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In the past trading week (July 15-July 19), A-shares fell first and then rose. The Shanghai Composite Index closed at 2982.31 points, up 0.37% for the week, and the Shenzhen Component Index closed at 8903.23 points, up 0.56% for the week.

Growth style is clearly dominant. On Wednesday, the Beijing Stock Exchange 50 Index rose 7.2% in large volume. Although there were some adjustments on Thursday and Friday, the weekly increase was still 4.61%. Driven by sectors such as driverless cars and semiconductors, the ChiNext Index rose 2.49% and the Science and Technology Innovation 50 Index rose 4.33%.

However, the overall trading volume of A-shares did not increase. According to Wind Information statistics, the total trading volume this week was 3310.72 billion yuan, a decrease of 47.495 billion yuan from the previous trading week.

The Third Plenary Session of the 20th CPC Central Committee was successfully concluded this week. In last week's weekly report, we reminded everyone that it is more important to look forward to the market trend during the meeting week than to look forward to the subsequent market performance. On July 18, Xinhua News Agency released the "Communiqué of the Third Plenary Session of the 20th Central Committee of the Communist Party of China" (hereinafter referred to as the "Communiqué"), which is over 5,000 words and mentions "reform" 53 times. Market participants generally believe that the "Communiqué" has a significant impact on the future investment direction of the A-share market.

Therefore, in this week’s weekly report, we will first look for investment clues based on the areas covered in this “Communiqué”.

1. Interpretation of the Bulletin by major securities firms

Structurally, the "Communiqué" is divided into three parts. The first part mainly affirms the work of the Political Bureau of the Central Committee since the Second Plenary Session of the 20th CPC Central Committee and the reform achievements since the new era. The second part makes systematic arrangements for further comprehensively deepening reform in the next stage. The third part analyzes the current situation and tasks: stabilizing growth, preventing risks, and promoting reform.

In terms of the systematic deployment of further comprehensively deepening reform, compared with the Communiqué of the Third Plenary Session of the 18th CPC Central Committee, this "Communiqué" separately listed "high-quality development" and "building a system and mechanism to support comprehensive innovation", placed the reform of the science and technology system in an important position, and emphasized "to improve the system and mechanism for developing new quality productive forces in accordance with local conditions" and "to comprehensively promote the reform of the system and mechanism of education, science and technology talents, and improve the new national system."

After the release of the "Communiqué", many securities research institutes issued a number of research reports from different angles, including both an overall interpretation of the "Communiqué" and the exploration of relevant investment opportunities from the "Communiqué".

The Macro Policy Group of CITIC Securities Research Department issued a "Study Experience", pointing out that there are nine key points in the "Communiqué" that require special attention:

1) Reaffirming the “two unshakable” principles, it is expected that SOE reform and measures to support the private economy will go hand in hand in the future.

2) Develop new quality productivity according to local conditions, focusing on digital economy, modern infrastructure, and industrial chain security.

3) Education, science and technology, and talent are the fundamental and strategic support for China's modernization, and we attach importance to the reform of the science and technology education and talent system.

4) Balance the fiscal relationship between the central government and local governments and implement the “1+N” policy system for the capital market.

5) Follow the general trend of urban-rural integration and break down the institutional barriers that hinder the flow of various factors.

6) Adhere to the principle of promoting reform through opening up and create a favorable external environment.

7) In the area of ​​people’s livelihood, attention is paid to income distribution, employment promotion, social security system, medical and health system, population service system, etc.

8) Chinese-style modernization is a modernization of harmonious coexistence between man and nature, and the new quality productivity is also green productivity.

9) Short-term economic policies require further implementation of existing policies and focus on preventing and resolving risks.

Minsheng Securities Research pointed out that the announcement of this meeting can provide five important signals for a new round of comprehensive and in-depth reform:

First, the overseas situation is more complicated.

Second, the goal orientation is clearer.

