Who wants to rush in August?

Yesterday was the last trading day in July, and the Shanghai Composite Index rose by 2.52% in July. However, as the index re-enters the top of the box since the second half of 2016, the technical pressure is increasing, which will test the market. Analysts said that with the emergence of positive factors such as macroeconomic fundamentals and market funds, the trend of A-shares in August was “easy to go down”. The non-ferrous metals and chemical sectors are expected to become the pioneers in August.

New high-profile hidden worry

Due to factors such as fiscal contributions at the end of the quarter, the market liquidity situation in July was slightly tight. Although the central bank repeatedly relied on reverse repurchase and MLF operations to relieve the pressure on funds, A-shares were inevitably subject to the stock game pattern. However, many macroeconomic data released during the same period exceeded expectations, which significantly eased the pessimism of A-share investors and allowed the cycle of the first half of the year to continue. Especially in early July, the non-ferrous metal plate took over the leading blue-chips such as Maotai, and anchored the market at 3200 points. In the last two trading weeks in July, Baima shares and large consumption also made efforts to form a cyclical stock. The trend of rotation, continue to open the territory above 3250 points. As of yesterday's close, the Shanghai Composite Index reported 3,273.03 points, a record high in more than three months.

However, under the large-scale brilliant results, there is no shortage of hidden worries, and this will test the 3300-point battle that the next market faces.

First of all, an important logic for supporting the rise of cyclical stocks and big blue-chip stocks this year is the valuation restoration. Therefore, in the case that the stock prices of big blue chips such as Maotai have risen sharply and the range of increase has been high, the non-ferrous metals are representative and still have strong repair needs. The cyclical stocks were naturally taken care of by the main funds, which drove the market to continue upwards in July. However, the global market value of blue-chip stocks and cyclical stocks is relatively large, and the continuous increase in capital consumption is relatively large. Second, after the stock price is high, the willingness to withdraw funds will heat up, and the distribution of weights will also cause constraints on the broader market. Therefore, on July 10-12, the Shanghai Composite Index showed a correction for three consecutive days, and on July 17, it was a heavy volume drop of 1.43%. Although it includes the fund distribution factor, the large-scale callback during the period is actually a helpless move in the context of the lack of growth. Just on July 7-17, the GEM has seen an adjustment of nearly 150 points, both on the GEM. The squeezing effect is still the capital outflow of the cyclical stocks, which reflects the short-term market liquidity. After that, the funds mainly flowed into large consumption, white horses and adjusted cyclical stocks. In the second half of July, the “troika” rose and eventually reached a new high. Therefore, in the context of the current market distance of 3,300 points, if there is no incremental fund to support the index to continue to rise, the market is bound to return to the "adjustment - up - re-adjustment" in place.

Secondly, the current Shanghai Composite Index and the Shanghai Composite Index 50 have all reached a new high. In particular, the Shanghai Composite Index is facing the technical pressure of the 3,300-point box on the upper edge since the second half of 2016, in the context of the previous two unsuccessful breakthroughs, unless there is a higher than expected Good, otherwise the technical and investor inertia is hard to break. In addition, from the trend of the Bollinger Band, the current market is also significantly constrained by the resistance line, and the short-term opening does not show a significant upward trend. From a technical point of view, it is not clear that the broader market continues to rise.

Finally, there will be a clear lead-up variety in a round of trending upside. Under the circumstances that the valuation is gradually completed and the performance of the mid-year report is being fulfilled, who in the cyclical stocks and big blue chips have the ability to continue to lead? Before the market did not form a more consistent answer to this question, the “mixed war” of funds could only accelerate the short-term thinking of the market, stimulate the index to fluctuate frequently, and continue to “dance” in the box.

Positive factors

Before the above three aspects were not further clarified, the trend of A shares in August was quite confusing. But after all, the stock market is a "barometer" of the economy, and the changes in the stock market can often sniff out the clues in the macro economy. Market participants believe that in combination with the latest changes in economic fundamentals and market capital, August A-shares are expected to oscillate and rise above the 3,300 points.

First, on the basis of the second quarter, various economic data continued to improve in July. Exports, land purchases, power generation, and manufacturing investment continued to improve in the month, and the cyclical industry generally achieved good earnings. According to data released by the National Bureau of Statistics on July 31, China's manufacturing PMI was 51.4% in July, down 0.3 percentage points from the previous month, but it was basically the same as the average of the first half of the year, and the overall trend was stable. In terms of CPI, many financial institutions believe that due to the rise in food prices, the CPI has a high probability of rising in July, and is expected to stabilize at 1.5%. It is expected to stabilize at 1.6% in August. Overall, inflation levels remain low. As a result, the economic performance in the third quarter was once again exceeding expectations.

