It is undeniable that a wave of market adjustment is inevitable because of panic dominated. However, how much will the decline be? How sharp will the decline be? How should investors respond? What are the similarities and differences between the current SARS and that 17 years ago?
Before the opening, the CSRC called twice. The head of relevant departments of the CSRC said that the impact of the epidemic on the market is short-term and will not change the long-term trend. For the possible changes in A-share market after the opening of the market, relevant departments will keep a high vigilance, adhere to the bottom line thinking, introduce and study hedging tools, and ease market panic. For more details, please click voice again in front of the CSRC! The introduction of hedging tools to deal with stock market changes, will maintain a high degree of vigilance, the suspension of night trading futures There are ten key statements.
On February 3, the central bank will launch an open market reverse repo operation of 1.2 trillion yuan to invest funds to ensure sufficient liquidity supply. The overall liquidity of the banking system is 900 billion yuan more than that of the same period last year. For more details, please click super large pen!! The central bank spoiler in advance: 1.2 trillion yuan was invested on the first day of market opening! To provide sufficient liquidity, is there still room for reducing reserve and interest rates?
CITIC Securities said that the impact of the epidemic on the macro-economy in the first quarter will be greater than that in the SARS period, and it is expected that the economy will gradually recover in the second quarter, so it is not necessary to be overly pessimistic about the whole years economy. The short-term adjustment caused by the epidemic is expected to be smaller than the decline of the peripheral market during the Spring Festival. The pace of rapid excavation and slow grinding is fast, and the rapid adjustment rate will end in a week. February will be the golden pit on the way of well-off cattle, which is the best allocation time point of the whole year. As the economy returns to normal gradually in the second quarter, the well-off cattle rate will be officially opened around the two sessions, and the short-term transaction and long-term allocation opportunities coexist.
How much peripheral collapse will affect the opening of a shares
How much will a share fall next week? To some extent, it will be close to the recent decline of the peripheral market.
The A50 Index has fallen nearly 11% in the past two weeks and nearly 8% during the Spring Festival.
As the A-share market has been greatly reduced on the last trading day before the festival, compared with the trend of A50 and Hang Seng SOE index, the A-share market has a high probability of opening and falling on Monday, which will be the first shock.
In addition to the impact on Chinas assets, the performance of major overseas markets was not as good as expected, and U.S. stocks closed down sharply on the 1st. Analysts believe that this collapse is not a response to the severity of the epidemic, but rather should reflect the uncertainty of the opening of the A-share market. Because the linkage between A-share and the outside world has become more close in the past year, A-share crash is bound to hit the peripheral market. As a result, big falls in US equities and other sectors should reflect this expectation in advance.
As for whether there will be a liquidity crisis in the A-share market, this possibility is not too high. Pan Gongsheng, deputy governor of the central bank, has previously said that the central bank will provide sufficient liquidity for the market after the opening of the financial market. On February 2, the peoples Bank of China made a dramatic breakthrough in advance, and on February 3, it will launch a 1.2 trillion yuan reverse repurchase operation in the open market to invest funds to ensure sufficient liquidity supply.
On the same day, the CSRC also voiced twice: the impact of the epidemic on the market is short-term and will not change the long-term trend. For the possible changes in A-share market after the opening of the market, relevant departments will keep a high vigilance, adhere to the bottom line thinking, introduce and study hedging tools, and ease market panic.
The final decline of a shares depends on four points
So, in what way will A-share eventually fall? Will the ultimate decline drag the market into the long bear? From the recent major research papers, it seems that this kind of worry has not appeared. Analysts believe that the final decline of a shares should be determined by four aspects:
First, the epidemic situation. From the current situation, in addition to the increase of confirmed cases, there are two good news:
The second is the emergence of several effective drugs, the first case of new coronavirus pneumonia in the United States after the use of an antiviral drug, remdesivir, symptoms improved rapidly. On February 1, Beijing time, Dr. merdad parsey, the global chief medical officer of Gilead science, issued a statement on behalf of the company. The company is working closely with global health institutions to provide the drug remdesivir for experimental treatment in order to support the response to the outbreak of new coronavirus (2019 ncov) infection.
In addition, Ding Sheng, Dean of the school of pharmacy of Tsinghua University, said that SARS virus, Middle East respiratory syndrome virus and new coronavirus all have a protease target similar to HIV, so there are more and more reliable two kinds of known drugs discussed at present, one is the inhibitor of HIV protease - lopinavir / ritonavir, the other is A new nucleoside analogue antiviral drug against Ebola virus.
Second, it depends on policy. With the spread of the epidemic and the implementation of measures to restrict the flow of people, the economic impact on the first quarter has been formed. How to hedge against this kind of impact may require macro policy efforts. At present, a number of economic professionals have voiced that we should reduce the standard and interest rate as soon as possible to cope with the major economic downturn. If these policies can appear, the markets decline and decline will be alleviated to some extent.
