"the bull rush" wall street was caught off guard, japanese and korean stock markets were sold off, and chinese assets were rushed to raise funds
2024-10-01
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in the past four trading days, a-shares have risen by more than 20%, and the sudden "bull return" has made wall street collectively anxious.
"the fomo (fear of missing out) on the chinese stock market is now very strong on wall street. even the stock prices of hermès and lvmh have surged. the expectation of a rebound in china's wealth effect has driven these luxury goods. china's related positions were too low before. now i want to "you should also make up some positions. if you can't buy overseas funds in a-shares, you will buy more chinese internet companies or consumer goods companies in the offshore market." on september 29, a mid-cap stock fund manager of an american mutual fund told china business news. the reporter said.
wall street is dominated by fomo
last week, china business news reported that before this wave of gains, overseas hedge funds’ allocation to the chinese stock market was only 6.8%, a five-year low and about 1 percentage point lower than the high point between april and may this year. , there is still a lot of room for accumulation. nowadays, the fomo sentiment caused by extremely low positions is more likely to cause overseas funds to increase their positions significantly, especially hedge funds. long-term funds that generally move more slowly are also beginning to be forced to increase their positions, otherwise they are likely to underperform performance benchmarks. fund flows on the a-share trading desks of some overseas investment banks reached a record high last wednesday.
on september 30, a-shares showed a historic surge, with the shanghai stock exchange index closing up 3,336 points, an increase of more than 8% that day. there were 5,336 stocks rising in the two cities, including 3,459 stocks that rose more than 9% and 5,310 stocks that rose more than 3%, setting the highest single-day trading volume in the history of a-shares. the turnover of shanghai and shenzhen exceeded 2.5 trillion yuan.
compared with european, american and asia-pacific stock markets, a-share valuations are at historically low levels. wu zhaoyin, director of macro strategy at avic trust, told reporters that before the recent surge in the stock market, the static price-to-earnings ratio of companies listed on the shanghai and shenzhen stock exchanges was 13.3 times, the dynamic price-to-earnings ratio was 13.2 times, and the price-to-book ratio was 1.2 times, all significantly lower than the average of the past ten years. and median, at historic lows. compared with the low point of the stock market at the end of 2018, the current price-to-earnings ratio and price-to-book ratio are even lower than the low point of the stock market at the end of 2018. compared with the end of 2018, the price-to-book ratio has dropped by approximately 13%. from a scale perspective, the decline in valuations of small and medium-capitalization stocks has been more pronounced. the price-to-earnings and price-to-book ratios of the csi 500 and 1000 indexes, which are mainly small and medium-capitalization stocks, have fallen sharply below the historical lows of the past decade; the csi 300 index, which is mainly large-capitalization stocks, has a price-to-earnings ratio and a price-to-book ratio that are close to those of the past ten years. historical lows.
after a-shares experienced two or three consecutive years of decline, dividend yields have continued to increase. the new "national nine regulations" further encourage listed companies to pay dividends and buy back. according to semi-annual report statistics, about 670 listed companies paid interim dividends in the first half of the year, with an amount of approximately 530 billion yuan, far exceeding 200 billion yuan in the same period last year; the deadline for disclosure of semi-annual reports as of august 31, calculations show that the weighted dividend rate of the csi 300 index is 3.3%, the weighted dividend rate of the csi 500 index is 2.2%, and the dividend rate of the csi 1000 index is 1.7%. "dividend stocks" with large market capitalization and high dividends have higher dividend yields. the dividend yield of sse 50 is 3.9%. the dividend yield of the shanghai stock exchange dividend index is even higher, reaching 6.7%. the dividend yields of many stocks are not weaker than those of bonds, financial management and other assets.
a-share diversion, asia-pacific stock market sell-off
meanwhile, other markets in asia-pacific suffered sharp sell-offs. tensions in the middle east have escalated significantly, with an attack on hezbollah's leader in lebanon and further attacks on proxies in yemen leading to worries about iran's response.
on september 30, the japanese stock market (nikkei 225 index), which has been favored by overseas investors in the past two years, plunged 4.82%. japan is still digesting the impact of the new liberal democratic party leader. the appreciation of the yen has an overall negative effect on the japanese stock market. still exists. japanese stocks saw weakness in the auto and semiconductor sectors, while bank stocks recovered on the back of rising interest rates and a stronger yen.