The above achievements were achieved in the context of supply-side reform and “de-capacity”. With the emergence of reforms, industries represented by steel, coal, non-ferrous metals, etc., in terms of product inventory and price Great improvement has been made, industry concentration has been further improved, and corporate profit improvement space and market value have also been improved. Compared with the previous valuation and repair momentum, the industry's good momentum will definitely provide a greater increase in stock valuation. boundary of safety. Before the market is completely “cleared out”, it is expected that the cyclical sector will continue to enjoy the policy dividend premium. At the same time, considering that the cyclical stocks have been consistently “distributed” after the continuous rise of the previous cyclical stocks, it is expected that the continued positive fundamentals in the later period will also provide greater market tolerance for the stock price and sector indices.

Second, the market will see a phased improvement in August. First of all, the funding gap in the commercial banking system in August is not obvious, and the main impact on market liquidity is the amount of central bank funds due. Although the central bank stressed that monetary policy still maintains a stable neutral, this does not mean that the central bank should tighten the “money bag”. The adjustment of monetary policy is mainly to correct the excess liquidity in the previous period. It is expected that the central bank will continue to renew the probability of reverse repurchase. Larger. Yesterday, the central bank carried out a 160-billion-day, 80-billion-day, 14-day reverse repurchase operation, fully hedging the amount due. With the increase in tax pressure and purchase of foreign exchange, the liquidity continued to improve in August.

Third, the value of some GEM stock investment is highlighted. In the context of the completion of the disclosure of the China Daily, the current performance of the GEM stocks and the stock price and valuation matching are not as good as expected, but the “real growth” with improved management, strong performance and development prospects is also evident. In particular, the early GEM shocks have further enhanced the attractiveness of this segment of the outstanding stocks. According to Wang Hanfeng, an analyst at CICC, the P/E ratio of the GEM in 2017 may have dropped to around 30 times. Compared with the valuation premium of blue chips, it will also fall to its position in recent years. Some growth stocks have room for stock selection. In addition, although the market value of the plate is small, small and medium-sized varieties have contributed to the active market sentiment and the creation of money-making effects. Market participants believe that as this part of the growth stocks receives financial attention and heat, it also helps the “cycle” market not to “snap away” after the rise.

Fourth, in the second quarter, institutional investors tend to increase their financial and consumption, and there are fewer allocations in the cyclical stocks. There are certain requirements for additional allocation.

Who is leading the "true hero"

In the opinion of market participants, the trend of A-shares in August was “easy to go down”, and at the same time benefited from the improvement of industry, economy and corporate profits, and the cyclical varieties are still the protagonists of the market. However, considering that liquidity is only improving rather than reversing, investors should not expect too much space for the index. It is expected that the cyclical sectors such as coal, nonferrous metals, brokerages and steel will continue to rise alternately, supporting the index in a “pulse” manner.

So, who is expected to stand out in the cycle sector and become the leading hero in the market in August? According to statistics, as of July 30, in July, a total of 312 listed companies in the two cities received institutional research, industrial machinery and other industries are their favorite, metal non-metal, basic chemical and other industries have become the new favorite. In terms of company distribution, there are 22 industrial machinery enterprises, 19 electronic equipment and instrument companies, 18 electrical components and equipment companies, and 18 electronic component companies. In addition, there are 15 metal non-metal enterprises and 10 basic chemical companies. In terms of individual stocks, Hikvision, Tianqi Lithium, and Huace Film and Television have received 292, 121, and 94 surveys, respectively, which are the focus of institutional research.

Recently, the data of leveraged funds such as Liangrong also showed that although the market volatility increased in the second half of July, the chemical, non-ferrous metals, steel, mining and other varieties were still the “good heart” of financiers, and they continued to receive net financing inflows.

Haitong Securities recommends that the consumption of white horses, finance, and cycle leaders be balanced. On the one hand, liquor, household appliances and other varieties have been reshuffled since June, and the current valuation and profit matching are better. On the other hand, the surplus products of coal and steel represented by cyclical stocks in the past month are very obvious. The gains were in the top, while the capital and profitability of the machinery and construction representatives were also good.

Zhongtai Securities also believes that the economic resilience and liquidity improvement, the financial and real estate sectors are cheap, the fund allocation ratio is not high, and it has a high margin of safety. From the main line of the market, resource stocks are still hot spots. It is recommended to continue to pay attention to the subject of price hikes to drive more certain areas in the mid-stream cycle, such as non-ferrous metals and chemicals.

(Original title: Who wants to rush in August is a "pioneer")