to stabilize growth recently, the market is likely to remain relatively pessimistic due to sentiment inertia until forward-looking indicators such as social finance, credit, property and infrastructure improve significantly.”Morgan Stanley Huaxin fund insider analysis.As for the follow-up situation of external risks, Kindalle pointed out that, from historical experience, asset fluctuations under geopolitical conflicts are usually shock pulses, which will disturb market sentiment during the occurrence, and even magnify the original sense of vulnerability of the market. Therefore, the follow-up short-term trends may still be worth paying attention to.However, he also stressed that at present, the existing DECLINE in U.S. stocks has not been further translated into risk spread of U.S. stocks to risky assets, such as leverage, liquidity and sentiment have not further triggered the stampede selling.Limited downward space, institutions are expected to pick up after the Spring Festival overall, institutions are generally more optimistic about the market after the Spring Festival.China Merchants fund officials pointed out to reporters, overall, the current short-term risk appetite of investors has been at a low level, continue to be limited downward space, after the Spring Festival with positive factors, the market will gradually return to warm.Morgan Stanley Huaxin fund insiders predicted that approaching the Spring Festival, the above emotional factors may still restrain the market performance, but the future with the “steady growth” policy details continue to be released, forward-looking indicators may improve and domestic growth gradually stabilized, market sentiment is also expected to repair.The above investment fund also talked about, on the one hand, positive factors will gradually upward correction.The current improvement in real financing demand has not yet been verified, and structural monetary easing and aggregate monetary easing may be in parallel. The Central bank will continue to be proactive.At the same time, as the local two sessions have been held, there is a strong demand for stable growth, and investment in infrastructure and manufacturing is expected to accelerate.On the other hand, negative factors will accelerate convergence.The expected impact of overseas liquidity will gradually be digested, while real estate credit risks will gradually be exposed and digested.At the same time, institutions remind the current allocation of high – quality assets.On the one hand, the market style change may bring better investment timing.The above analysis of the Central European fund personnel, the gradual strengthening of macro factors at home and abroad, the domestic growth industry in the past two years continued to strengthen pressure, combined with the weak fund since the beginning of the year, leading to a relatively weak institutional heavy position industry.But given expectations of a gradual increase in steady growth policies ahead of the two sessions, it may still be a good time to focus on value.And, given the much starker choices-and graver consequences-in planning yet steady growth in domestic policy is often more phased policy, and in the economy showed signs of stabilising after began to tilt towards long-term transformation, from the point of longer time dimension, the current policy expectations for steady growth led to the growth of the callback, or will bring the good opportunity for the medium and long term in the first half of the year.Morgan Stanley Huaxin fund insiders said, “steady growth” is still the main stage of the future, and the growth style of sharp killing space may be relatively limited, “steady growth” style may last until the end of the first quarter or so, when the style may be more obvious to return to the turning point of the growth style.As for the specific layout direction, China Merchants fund points out, will grasp the market value and steady growth of the main line.”In 2021, the performance of large-cap value stocks is not superior, mainly lies in the ‘earnings down (but still positive) + credit expansion + currency broadening’ environment, the performance of mid-cap blue chips with elastic characteristics of earnings is better.On the one hand, high profit growth rate has the advantage of scarcity, on the other hand, the environment of wider credit money makes growth rate and profit growth rate benefit more.However, based on the present, it will be more difficult to find industries with significant economic advantages in 2022.At the same time, the reallocation of the earnings structure and the repair of the middle and lower reaches will be important clues for value improvement as the main line of stabilizing growth emerges.”China Europe Fund suggests focusing on investment opportunities under the main line of Stable economic growth in China, focusing on optional consumption industries with strong profitability and valuation flexibility, such as liquor, household appliances and service consumption.In addition, in the capital construction investment related to steady growth, the areas with greater incremental flexibility, especially the energy infrastructure and new energy power operators involved in the dual carbon sector.Huaxia fund insiders say, under the policy of steady growth, the domestic economy is expected to be in the first quarter of 2022, associated with the steady growth of power investment, real estate and new energy chain infrastructure industry chain, the respect such as digital economy will still be relatively slow, after adjusting for sharp configuration has been significantly increased, the ratio of afternoon instead can be more optimistic.In addition, the Great Wall fund concerned people suggested that the military sector of investment opportunities.”On January 25, when the market continued to decline across the board, the military industry bucked the trend.”Compared to many industries that are significantly driven by macro environment and policy, the military sector is highly planned and independent, making it a cost-effective choice in a volatile environment.”He specific analysis, since the beginning of the year, the military plate adjustment, the main reason is that the New Year period plate valuation switch is completed, the market came to an end, and the valuation is in a high score.From the perspective of the cycle, military industry is still in the starting stage of the industry cycle, the upward trend of prosperity is beyond doubt.From the perspective of three to five years, the fundamentals of the military industry as a whole continue to improve. In the process of rapid growth of the industry and continuous optimization of the pattern, there will be a series of targets with good growth, attractive valuation and poor market expectations to bring high-quality investment opportunities.(Edited by Xia Xin and proofread by Zhai Jun)