Several factors influencing the Grain Market in June - Stock Market Dynamics. In June, we look forward to a true conclusion of the Grain market. Observing the world market, only China's market presents a scene of flourishing prosperity. Several factors influence the grain market in June.
NO1: Liquidity Factors
In terms of the money market, monetary policy has already tightened.
Recently, Chairman Xiao Gang of the Bank of China expressed that although the central bank's commitment to continue implementing a loose monetary policy hasn't changed, it has actually tightened.
The central bank recovered some liquidity through the issuance of central bank bills in April; at the same time, considering the fact that the CPI is negative, the current interest rate is still relatively high, but there are no signs of adjustment by the central bank. This indicates that although the general policy direction hasn't changed, the central bank is moving towards more cautious operations in actual practice.
Therefore, from the perspective of liquidity, one important factor that has been supporting the market valuation increase is currently undergoing some subtle changes. These changes may lead to fluctuations in the market in the medium and short term.
NO2: Policy Factors
The current policy hotspots mainly focus on two aspects: industry policies and regional policies.
Industry policies mainly focus on the revitalization plans for ten major industries, while regional policies include the construction of Shanghai's two centers, the Fujian Strait West Coast Economic Zone, Beibu Gulf, Tianjin Binhai New Area, Chengdu City's comprehensive coordinated urban-rural development service experimental zone, revitalizing Northeast China's old industrial base, Shenzhen's comprehensive coordinated reform, etc.
The initially released were mainly central government documents, and now local governments' accompanying documents have started to be issued successively. Due to the varied characteristics of regional economies and the involvement of different companies in various industries, targeted selection of listed companies in line with expectations can yield returns exceeding the index.
During the process of industrial transformation, new energy as engine power, major equipment manufacturing, core nuclear foundations, biological industries, etc., as sunrise industries, related companies have larger potential for future performance growth, and can be given more weight.
NO3: IPO Restart Factor
The timing of the IPO restart was faster than expected.
The release of the draft for public comment last week marked the official beginning of the IPO restart. The IPO restart happened faster than investors generally anticipated. Does this also indicate to some extent the attitude of the management towards the operation of the stock market?
During this market upturn, policy-driven forces were one of the main drivers. Restarting IPOs, on the one hand, indicates that the management believes the market has stabilized, and on the other hand, it shows that the height and speed of the market's continuous rebound have exceeded the management's expectations, so it can also be considered that the policy has an intent to cool down the market.
NO4: May Macro Data Factor
May macro data relates to the driving force behind the continuation of the V-shaped economic recovery towards the right side, which has a key impact on the stock market in June.
If the PMI continues to improve and earlier poor indicators like electricity generation show signs of improvement, A-shares will regain momentum and challenge the 2700-point level.
If electricity generation continues to expand month-on-month and the PMI shows weakness month-on-month, we hold a pessimistic view of the future market. We believe that the adjustment time and space for the stock index will be extended, and a new turning point in A-shares will appear after "the management introduces unexpected economic stimulus policies."
NO5: Large and Small Non-tradable Shares Factor
The latest statistical data published by Southwest Securities shows that in June, 105 companies' equity reform restricted shares and 27 companies' non-equity reform restricted shares will be listed for circulation. The monthly quota for large and small non-tradable shares being lifted is about 124.3 billion yuan, decreasing by over 50%, with the total monthly quota shrinking by 40% compared to the previous month.
"Companies with low proportions of restricted shares held, dispersed shareholders, and many small non-tradable shareholders without voting rights should be watched out for," said Zhang Gang, senior analyst at Southwest Securities. "The characteristic of having more large non-tradable shares in June is very obvious."
NO6: US Stock Market Factor
In the recent economic data released in the U.S., there has been an increase in data better than expected, including the PMI index, consumer confidence index, chain store sales data, etc. The newly announced decrease in non-farm employment numbers in April was lower than in March, further indicating that the downward trend of the economy may have eased somewhat.
Recently, the U.S. stock market has seen a pullback, but the pullback space is limited. Although the U.S. recovery road is still long, the worst phase of the economy is passing, and it is in the early stages of warming. The U.S. financial system has basically stabilized, and consumer credit and corporate financing are gradually recovering. For the stock market, from a valuation perspective, the dynamic P/E ratio of the S&P 500 is around 16 times, and its historical P/E ratio generally falls within the range of 15-18 times. Considering that this year is the profit low point for U.S. stocks and the economy is showing improving trends quarter-on-quarter, the current valuation level remains attractive.