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structural changes are coming too fast!

in the morning trading today, a number of popular stocks collectively crashed. rifa precision machinery, kesen technology, shenzhen huaqiang, tianmao group, dazhong transportation, weishi electronics, laobaixing, jinjiang online, etc. all hit the limit. small-cap brokerage stocks that have performed well recently also fell collectively. guohai securities and tianfeng securities both fell by more than 6% at one point. as of 10:15 am, the number of a-share stocks that hit the limit has reached 20.

affected by the unfavorable external news, the wuxi group also fell sharply. hong kong stocks wuxi apptec fell more than 10%, wuxi biologics fell 7%, and wuxi helian fell more than 4%. a-shares wuxi apptec fell more than 6%, and bgi fell more than 3%.

it is worth noting that strong stocks often fall back, which is a common phenomenon at the bottom of the stage. from the perspective of valuation, a shares are indeed undervalued at present. however, due to the existence of liquidity problems, the short-term pessimism in the market shows signs of spreading. so, where is the turning point of the market? citic securities believes that the bottom characteristics are emerging.

flash crash

this morning, it seems to be an important observation point in the a-share market. hot stocks have experienced a collective flash crash. rifa precision machinery, kesen technology, shenzhen huaqiang, tianmao group, dazhong transportation, weishi electronics, laobaixing, jinjiang online, etc. all hit the limit down. all of these stocks are at high levels, and such a fierce pace of shipments basically means that the strategy of capital grouping has come to an end. behind the shipment of these stocks at the limit down, it may also be the capital's concerns about liquidity.

while the hot stocks are retreating, bank stocks are rising again. the people's bank of china's open market reverse repurchase today net injection of 184.8 billion yuan, the largest scale in two weeks. however, the interbank overnight pledged repurchase rate still rose to a four-week high in the early trading, and was inverted with the 7-day variety. the 1-month interbank deposit rate also rose to a high of more than two months. there is a possibility of a reserve requirement ratio cut or interest rate adjustment in the future.

it is also worth noting that some stocks have encountered negative news, such as chuangxing resources, which has hit the daily limit for two consecutive days, and nord shares have also fallen sharply again. although they have already met expectations, the stocks of wuxi group are still affected by external shocks. wuxi apptec, a hong kong-listed company, once fell by more than 10%, wuxi biologics, once fell by 7%, and wuxi helian, once fell by more than 4%. wuxi apptec, a chinese-listed company, fell by more than 6%, and bgi fell by more than 3%.

the u.s. house of representatives announced on september 9 local time that it passed bill hr8333, also known as the biosecure act, by a vote of 306 to 81.

wuxi biologics announced on the hong kong stock exchange that the company has noticed that the u.s. house of representatives reviewed and passed the draft bill on september 9, 2024. the draft includes defining the company as a "biotechnology company of concern" and a "grandfather clause" applicable before restrictions are implemented in 2032 according to the proposed draft legislation. since the draft bill must be approved by the u.s. senate before it becomes law, its content is still subject to further review and revision. the legislative path of the senate is currently unclear. wuxi biologics reiterates that it is not engaged in human genomics business, nor does it collect human genomic data in any business worldwide, and firmly believes that it will not pose a national security risk to any country. the company will continue to pay close attention to the legislative process and communicate with relevant parties.

it is reported that the subsequent legislative process includes a separate legislative version: it does not mean that the legislation is successful at present, and it needs to be negotiated with the senate for bill amendment and voting, and the two houses will submit it to the president, etc.; the ndaa (package legislation) version: there will be a senate ndaa voting stage in the future. in fact, these are already within the market's expectations.

when will the turning point come?

in fact, the current valuation of the a-share market has reached a historical low, especially the price-to-book ratio, but the market may be worried about the revaluation of net assets behind the lack of liquidity, and the above structural changes are a reflection of this worry. so, what node is the market currently at? when will it usher in a turnaround?

chen guo of citic securities believes that the third quarter is expected to be the bottom of earnings. at the end of the third quarter, the market gradually took into account the expectation of improved year-on-year earnings data in the fourth quarter. the pessimistic expectations of the short-term market reaction have exceeded those in early february. however, important bottom characteristics have appeared in recent transactions. first, the turnover rate measured by the circulating market value has been close to or equivalent to several major bottom levels in history; second, the banking and other sectors that performed relatively strongly in the previous period have obviously made up for the decline in the past two weeks, and the decline of strong stocks is often a common signal at the end of the market adjustment. comprehensively considering earnings, valuations, trading characteristics and other aspects, the market has met the bottom conditions.

in addition, the market undoubtedly has certain expectations for policies. recently, local governments have successively made efforts, which may be a signal of policy efforts. so, what other policies are on the way?

citic securities believes that in terms of real estate policy, it is expected that there will be room for the subsequent downward trend in the interest rates of newly issued mortgage loans, the repricing of existing mortgages, and the transfer of mortgages in the interest rate marketization environment. in terms of fiscal policy, the speed of public fiscal expenditure, the issuance progress of special bonds, and the use of special government bonds have all shown signs of marginal acceleration. in terms of monetary policy, the federal reserve's interest rate cut cycle is about to begin, which may help the central bank to further open up room for interest rate cuts.

citic securities research report believes that judging from the financial market situation in august, the prevention of idleness and the tapping of potential are being promoted together. it is expected that the net rmb loan issuance in that month may continue to increase less than the same period last year, and the growth rate of social financing may remain at 8.1%-8.2%. looking ahead, the current fiscal policy and monetary policy are in a stage of dual support. against the background of further expectations of the fed's interest rate cut, there is still room for the quantitative and interest rate monetary policies to be strengthened in the next stage.