A Shares Bailout: Bottom Line Is Not Easy.

"Policy market" has always been considered as an important symbol of A shares.

The increase in October this year is the third time in the history of Huijin Company. Although the real gold and silver are not many, the decision of the "national team" is still a big rebound in the A share market.

However, from the perspective of historical experience, the bailout policy often has to be more effective in order to play a more effective role, and the bottom of policy is often the first bottom. The bottom is only second copies.

Therefore, bottoming out is not doomed to accomplish overnight.

Market analysis / market analysis

Huijin holdings is the bottom line, but also the bailout.

This is definitely a "premeditated" Bailout: in October 10th, the A shares just closed, Xinhua News Agency announced that Huijin holdings on the same day, the next day, the stock market will not significantly increase.

Reporters noted that Huijin holdings on the one hand, from the valuation of bank stocks is indeed too low, on the other hand, A shares had to save.

Huijin bottom low

From the point of view of value investment, Huijin's holdings of bank shares at this time is a wise decision, because the valuation of bank stocks has already reached a new low.

At present, the valuation of the banking sector is the lowest in the whole industry, and only 12 of the 20 stocks with the lowest P / E ratio are bank shares.

Wind data show that in September 30, 2011, the overall P / E ratio of bank shares was 7.07 times, the lowest in history.

This figure is lower than the lowest value of the 1664 points in the stock market at the bottom of the Shanghai stock market (9.51 times October 31, 2008) and the lowest value of the 998 point area (15.41) (July 8, 2005).

And Huijin's first two holdings were in September 19, 2008 and October 9, 2009, respectively, and the corresponding overall price earnings ratio of bank shares was 11.27 times and 15.15 times.

It can be seen that the valuation level of bank stocks is more attractive now.

It should be noted that Huijin's efforts to increase its holdings are not strong enough.

On the one hand, the announcement of four major industries, agriculture, industry and construction shows that Huijin increased its holdings of industrial and commercial banks (4.13, -0.01, -0.24%) (601398, closing price 4.14 yuan), 14584024 shares, increased Agricultural Bank (2.58, -0.02, -0.77%) (601288, closing price 2.60 yuan) 39068339 shares, increased bank of China (2.97, -0.03, -1.00%) (micro-blog) (601988, closing price was 601988 yuan), and increased bank of construction (-0.02, -0.43%) (the closing price of RMB), the shares were calculated according to the average price of the above 4.13 shares in October 10th.

Less than two hundred million yuan of holdings is nothing to money rich Huijin.

In the last increase, in October 9, 2009, Huijin bought three, 30 million 73 thousand and 500, 16 million 139 thousand and 200 and 5 million 126 thousand shares respectively, corresponding to the market value of 147 million yuan, 64 million 150 thousand yuan and 29 million 400 thousand yuan at that time, which is higher than the total amount of money sold now.

Therefore, this Huijin increase is not simply a cheap bank stock, but more or more.

Historical review

The history of bailout and multi pronged approach

A shares can never get rid of the brand of policy market.

Whenever the stock market falls for a long time, the regulators will launch when the market rescues the market.

From the perspective of historical data, the bailout policy is often multi pronged, and from the current situation, there will be further rescue actions in the future.

Huijin's three attempt to save the market

Huijin holdings is considered to be an important weapon for the "national team".

Statistics show that Huijin is known as "Central Huijin Investment Co". It is a wholly state-owned company authorized by the State Council to authorize the state to exercise the rights of investors and fulfill the obligations of investors according to law. The financial institutions directly holding shares include six large commercial banks, two securities companies, two comprehensive institutions and a reinsurance company.

In addition to its four major industries, agriculture, construction and construction, Everbright Bank (3, -0.01, -0.33%) (micro-blog) (601818, closing price 3.01 yuan) and the new life insurance company ready to be listed are also Huijin.

In addition, Huijin also holds a stake in well-known securities companies such as Shenyin and Guotai Junan (micro-blog).