on the same day, south korea's kospi index also fell by 2.11%, samsung fell by more than 3%; tsmc fell by more than 4%, but chinese semiconductor stocks rose by more than 10%.
the indian stock market, which recently reached new highs, also experienced a correction on the 30th, with the bombay 30 index falling by 1.26%.
the decline in asia-pacific stock markets has its own reasons, and the diversion effect of a-shares is one of the reasons. a trader at a u.s. investment bank told reporters: "south korea's kospi index fell rapidly after rising at the opening today, mainly because foreign investors sold sharply, and local institutions that were buyers in early trading also turned to intraday selling, possibly because south korea the market is used as a source of funds to buy hong kong stocks and other china-related stocks. the korean stock market will be closed tomorrow (october 1) for 'armed forces day.'
according to the reporter's understanding, the korean stock market was mainly affected by profit-taking and sector rotation. investors seemed to have begun to sell sectors such as automobiles and finance that mainly benefited from the "value enhancement plan." goldman sachs data showed that foreign investors were the main net sellers in both sectors, selling $86 million and $53 million respectively. earlier this year, inspired by the japanese stock market's record highs, south korea launched the "corporate value-up program" and continues to announce more details in an attempt to improve the governance and value management of listed companies to enhance the korean stock market is attractive, and the korean stock market once rose.
the high valuation of the indian stock market has always been a "knot" for international investors. the overall price-to-earnings ratio has exceeded 25 times. many international investment bank analysts have previously mentioned to reporters that generally long-term institutions tend to buy when the price-to-earnings ratio is 17 or 18 times. however, when it exceeds 22 times, it will become relatively cautious.
but overall, institutions' long-term view on india remains positive. gary dugan, ceo of the global cio office, told reporters that the indian stock market may be currently overvalued, but the country continues to lay the foundation for its economic development, and many new positive factors are indeed "made in india" that promotes entrepreneurship.
in his view, china's stock market is still expected to continue to rise, and it will be difficult for investors to buck the trend. in the future, expectations of interest rate cuts by the federal reserve may still benefit asian markets. given that the consumer confidence index is lower than expected, this week's u.s. non-farm payrolls report is particularly important. the weak labor market will reinforce the minority view that the fed may cut interest rates by another 50bp at its november meeting.
october is the fiscal policy window period
today, how long china's bull market can last is the biggest question in the minds of global investors. after the national day holiday, the focus will turn to fiscal policy.
according to the reporter's understanding, major domestic and foreign investment banks' expectations for fiscal stimulus are that additional government bond issuance is expected to be approved in the fourth quarter, and fiscal expenditures may be as high as 3 trillion yuan.
shin hui, chief economist at goldman sachs china, said that in terms of policy, the meetings and press conferences that may be held by the state council, the ministry of finance, the national development and reform commission, and the ministry of housing and urban-rural development are worthy of attention. the bi-monthly meetings of the national people's congress standing committee (probably in late october or early november) are also important, because changes in the official deficit target require approval by the national people's congress standing committee; in terms of data, high-frequency data such as government bond issuance, and more forward-looking data monthly data (such as pmi) will provide key signals on policy implementation and policy impact.
“we met with fixed income and equity clients in london last week. the itinerary overlapped with the easing measures announced by the people’s bank of china on tuesday (september 24) and the september politburo meeting on thursday (september 26). on monday, our trip began with client discussions remaining pessimistic and bearish on tuesday and wednesday as investors digested the central bank's newly announced easing measures, but most remained skeptical as clients viewed fiscal policy as a key to steady growth in the chinese economy. the key. on thursday and friday, the politburo meeting sent a clear dovish signal, and after media reports suggested an additional fiscal expansion of 2 trillion to 3 trillion yuan, some customers began to believe that this round of easing may be a key turning point. the focus quickly turned to policy implementation and how to track policy effects," shining said.
wang ju, head of foreign exchange and interest rate strategy for bnp paribas greater china, also mentioned, “the next key window will be the national people’s congress standing committee meeting at the end of october, when an additional treasury bond issuance of 1 trillion to 2 trillion yuan may be approved. the central bank in addition to the 50bp rrr cut mentioned, there is room for further rrr cuts of 25~50bp during the year, which may be intended to match this; as the national development and reform commission launches a series of 'incremental policies' on september 19, additional government bonds may serve as a source of funds. . funds raised from treasury bonds may also be used to recapitalize major commercial banks.”
(this article comes from china business news)