Third, the positioning of market functions has become “optimizing resource allocation efficiency and maximizing benefits”, with more emphasis on “better maintaining market order and making up for market failures”.

Fourth, the technology and security content is higher.

Fifth, the systematic transformation of macroeconomic policies.

Ping An Securities pointed out that, looking through the conference draft, "reform" appeared 53 times, becoming the first hot word, setting the overall tone of positive change for the Third Plenary Session; "Chinese-style modernization" appeared 22 times, and the reform tasks in various fields were carried out around this goal. "Development", as the primary task, appeared 42 times, 5 times more than the Third Plenary Session of the 18th CPC Central Committee. "Economy" and "market" appeared 22 times and 13 times respectively, 12 times and 9 times less than the Third Plenary Session of the 18th CPC Central Committee. It can be seen that the development in the new stage is no longer just an extension of "quantity", but must be transformed into an enhancement of "quality". This is also reflected in the obvious increase in the frequency of related words in "scientific and technological innovation" and "ensuring people's livelihood".

It should be pointed out that the content of the "Communiqué" focuses on the overall layout of reform and provides the general direction of reform in various fields, while the specific reform content and measures need to be implemented in subsequent documents.

2. Outlook for next week’s events

Monday, July 22

1) The margin ratio for short selling will be lowered.

According to the notice issued by the China Securities Regulatory Commission on July 10, the margin ratio for securities lending will be raised from no less than 80% to 100% from July 22, and the margin ratio for private equity investment funds participating in securities lending will be raised from no less than 100% to 120%. Previously, China Securities Finance Corporation had suspended securities lending business since July 11.

2) The loan market benchmark rates (LPR) for 1 year and 5 years or more will be announced. Data from June 20 showed that the 1-year and 5-year interest rates remained unchanged, and the industry still expects that the LPR may be lowered that month.

Zhang Jun, chief economist of Galaxy Securities, believes that the central bank will adopt a "different" interest rate cut. The LPR may be lowered by 10BP to 20BP in July. The main reason is that the LPR reduction since 2023 has been freed from the constraints of MLF. A separate reduction in LPR can guide the downward financing costs of the real economy to promote economic growth.

3) Expansion of Shanghai-Hong Kong Stock Connect ETFs.

According to previous announcements, the Hong Kong Stock Exchange and the Shanghai and Shenzhen Stock Exchanges have respectively announced the latest list of eligible ETFs for the Shanghai-Shenzhen Stock Connect and the Hong Kong-Shenzhen Stock Connect in accordance with the new inclusion criteria. The expansion will take effect on July 22. A total of 6 ETFs were transferred into the southbound Hong Kong-Shenzhen Stock Connect this time. After the expansion, there will be a total of 16 ETFs in the southbound Hong Kong-Shenzhen Stock Connect. A total of 85 ETFs were transferred into the northbound Shanghai-Shenzhen Stock Connect. After the expansion, there will be a total of 225 ETFs in the northbound Shanghai-Shenzhen Stock Connect and the Shenzhen-Shenzhen Stock Connect.

Tuesday, July 23

The 5th World Photonics Conference and the 11th Trusted Cloud Conference will be held in 2024.

South Korea is to release PPI data and the U.S. is to release existing home sales data.

Wednesday, July 24

The Ministry of Finance will issue the 2024 ultra-long-term special treasury bonds (fourth phase) through bidding. This phase of treasury bonds is a 30-year fixed-rate interest-bearing bond with a total competitive bidding value of 55 billion yuan.

Thursday, July 25

The Shanghai Stock Exchange Science and Technology Innovation Board Medical Index and the Shanghai Stock Exchange Science and Technology Innovation Board Artificial Intelligence Index will be released.

The time window for adjusting the retail price limit of refined oil products. According to the agency's calculations, as of the sixth working day on July 19, the average price of the reference crude oil variety was US$83.53 per barrel, with a change rate of -1.15%. The corresponding domestic gasoline and diesel retail prices should be reduced by 50 yuan per ton.