Third, it depends on the valuation. When a panic occurs, emotions will inevitably lead to a huge sell-off. In this case, if you follow the mood, you will also be very passive. At this point, valuation is the most important variable.
According to the data of CICC, the current forward P / E ratio of CSI 300 is 10.3x and forward P / N ratio is 1.2x, slightly higher than the low points (8.6x and 1.0x) at the beginning of 2019, but lower than the historical average (12.7x and 1.9x). The forward P / E ratio of the non-financial sector is 14.0x, and the forward P / N ratio is 1.7x. At present, the forward P / E ratio of the top 100 A-share companies with foreign ownership is 21.9x, which is slightly higher than the historical average (17x). MSCI China, except for A-share index, has a forward P / E ratio of 10.3x, which is close to the historical average value of 0.5 times of standard deviation, forward P / N ratio of 1.4x, which is close to the historical average value of 0.7 times of standard deviation. The forward P / E ratio and forward P / N ratio of the Hang Seng index have reached the position where the historical average value is the next standard deviation (at present, the forward P / N ratio is 9.9x/1.1x, the historical average value is 11.9x/1.5x, and the next standard deviation is 9.8x/1.1x).
Fourth, it depends on the attitude of foreign investment. To some extent, foreign investment is the wind vane of the market. Before the festival, foreign investment flowed out in a large scale, and the net outflow on the last day before the festival was the second highest in history. With the sharp fluctuation of A-share market after the festival, it is worth paying attention to whether foreign capital can generate a large net inflow. If the net inflow of foreign capital can be sustained, the market will gradually stabilize.
There are six major differences between today and 17 years ago
At present, almost all of the research reports are compared with that of 17 years ago. However, compared with the SARS of 17 years ago, there are similarities and differences in the changes of the world.
First, from a cyclical point of view, from the end of 2002 to early 2003, the global economy has just climbed out of the bubble cycle of the network and is at the starting point of the commodity cycle (there are Chinese factors), and now it is at the starting point of a new technology cycle (5G, Internet of things and electric vehicles). As far as the contribution to the sound economic development and social progress is concerned, this technological cycle is naturally stronger than the commodity cycle. This is the biggest dependence of the market.
Secondly, from the position of the worlds major markets, from the end of 2002 to the beginning of 2003, the major markets in the world are generally in a relatively low position, especially in the US market. After the baptism of the Internet bubble, they have not yet performed well, and NASDAQ has just seen the bottom. It can be said that at that time, the risk of major global stock markets was not great.
Now, unlike then, US and European stock markets have reached record highs, with US stocks particularly strong. If the stock position is high, the risk will be relatively high.
Third, the global economic environment and trends are not the same. From the end of 2002 to the beginning of 2003, economic globalization is in full swing, and China has just joined the world organization, and its economic development has just stepped into the fast lane with full potential. Later, because of the existence of Chinese factors, it ushered in the commodity cycle. The current environment is quite different from that at that time: the economic globalization has turned against the current, Chinas economy has entered a stage of steady development, and the world is facing more variables.
Fourth, in terms of the speed of information dissemination, the speed and scope of the current dissemination are far greater than that of 17 years ago. This has both advantages and disadvantages. The disadvantage is that it will amplify the panic of the people; the advantage is that the information will come and may go quickly. This will increase market volatility. The market may rebound quickly in one minute due to the information of one drug, or may fall in the next minute due to the details of one confirmed case.
Fifth, from the perspective of market development, the market in that year was not as mature as it is now, and the scale and volume were not at the same level. In addition, from the perspective of the reform process, the market from the end of 2002 to the beginning of 2003 has not yet been rolled out. At present, since September last year, after the CSRC issued 12 articles of deep reform, all works are in progress, and the market reform is developing in a promising direction. Sixth, from the perspective of market expectations, the current market generally expects that the impact of this round of epidemic on the economy will be greater than that of SRAS 17 years ago. This is the problem A shares have to face after the first wave of emotional shock. If the impact of the final epidemic on the economy is not as great as expected, the market will rebound. If the final impact on the economy exceeds expectations, there may be a negative market. However, no matter what the result is, it will eventually go. Buffett also said that the share price slump caused by non fatal accidents is a good opportunity to buy. Judging from the current situation, the market crash may not be avoided, but the opportunity to buy high-quality individual stocks is also emerging. The epidemic will pass, and the world will eventually belong to the optimists. Source: responsible editor of securities companies in China: Yang bin_nf4368
Sixth, from the perspective of market expectations, the current market generally expects that the impact of this round of epidemic on the economy will be greater than that of SRAS 17 years ago. This is the problem A shares have to face after the first wave of emotional shock. If the impact of the final epidemic on the economy is not as great as expected, the market will rebound. If the final impact on the economy exceeds expectations, there may be a negative market.
However, no matter what the result is, it will eventually go. Buffett also said that the share price slump caused by non fatal accidents is a good opportunity to buy. Judging from the current situation, the market crash may not be avoided, but the opportunity to buy high-quality individual stocks is also emerging. The epidemic will pass, and the world will eventually belong to the optimists.