"Daily economic news" reporter noted that from the perspective of history, Huijin has so far made three attempts to save the market.

Huijin's first increase is the end of the bear market.

In the evening of September 18, 2008, Huijin announced that it would increase its three major industries, namely, construction, construction and construction.

The next day, stock index soared 9.45%, almost all stock prices went up, and stock index rose 7.77% on the third day.

Statistics show that after Huijin holdings news was released, stock index rose 21% in 5 days.

However, when the stock index rebounded to above 2300 points, the fall again appeared, and finally fell below the lowest point of Huijin's holdings day, and dropped to 1664 points.

Huijin's second increase was October 9, 2009, when the Shanghai stock index rose 4.76%.

In the evening of October 11th, the three major companies of industry, construction and Construction announced at the same time that Huijin had recently increased 30 million 73 thousand and 500 shares, 16 million 139 thousand and 200 shares and 5 million 126 thousand shares, and promised that it would continue to increase three major shares in the next 12 months.

As a result, the stock market rebounded, and the stock index was close to the previous high of 3478 points, or 17%.

But in November 24th, the stock market again chose to fall.

At present, it is the third increase in Huijin.

Shortly after the closing of October 10, 2011, Xinhua news agency released Huijin's holdings, and the four major industry development announcements were confirmed at night.

It is worth noting that, compared to the previous two holdings of suspected news leakage phenomenon - for example, in September 18, 2008, the stock market single needle bottom, the stock market has risen in October 9, 2009 - Huijin third holdings do not seem to have too many "prophets", Shanghai index in the same day 14:30 after the emergence of a fall, only a few minutes before the end of the rally barely formed a small rebound, and the four lines despite the adverse trend, but the gains are very small.

Huijin increased its holdings the next day, the Shanghai index opened 52 points higher, but then continued to decline and once turned green.

However, on the third day, the stock index rose sharply after hitting the bottom of the 2319 points in the market and set the biggest increase in 3.04% per year in the year.

At present, Shanghai's K-day line has been on the 5, 10 and 20 day moving average.

A number of policies are good.

It is worth noting that Huijin's holdings are often accompanied by other bailout policies.

On the day of the first news of Huijin's release, the management has actually made three "save the market gold medal": Huijin Company will independently purchase three lines of labor, construction and construction in the two level market; the stamp duty on securities pactions will be levied only on the date of the stamp duty, and the SASAC supports the central enterprises to increase or repurchase the shares of the listed companies.

Huijin's second holdings were also good and good.

In September 29, 2009, the media reported that Shang Fulin, chairman of the securities and Futures Commission, said at the founding meeting of the new audit committee of mergers and acquisitions of listed companies, to effectively play the role of capital market and support the promotion of conditional M & A is an important part of the capital market in serving the national macroeconomic policy objectives.

As we all know, restructuring is a major theme in the A share market. It is obvious that encouraging mergers and acquisitions is a good performance of the stock market.

Also on the same day, media reports pointed out that at the regular meeting of the third quarter of the 2009 monetary policy committee of the people's Bank of China, the responsible person said that the fourth quarter should continue to implement moderately loose monetary policy, which in turn will be favorable to the market funds.

In October 13th, the media reported that the China Securities Regulatory Commission (CSRC) intends to amend some provisions of the securities registration and settlement management measures, expand the scope of investors to open securities accounts, and allow investors such as partnerships and other forms of organization to open accounts in accordance with the law.

Since then, more and more partnership enterprises have appeared in the IPO inquiry, the issuance stage and the tiger list.

The rescue market is different.

"Daily economic news" reporter noted that Huijin and other good policies together to rescue the market is often at a last resort, this is related to the specific macroeconomic background at that time.

Is there any similarity between the current market environment and the environment before the bailout?

Huijin's first bailout in September 2008 was a typical effort to turn the tide.