The EU will release the euro area's M1, M2 and M3 economic data for June.

Friday, July 26

The State Council Information Office will hold a press conference on the theme of "Promoting High-quality Development" at 10 a.m. on the same day, and invite Wang Hongzhi, Deputy Director of the State-owned Assets Supervision and Administration Commission of the State Council, to attend to introduce the situation and answer questions from reporters.

The Shanghai Stock Exchange Science and Technology Innovation Board Chip Design Thematic Index and the Shanghai Stock Exchange Science and Technology Innovation Board Semiconductor Materials and Equipment Thematic Index will be released.

The opening ceremony of the Paris Olympics will begin at 7:30 p.m. local time on July 26. Paris will be in daylight saving time at that time, with a time difference of 6 hours from Beijing.

According to the schedule, the Paris Olympics will be held from July 26 to August 11, 2024, followed by the Paris Paralympic Games from August 28 to September 8, 2024.

Market

Wind data shows that the number of restricted shares listed next week (July 22 to July 26) will total 6.181 billion shares, an increase of 233% from this week; based on the closing price on July 19, the market value is approximately 95.013 billion yuan, a huge increase of 280.63% from this week.

Next week, Daquan Energy will have 1.625 billion shares listed and circulated, mainly restricted shares of original shareholders of the initial public offering, with a market value of 30.55 billion yuan after the restrictions are lifted.

The scale of Sunshine Guojian's unblocking is second largest, with 524 million shares to be listed and circulated next week. The unblocked shares are mainly restricted shares of the original shareholders of the initial public offering, with a market value of 10.156 billion yuan.

There will be 3 new stocks issued next week. They are Liju Thermal Energy on July 22, Boshijie on July 23, and Longtu Optical Mask on July 26. There is also 1 convertible bond subscription, Heshun convertible bond will be subscribed on July 22.

One new stock will be listed next week. Keli Equipment will be listed on the Shenzhen Stock Exchange's Growth Enterprise Market on July 22.

Next week, 1.183 trillion yuan of reverse repurchases will mature in the central bank's open market. From Monday to Friday, 129 billion yuan, 676 billion yuan, 270 billion yuan, 49 billion yuan and 59 billion yuan will mature respectively.

III. Review of recent news

1) Microsoft's global "blue screen" outage

Starting at 3:00 am Beijing time on the 19th, Microsoft Windows systems in many parts of the world crashed due to a security software update, resulting in a "blue screen". Multiple industries including aviation, medical care, media, finance, retail, and logistics were affected.

Affected by the "Microsoft Blue Screen" incident, Microsoft fell 0.74% on Friday Eastern Time, and cybersecurity company Crowdstrike fell more than 11%. Technology stocks fell across the board, with Intel falling more than 5% and Tesla falling more than 4%.

In the global shock wave brought by the "blue screen incident", Chinese companies were less affected, and many industries were even not shocked. According to relevant reports, the local software industry has developed rapidly and gradually formed its own system, helping Chinese companies to avoid the impact of the blue screen incident.

2) Shanghai State-owned Assets Supervision and Administration Commission held a symposium on market value management

The Shanghai SASAC held a symposium on market value management on the afternoon of July 16. He Qing, Secretary of the Party Committee and Director of the Shanghai SASAC, presided over the meeting and delivered a speech. He Qing pointed out that it is necessary to fully recognize the special importance of strengthening the market value management of Shanghai state-owned holding listed companies, and to truly unify thoughts and actions with the spirit of the Central Financial Work Conference and the new "Nine National Regulations", implement the strategic deployment of the Shanghai Municipal Party Committee and Municipal Government, and contribute state-owned assets and state-owned enterprises to the high-quality development of the capital market.

