Donghai Securities: Weak Pattern Is Hard To Change &Nbsp; Market Shock Bottom

Last week, the market continued to shake down, the intraday close to the 2500 point integer pass, the heavyweight trend was weak, Shanghai Composite Index and Shanghai and Shenzhen 300 were suppressed by the 5 day moving average, a week down 3.85%, 3.72%, Shenzhen index was slightly stronger, and fell 2.94% a week.

The weakness of the market is obvious. The Shanghai Composite Index has a turnover of only 61 billion 721 million yuan a week, which is 19.28% lower than the previous week. It is the lowest since January 14, 2009, indicating that the market is light and dynamic.

In terms of market style, small cap stocks, high market rate stocks, high priced stocks and blue chip stocks performed well, while the low market price and low price earnings ratio shares showed the weakest performance, reflecting the market's preference for blue chip stocks and growth stocks.

For the recent market, we believe that considering the market entry policy observation period, short-term A shares vulnerable pattern is difficult to change, the market is still in the process of bottom up.

On the one hand, the introduction and implementation of real estate related regulatory policies need a process, and the effect needs further observation. On the other hand, the uncertainty brought by the European sovereign debt crisis, coupled with the adjustment of the domestic economic structure, and Premier Wen's position on "preparing for the two possible bottom of the world economy", has made the recent market's concern about the "two bottom finding" of the economy increasing. At the same time, it also caused the market to expect the relaxation of the policy tightening.

In the relatively quiet period of this policy, market sentiment will be in the process of slow repair, and the market sentiment is still quite fragile in the process. Therefore, market interpretation of policy signals will affect market psychology.

In the light of the current situation, the relevant policies of real estate regulation continued to be introduced this week, making the policy bad news of the real estate sector gradually exhausted, and the market has gradually stabilized signs. However, whether the policy can achieve the effect still needs further observation. At present, the high housing prices cause the market to introduce more severe policy concerns for the future, which also suppresses the market's rebound height. In addition, the sharp fall in the PMI index shows that economic growth has begun to slow down. Under the background of tightening policy, the optimistic earnings forecast will be gradually lowered in the future, which will also pressure the rebound of the market.

It should be pointed out that although the short-term market turnover is slack, no matter from the behavior of industrial investors or two tier market investors, the market has a possibility of gradually bottoming out. On the one hand, the number of new accounts has increased continuously in recent weeks, which has reached more than 300 thousand households. According to relevant media reports, billions of funds of central enterprises have entered the stock market tentatively. On the other hand, since May, the cumulative announcement of major shareholders and senior executives has exceeded the market value of holdings, and this net increase phenomenon appeared last 19 months ago, that is, October 2008.

In terms of investment strategy, there are three main lines of investment, one is to focus on the consumer goods sector that meets the "structural adjustment" policy direction and a steady growth, such as food and beverage, pharmaceutical and biological, catering and tourism, household appliances and retail. Taking into account the increase in the number of participants in World Expo, Shanghai, it is recommended to pay attention to the retail and hotel stocks in the world's concept stocks; two, it is concerned about the strategic emerging industry stocks that will grow in the future; three, we should pay attention to the western regional concept stocks, and 2010 is the last year of the 11th Five-Year plan, and also coincide with the 10th anniversary development of the western region. The western region will be the focus of the future "structural adjustment" and will play an important role in the "12th Five-Year" plan.