Since the end of 2007, A shares have fallen to the top of the global financial turmoil.

The Shanghai stock index has fallen by nearly 70%.

From the economic background, the global financial turmoil has not stopped. The whole world must join hands to save the market. This is the background of the three gold medals.

From the stock market background, the stock index has fallen below 3000 points, and the support level under the 3000 points is the platform area of the bull market from May 2006 to July, when the highest point was 1757, while the lowest point in September 18, 2008 was 1802.

From the background of public opinion, at that time, both financial capital, industrial capital and ordinary investors wanted the management to rescue the market, and many small and medium-sized enterprises and export oriented enterprises went bankrupt. The rescue market was not only related to market public opinion, but also vital to the economic lifeline.

The second increase in Huijin in September 2009 reflects the management's concern about the post bull market era.

From the economic background, the global financial crisis had just been alleviated under the rescue measures of common liquidity released by all countries in the world. Therefore, it is necessary to continue the previous policy and avoid the two dip in the economy.

From the background of the stock market, in 2008, just like the past year in the big bear market, the market panic remained unchanged, from 1664 points to 3478 points, 10 months time doubled, after 3478 points peaked, the stock market showed a sharp fall, and 20 trading days, the Shanghai stock index fell 23%. If the policy is not ready, the index will form a new round of decline.

From the background of public opinion, at that time, the market was extremely disturbed by the withdrawal of policies and the two dip. That is why the central bank meeting stressed the need to continue easing monetary policy.

And will the third bailout in October 10, 2011 be a sign of tightening policy?

From the economic background, the European debt crisis, RMB appreciation and domestic inflation remain high. Many listed companies have been forced to downgrade their performance. In Wenzhou and other places, it is the boss who runs the usury.

From the stock market background, the continued weakness has seriously affected the financing of the market, and eight of the technology has been forced to suspend the listing.

Since April this year, the Shanghai stock index has not fallen too much, but the fall time has been longer. At the end of September, the index approached the 2319 important low point of the previous period, and the rescue market has reached a critical moment.

From a technical point of view, at this time, the stock market does not have much support, and then the 2000 point will face the test.

Judging from the background of public opinion, from the end of June, the market began to expect to relax the policy because of the uncertain economic prospect, but the relaxation did not appear. The stock market continued to decline, and the resentment against the IPO's "just focusing on money and reckless" was also increasing. It is also necessary to rescue the market at this time.

More bailout policy or deadline

In fact, Huijin's third increase is not unexpected. It has already been promoted by other policies. However, due to its limited influence, market attention is not high.

According to media reports in May this year, the social security fund added 10 billion yuan into the market, of which 6 billion yuan was the amount of equity investment. At the end of September, there were media reports that more than 10 billion yuan of social security funds had been approved by relevant conferences recently, and had been allocated to social security accounts and will invest in the stock market. The Social Security Fund Council also said that China's economic fundamentals are still good, and the A share market is at the bottom of the valuation.

Also in September, large shareholders and executives increased the number of shares held by companies. More than 500 executives of listed companies increased their holdings in the company's stock market.

In addition, many state-owned enterprises including Baosteel (5.23, -0.04, -0.76%) (600019, closing price 5.27 yuan), Yangtze River Power (6.45,0.00,0.00%) (600900, closing price 6.45 yuan), and China Construction (3.32,0.00,0.00%) (601668, closing price 3.32 yuan) also increased substantially, indicating that industrial capital began to identify with the current company value.

During the National Day this year, Premier Wen Jiabao of the State Council took 13 officials from the ministries and commissions to Wenzhou for investigation, and the local government followed the "rescue market" action.

On October 12th, Premier Wen Jiabao chaired a State Council executive meeting to study and determine financial, fiscal and tax policies and measures to support the development of small and micro enterprises. The meeting held that some small and micro enterprises are facing difficulties in their operation, financing difficulties and heavy taxes and fees.