3) Two Saudi ETFs fluctuated sharply after listing

On July 16, the first domestic Saudi ETFs, Huatai-PineBridge CSOP Saudi Arabia ETF (520830) and China Southern Fund CSOP Saudi Arabia ETF (159329), were listed and traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange respectively. They surged for two consecutive trading days after listing, with a large premium. However, they both closed down on July 18 and 19.

4) The trend of “trading old for new” commercial housing has spread to Beijing

On July 19, under the guidance and support of Beijing Municipal Housing and Urban-Rural Development Commission and other departments, the Beijing Real Estate Association and the Beijing Real Estate Agency Industry Association officially launched the "old for new" campaign for commercial housing. The first batch of new commercial housing projects participating in the "old for new" initiative totaled 31, involving more than 9,000 housing units.

According to CRIC data, benefiting from a series of major boosting policies, real estate transaction data in the four first-tier cities collectively climbed in June, with the transaction volumes of new and second-hand homes both hitting a new high for the year. Among them, the monthly transaction volume of second-hand homes in Shanghai and Shenzhen set a new high in the past three years.

5) Central Huijin continues to increase its holdings of broad-based ETFs

The second quarterly report of 2024 for public funds has been disclosed. By comparing the top ten holders disclosed in the 2023 annual report, it can be found that Central Huijin increased its holdings of the top broad-based ETFs in the first quarter and increased its holdings again in the second quarter. Taking the E Fund CSI 300 ETF as an example, the holder of "Institution 1" increased its holdings by about 2.883 billion shares in the second quarter. The fund's 2023 annual report shows that Central Huijin held 6.146 billion shares at the end of 2023; the first quarterly report of 2024 shows that the number of shares held by "Institution 1" at the beginning of the year is consistent with the number held by Central Huijin at the end of last year, so it can be determined that "Institution 1" is Central Huijin.

6) Many places continue to vigorously promote driverless cars

On July 17, Haikou Meilan International Airport launched an autonomous public transport shuttle on its open roads. Meilan Airport said that the launch of the autonomous shuttle project is an important achievement in the airport's continuous promotion of smart airport construction, and it will continue to explore the application of autonomous driving technology in more scenarios in the future.

On July 19, SAIC Motor stated on its investor interaction platform that SAIC Robotaxi has achieved demonstration operations in Shanghai, Suzhou and other regions, with a total of nearly 100 vehicles, a cumulative mileage of 4 million kilometers, and more than 200,000 orders.

7) Gold falls after reaching a new high

After more than two months of sideways consolidation, gold started to rise again in July. In the early morning of the 17th Beijing time, the spot price of gold hit a record high, breaking the high of $2,450 set at the end of May. But it fell back on Friday, falling more than 2% that day and falling below the $2,400 mark.

4. This week's market review

Index performance:

The BEI50 index performed best, with a weekly increase of 4.61%. The ChiNext index rose for four consecutive days, and the Shanghai 50 index and the CSI 300 index both recorded nine consecutive rises.

Leading gainers and losers:

Under Wind's secondary industry sectors, semiconductors and semiconductor production equipment had the highest weekly growth, followed by food, beverages and tobacco, and third was diversified finance.

Leading the decline were household and personal goods and business and professional services.

There were more stocks falling than rising, with 1,601 stocks rising, 60 stocks flat, and 3,695 stocks falling this week. The profit effect of the Beijing Stock Exchange was better, with 232 stocks rising and only 17 falling.

Shanghai and Shenzhen weekly gainers list:

Shanghai and Shenzhen's weekly decline list:

The net outflow of northbound funds this week totaled 19.323 billion yuan.

The top six stocks with the largest net northbound capital inflows are as follows:

The top six stocks with the largest net outflow of northbound funds are as follows:

Investment is risky, independent judgment is important

This article is for reference only and does not constitute a basis for buying or selling. You should bear the risks of entering the market at your own risk.

Cover image source: Daily Economic News, photo by Liu Guomei

Reporter Wang Yandan, Editor Peng Shuiping

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