On Thursday, after a high opening, the Shenzhen and Shanghai A shares experienced violent fluctuations, showing obvious signs of capital outflow. The reason for the rebound after the fluctuations and the formation of a flat volume cross star is mainly due to institutional support for two weighted stocks, Sinopec and PetroChina. However, from the market level, it is clear that the current A-share market has already shown very obvious top characteristics. The main factors involved are: firstly, during the upward rebound process, the trading volume has not been well coordinated; secondly, high-priced stocks have fallen again with new varieties. Apart from small-cap stocks, after the previous sharp declines in Guizhou Maotai and ZTE Communications, the old blue-chip stocks Longjing Environmental Protection and Saama Industry also hit the limit down, indicating significant differences among major institutional players in the market, leading to early exits; thirdly, while the trading volume remains weak, there are four obvious gaps below the A-shares, exerting strong downward traction, showing that even if a breakout occurs upwards, the space will be very limited. No matter which sector the market starts, it is difficult to achieve progress in the index; fourthly, the stable policies before the introduction of stock futures are facing substantial termination.
From the trajectory of the market, we believe that the time for the market to choose a direction is approaching. Considering the current market valuation, trading volume, unusual movements of institutional stocks, and the gap below, a major top may form in the near future. The probability of breaking through downwards is 80%. Therefore, at this stage, we recommend that investors do less and observe more, and prudent investors can adopt a rest strategy as the best option.
From today's basic fundamentals, they mainly focus on: According to preliminary calculations by the National Bureau of Statistics, the GDP for the first quarter was 8,057.7 billion yuan, growing by 11.9% year-on-year at comparable prices, accelerating by 5.7 percentage points compared to the same period last year. Among them, the added value of the primary industry was 513.9 billion yuan, growing by 3.8%; the added value of the secondary industry was 3,907.2 billion yuan, growing by 14.5%; the added value of the tertiary industry was 3,636.6 billion yuan, growing by 10.2%. The CPI in March was 2.2. At the press conference held by the Shanghai Municipal Government yesterday afternoon, Xu Quan, deputy director of the Shanghai Financial Office, stated that the international board has been listed as a key task for the construction of Shanghai's international financial center. The CSRC is also discussing the draft of the trial method for IPOs on the international board, and the international board is expected to be launched within the year. On April 14, the Xinhua News Agency reported that the Chinese government decided to delegate the approval authority for foreign investment projects and encourage foreign capital to participate in domestic enterprise restructuring and mergers and acquisitions through shareholding, mergers, and acquisitions. Zhang Xiaqiang, deputy director of the National Development and Reform Commission (NDRC), said at a press conference held by the State Council Information Office that China will deepen the reform of the foreign investment management system. Encouraged and permitted projects under $3 billion in total investment in the "Catalogue for the Guidance of Foreign Investment Industries" (except those specified in the "Government Approved Investment Projects Catalogue" that need to be approved by relevant departments of the State Council) will be approved by local government departments. Previously, the upper limit of foreign investment projects authorized for approval by local governments in China was $1 billion. Zhang Xiaqiang said that this is the largest delegation of foreign investment authority since China's reform and opening up 30 years ago.
Wuhan Iron and Steel Corporation (WISCO) announced its steel product sales price policy for May yesterday. Among them, except for an increase of 100 yuan/ton in cold-rolled coil, hot-rolled steel, plate, galvanized steel, tinplate, non-oriented silicon steel, color-coated steel, and wire rod were all significantly increased by 500 yuan/ton. This is WISCO's fourth consecutive price increase this year. However, insiders from WISCO told reporters that the current steel price increase still cannot cover the rising costs of raw materials such as iron ore and coke, and the motivation for further price increases remains. In fact, WISCO is just one member of the current wave of steel plant price hikes. According to monitoring by the Langfang Steel Information Research Center, the frequency of price adjustments by major domestic steel mills has changed from once a month to once every ten days. From March 15 to April 10, Hebei Iron and Steel Group raised the factory prices of building materials three times, accumulating an increase of 400 yuan for high-line and 500 yuan for rebar. From March 11 to April 11, Shagang Group raised the price of rebar by a cumulative 650 yuan and the price of wire rod by a cumulative 600 yuan.
By April 14, 1,205 listed companies had disclosed their 2009 annual reports, among which 689 proposed cash dividend distribution plans. Based on the latest closing prices, dividends of 25 companies exceeded the interest rate of one-year fixed deposits. Referring to the per-share dividend amounts in the allocation plans of 689 companies and the closing prices on April 14, currently, the dividend yields of 25 companies exceed the one-year deposit interest rate of 2.25% (excluding companies that have already implemented the 2009 distribution). Among them, Yutong Bus plans to distribute 1.00 yuan (pre-tax) per share, with a dividend yield reaching 4.98%, far exceeding the current one-year deposit interest rate, ranking first among the above 25 companies. Meanwhile, Ningbo-Hangzhou Expressway, Zhijiang Enterprises, Construction Bank, and Youngor’s dividend yields all exceed 3.40%.
Data shows that by April 15, 24 new funds have been established this year, raising 47.807 billion yuan. HAF Fund Management Company announced that the HAF Small & Mid-Cap Stock Fund was established yesterday. The fund's first effective subscription account number was 11,522 households, calculating each fund unit at 1.00 yuan RMB, and the total number of fund units during the establishment fundraising period, including interest conversion, amounted to 1.237 billion units. For two consecutive days, the ChiNext stocks experienced significant adjustments. According to information from the Shenzhen Stock Exchange, institutional seats and some speculative capital seats became the main force selling ChiNext stocks. Only in the top five sellers of four ChiNext stocks—Lepu Medical, Ruentong Technology, Shanghai Jiahao, and East Money—institutional seats appeared seven times, cumulatively net selling 1.88 billion yuan. Additionally, some active speculative capital seats gathered in business departments also appeared in the top five sellers.
In summary, judging from the abnormal fluctuations of disk surface varieties, the factors of the gap below, and the lack of substantive reference significance of the CPI without major consumption weights such as housing, consumption, and medical care, as well as the trading volume factor, the mid-term top of the current A-share market may be forming. The probability of the large triangle consolidation pattern breaking downwards is extremely high. Operationally, investors should remain highly vigilant. They should not take lightly the risk guidance of stock futures on market valuation. At this stage, guarding against the risk of a major top is the top priority. I believe that the overall valuation fluctuation PE of the fully circulated market after the stock futures will remain between 15-20 times.