How To View The A Share Market Down Sharply

This year, at the macro level

As the Shanghai Composite Index closed at 2470.52 points in September 6th, it renewed its closing new low since July 19th last year.

Investors can not help asking why the A share market fell sharply.

External market pressure

The European debt crisis and the downgrade of the US debt rating have led to major institutional downturns in global economic growth, causing investors to panic.

The near future,

Faced with the concussion of the A share market, many investors find it hard to accept.

In fact, in today's increasingly globalized world, important changes in the international capital market will also be reflected in the A share market.

In particular, this year, affected by factors such as the European debt crisis and the downgrading of the US debt rating, major institutions have lowered their expectations of global economic growth, causing panic among investors and plunging global stock markets, especially in the European stock market.

As of September 7th, Greece's ASE composite index fell 20.4%, the German DAX30 index fell 18.2%, the Italy financial times MIB index fell 16.1%, and the French CAC40 index fell 13.2%.

For the relatively independent A share market, the sharp drop of international market brings more psychological pressure.

The collapse of the A share market also has its own reasons.

If the global economic growth is expected to decrease, the export will be sluggish; the effect of macro-control and real estate regulation is not yet clear; the de stocking has not yet been completed, especially in real estate stocks.

After June this year, analysts lowered their performance expectations, raising interest rates and raising the deposit reserve ratio to tighten market funds; inflation expectations led investors to shift to other markets such as commodities, gold and artworks.

Since May, paper gold and physical gold have changed from international gold prices, rising from 320 yuan / gram in early May to 390 yuan / gram in September 5th, or 22%.

The first gold fund, the noyen global gold fund, rose 17.81% in the same period.

Paper gold can be traded online for 24 hours on a continuous basis, and the charges are low and there is no physical storage problem. Gold investment products are pursued by some off site funds, which is a diversion for stock market funds.

At the same time, bank financing products are also continuously diverting funds outside the field.

Data show that in from August 25th to 31st, a total of 9 banks issued 215 financial products, an increase of 7 compared to the previous week.

Overall stable development of economy

The shock of the A share market is a normal reaction to the turbulence in the global financial market. It is the spread of global panic. The fundamentals of China's economy have not changed significantly.

At present, for A share investors, on the one hand, we should be vigilant against the psychological impact of the amplification effect of the debt crisis in Europe and America. On the other hand, we should also fully realize that the internal factors determining the direction of A share operation are still healthy.

The trend of a country's stock market depends largely on the fundamentals of its own economic entity.

Although China's economy is facing slower growth and inflationary pressures, the national economy is still running in a stable and relatively fast growth range, and continues to develop towards the expected direction of macroeconomic regulation and control.

At the same time, China's urbanization process is limited by the impact of the debt crisis in Europe and the United States. This endogenous drive will still support the continued expansion of the economic scale, which is also the core driving force of domestic demand pull and investment pull.

In the first half of this year, gross domestic product increased by 9.6% over the same period last year, and it should be maintained around 8% in the next two years.

With the announcement of economic data in August, CPI's year-on-year rise has dropped for the first time this year.

It can be expected that the fourth quarter inflation pressure will be eased, and monetary policy is expected to win room for maneuver.

As the cornerstone of the securities market, listed companies are of vital importance to the healthy development of the capital market.

Up to August 31st, the semi annual report of the listed companies in 2011 revealed that 2209 listed companies in Shanghai and Shenzhen two cities had achieved a total operating income of 9 trillion and 330 billion 766 million yuan, representing a total net profit of 965 billion 359 million yuan.

The comparable operating data and the net profit of the listed companies increased by 26.2% and 22.44% respectively.

Although the growth rate of the first half of last year has slowed down compared with last year, the net profit has increased by nearly 70% compared with the same period last year.

Overall, the overall performance of listed companies is still showing a steady growth trend.

As of September 5th, a total of 806 listed companies in two cities have disclosed three quarter earnings forecasts, 506 of which have achieved year-on-year growth, accounting for 62.78%.

Among them, 282 expected the first three quarters of the year-on-year growth rate of more than 50%, accounting for over 30%; 109 said net profit growth of more than 100%, accounting for 13.52%.

From the industry point of view, as a heavy burden of expanding domestic demand, the large consumer sector has not failed to meet expectations, and the performance of listed companies such as medicine, biology, textiles and clothing, food and beverage, and commercial trade has increased significantly.

Continue to fall, limited space

As of September 5th closing, the CSI 300 index had a static P / E ratio of 13 times.

In November 2008, the lowest level of static P / E was 12.15 times.

The two level market valuation center of A shares is in a reasonable lower limit

As the A share market continued to fall, low price stocks expanded.

As of September 6th, only 200 yuan or more of the shares were in Guizhou Moutai, while the low price shares below 5 yuan quickly expanded to 130, of which 2 yuan had reached 14.

Meanwhile, 24 stocks listed earlier this year also hit a new low in history, including 10 large cap stocks with the code "601".

Data show that as of September 6th, 91 of the 215 new shares listed on the IPO this year were below the issue price, accounting for 42.33%.

At the same time, "breaking clean" stocks are emerging one after another.

As of September 6th, 19 stocks fell below the net asset value per share.

Among these "broken" stocks, there are a large number of iron and steel stocks. Among them, the latest market rate of Anyang iron and steel is only 0.70 times, which is equivalent to thirty percent off sale of net assets.

Insiders said that the increase in low price stocks was related to the high pfer of early listed companies.

In addition, the share price of large cap stocks listed last year is low, and the A share market has been affected by the debt crisis in Europe and the United States. It has been in a downward channel since July, making the overall valuation level of the market decline.

According to China Securities Index Co data, as of September 5th closing, the CSI 300 index's static P / E was 13 times.

In November 2008, the lowest level of static P / E was 12.15 times.

Compared with the previous Shanghai Composite Index 998 points and 1664 points two time points, this valuation level is also the lower limit.

It can be said that this data provides a good margin of security for the stock market, and A shares continue to fall with limited space.

It is worth noting that when the market continued to decline, the surge in industrial capital holdings has begun to show signs. Some of the shareholders of listed companies and their partners or executives have begun to increase their holdings.

Statistics show that since August, 74 A shares have issued 174 announcements of shareholder holdings, with a cumulative announcement of 1 billion 625 million yuan.

The largest shareholder increased by 827 million yuan, accounting for 50.87% of the total shareholder holdings.

At the same time, QFII (qualified foreign institutional investors) also began to be active.

After the announcement of the cypress August 31st announcement by Edmund Piotr Hill Bank of France, Liuhua shares were announced in September 1st by the Bank of France, Edmund Piotr Hill, which has recently increased its holdings to 5% of the placards.

The increase of industrial capital reflects the confidence of major shareholders and executives in the future development of listed companies.

For ordinary investors, it is a rational choice to find and layout high-quality growth stocks determined by performance growth.

For the management, we should properly handle relevant problems and make good use of the current major opportunities to better accomplish the historical tasks of economic pformation and growth of China's financial and securities system.

We believe that when the market participants can maintain confidence and rationality, the A share market will be able to achieve great success.