The Primary Consideration of the Valuation of Global Stock Markets Non-Agricultural Two Continuous Drops into Northern Capital

 The Primary Consideration of the Valuation of Global Stock Markets Non-Agricultural Two Continuous Drops into Northern Capital

In addition to the anticipated cooling down of interest rates, we can also see the origin of the domestic market callback in several aspects. First of all, it was announced at the weekend that more than 20 new shares were listed and issued this week; secondly, from the perspective of the market, the funds flowed northward on Monday totaled 3.3 billion yuan. Since this year, the impact of northward capital on A shares has been very large, basically synchronized or slightly ahead of the market. As a marginal variable of the market, many investors use the data of Land Stock Exchange to judge the sentiment of A shares. In addition, all walks of life also hold a wait-and-see attitude towards the semi-annual reports of listed companies. Wu Zhaoyin, Director of Macro Strategy of China Aviation Trust, told First Financial Journalist.

Global Stock Market Continuous Retreat

On July 5, the number of non-farm employees in the United States was far from the supermarkets expectation. The number of non-farm employees increased by 224,000 (160,000 expected), the labor force participation rate was 62.9%, which was better than the expectation of 62.8%. Hourly wages increased by 3.1% year-on-year, which was equal to the previous value. The unemployment rate was 3.7%, which was 0.1 percentage points higher than the previous value, which was 3.6% higher than the market expectation.

At present, the easing expectations on one side are cooling down instantaneously, while on the other side, the U.S. economy is actually not strong, and non-farming can not show the whole picture - the high-frequency data of the U.S. economy frequently points to a slowdown in growth. The main index of the New York Federal Reserve Banks June survey of factories in New York State dropped 26.4 points to - 8.6, the lowest level since October 2016.

We value economic data more than the Federal Reserve, and we think its hard for U.S. stocks to keep climbing. Wilson pointed out that the Morgan Stanley Corporate Conditions Index, the largest monthly decline since 2002 in June, is closely related to ISM orders and corporate earnings revisions.

In addition to the pressure on U.S. stock earnings expectations, the Federal Reserve was expected to cut interest rates sharply to return funds to emerging markets, but the failure of the 50 BP interest rate cut expectations triggered a pullback in the Asia-Pacific market.

In addition to the impact of the Federal Reserves monetary policy, A shares were also affected by other short-term effects, with a net outflow of 2.6 billion yuan on Tuesday.

Concentrated issuance of new shares is one aspect. On July 22, the first listing ceremony of Kechuangban will be held. Up to July 4, 141 companies had accepted the application for listing and issued the first round of inquiry letters to 118 companies. The Board of Stock Listing of Kechuang Stock Company considered and approved the application for listing of 31 companies. Twenty-five companies had obtained approval from the SFC for registration. They were the first listed companies of Kechuang Stock Company.

Morgan Stanley recently raised its forecast on the financing scale and the number of listed entrepreneurs of Cosco in the second half of this year. It expects total financing to be 16.4 billion US dollars and 162 listed entrepreneurs, nearly double its previous forecast. However, Wang Bing, a stock strategist at Morgan Stanley, told reporters that the overall liquidity impact of Cosco issuance was limited, accounting for only 0.1% of the total market value of A shares and 19% of the turnover rate from the beginning of the year to today. GEM may be affected by short-term liquidity, accounting for 5.2% of the free circulation market value of GEM.

However, institutions do not believe that the current pattern of A-share interval volatility will be destroyed. Wu Zhaoyin told reporters that new shares can provide fresh content for the market. Intensive issuance should not be the norm. Past experience also shows that the issuance of new shares will not lead to long-term weakening of the market, at most short-term fluctuations.

As for northbound funds, a number of foreign fund managers interviewed mentioned that as long as the valuation is appropriate, the willingness to allocate foreign capital is still large. Since this year, when the Shanghai Stock Exchange Index falls to around 2800, foreign investment will accelerate its inflow, which reflects the impact of valuation changes on the attractiveness of foreign investment. Foreign investment attaches more importance to valuation than domestic investment, Lu Jie, director of Chinese research at Robeco, told reporters. For example, the first quarters surge was mainly due to the restoration of valuation, but valuations of many sectors also exceeded the historical average and were normal profit-taking.

Although for foreign capital, once the long-term growth of enterprises is optimistic, high valuation of some stocks will not hinder buying, but more foreign capital lacks understanding of subdivided Chinese stocks, and valuation is also an important indicator.