"Daily economic news" reporter noted that in the current rescue policy, in addition to Huijin holdings, because no direct reduction of stamp duty and other direct targets for the stock market, so the market attention is not high enough.

But from past experience, once the regulators have launched, and if the existing policies fail, a series of follow-up policies will continue to emerge.

Outlook / outlook

Economic downturn or policy easing

Now that the policy bail-out has started, can the stock market see the bottom?

This can not help but think of a joke - copy the bottom must copy second!

Chen Sheng Wu Guang was the first to copy the bottom of the Qin Dynasty, and later failed. The winner was Liu Bang, because he bought the world after the formation of double bottom (Chen Wu + Xiang Yu). Cao Cao, Liu Bei and Sun Quan first failed to copy the bottom Han Dynasty, and failed to succeed. Sima Yi copied second bottoms, and got the world. The first soldier to copy the Song Dynasty failed, the yuan soldier copied the bottom two, and won the battle; the first one to copy the Ming Dynasty failed, and the Qing army copied the two bottom to win.

The above joke is reflected in the stock market, which means that the bottom of policy is often not the real bottom. The bottom should be copied at the end of second, that is, the bottom of the market.

Many reasons or prompted A shares to explore the second bottom

Judging from the trend of A share, it is successful without a bailout, and the bottom of the policy is not synchronized with the market bottom.

The 998 point in June 6, 2005 was the bottom of history, but the bull market did not begin to rise at this time until the two stock market bottom in July 2005.

The reason for the 998 point is the reform of the share reform policy, that is, the bottom of the policy.

It is worth noting that the second bottom, the bottom of the market, has not hit a new low.

The first bottom of September 18, 2009 was Huijin's three main advantages, namely the bottom of policy.

But after a sharp rebound, the stock market continued to fall, and finally fell to 1664 points at the bottom of the market.

Unlike the 998 points, the bottom of the second is a new low.

But what is different is that Huijin's second bailout policy in September 29, 2009 was at the bottom of the second policies. It is also a double bottom form, and the bottom of the second policies is higher than the bottom of the first market.

Today, Huijin's third bailout is at the bottom of the 2318 point, which is the bottom of the policy. When will the bottom of the second market emerge?

Apart from the technical aspect, there are many factors that may cause the stock market to go down to the second bottom.

For example, the European debt crisis has intensified again, such as the rise of the occupy Wall Street movement. In addition, the IPO flood of A shares is an unfavorable internal cause.

"Daily economic news" reporter noted that in September 2011, IPO raised 28 billion 930 million yuan, hit a new high of nearly seven months, the pace of expansion even faster than 3000 points, which seems incomprehensible.

Now, the new stock market is likely to hit again. From its correlation with the index, the emergence of the tide is also a sharp fall in the stock market.

Shenzhen stock market is still high.

From the above historical experience, whether the bottom of the policy is playing the first bottom or the second bottom, the possibility of the two bottom finding is very great.

That's valuation.

At present, although the valuation of bank stocks has reached a new low, Shanghai A share and Shanghai and Shenzhen 300 (2654.428,0.65,0.02%) index also have a new low price earnings ratio. However, Shenzhen A shares and small and medium plate index (5885.760,5.31,0.09%) still have a high price earnings ratio.

Wind data show that as of September 30, 2011, Shenzhen Stock Exchange A share price earnings ratio was 27.21 times, and the SME board price earnings ratio was 31.41 times, all the lowest in recent years.

But there is still a big difference between the 14.55 times of their respective historical low values (November 7, 2008) and 11.25 times (September 30, 2011).

But the market is also optimistic about the voice, Wan Lian securities analyst Huang Peng pointed out that once the economy accelerated down, the possibility of policy easing will be significantly improved, so the economic downturn is not entirely bad for the market trend.

If the relevant policy fine-tuning signal can be continuously released and verified later, it will eventually lead to a change in market expectations, which is expected to form a wave of medium level rebound.