CICC: &Nbsp, A Share Market Will Continue To Seek Bottom.

Market review:

The small cap stocks are unwilling to be lonely and the hot spots are everywhere. The heavyweights are indifferent and restricting the rise: the Shanghai and Shenzhen two cities maintained a weak trend in early trading, and then the securities companies launched the upside, but they played a limited role in raising the stock index. In the afternoon, gold stocks once collapsed, triggering the stock index to further explore the intraday low, and after the strong rise of the business sector, real estate and other sectors, the Shanghai Stock Index reluctantly closed the red market.

The following market will be judged:

US stocks will maintain a weak position.

While the European debt problem has raised investor concerns, the employment figures do not support the US stocks in a fundamental way.

On the contrary, the slowdown in the growth rate of the private sector's employment has been exacerbated by the already optimistic mood of the market. When the market expected to fail, the US stock market fell sharply, indicating that the market sentiment is very fragile at present.

We believe that the fundamentals of the US economy have not yet been affected by the European debt crisis, and the trend of stabilizing and resuscitation in the employment market has not changed, but the slowdown in the second half of the economic growth will be a fact.

Investors will adjust their expectations of the US economic recovery and even corporate profits. Before that, it is hard for us to see the impetus for US stocks to continue to rebound in the short term. The market will remain weak in the risk appetite downturn.

"Internal and external troubles", the A share market will continue to search the bottom.

Despite continued downward trend, the market valuation continued to decline and did not rule out a short-term technical rebound in the market. However, in view of China's economic and corporate earnings growth under the influence of regulation and control, it has not yet seen stabilizing signals from the local high economic boom. The economy still needs to digest the negative effects brought by the huge credit that was released in the early stage to stimulate the economy, including the real estate market and price pressures. The space and possibility of policy pformation are not large. The introduction of the standard of the two suites at the weekend also shows that the government has not relaxed the regulation of real estate, and the European debt crisis has continued to spread.

Under internal and external troubles, we are relatively cautious about the market trend.

Although the market's expectations for the economic downturn have been reflected, the real downturn in the economy and earnings will still have a negative impact on the market, as the PMI data released on Tuesday last year have put pressure on the market.

In addition, China's A share market will be closed early next week, and the short-term uncertainty of the peripheral market may make the market more cautious this week, and the volume of pactions may shrink further.

Investors are advised to keep low positions.

The conditions for a comprehensive shift of policy are not yet available.

From a historical point of view, 2004-2005 years of regulation cycle did not see a clear turn in policy, and various economic indicators dropped steadily. At that time, there was no obvious relaxation or overweight trend on behalf of monetary policy interest rate, fiscal stimulus intensity and so on.

After the digestion of regulatory policies, the economy began to show an acceleration trend in the middle of 2005. This is the fundamental factor that brings the market out of the trough.

In the 2007-2008 years of regulation and control cycle, the dual impact of internal and external demand is the fundamental reason for the policy shift. This policy shift took place only when the indicators of export, industrial added value and prices showed a downward trend.

At present, most of the economic indicators are still relatively strong. Some indicators show a downward trend, including some leading indicators such as money and credit growth, PMI and investment growth, industrial added value and so on, and the downward trend is relatively stable. There is no "sudden drop" similar to the second half of 2008, and exports, consumption, prices and other indicators are still high.

This trend makes us believe that the current environment does not support the credit crunch and the comprehensive turn of the real estate policy.

Moreover, even if there is a "policy shift" which is similar to the "substantial increase in infrastructure construction and large monetary easing" at the end of 2008, it may be difficult for the market to have a similar reaction.

In the long run, the focus of future policy will focus on supporting economic pformation.