Xu Yiding: Small And Medium-Sized Stock Market Risk Increased

The market share of value shares continued this week, representing the index's Shanghai Composite Index rose 2.51% throughout the week, and even broke through the 2500 point integer pass during the period. However, the stocks of theme stocks and high valuations of small and medium sized stocks fell sharply, representing the index's decline of 5.35% over the whole week. Overall, the market "28 quotes" obvious, the stock split. At the same time, the majority of stocks fell during the week, which meant that the market divergence intensified, and the market trend of late market would be weakened, and the difficulty of operation would also increase.

On the economic front, the economic data in October showed a weak trend and seemed to have a weaker trend. For example, in October, the added value of above scale industries increased by only 7.7% in real terms, down 0.3 percentage points from September, and also fell below 8% after August of this year. This is the only two time in 66 months since May 2009. Then, with the slowdown in import growth in October, the increase in producer price index (PPI) and the PMI data, all showed that the domestic demand is continuing to slump and the economy is getting weaker.

On the emotional side, this week, the high value / theme stocks represented by the gem were generally adjusted substantially. As most investors had previously held such stocks, their fall had a major impact on market confidence. At the same time, it also reflects a bad sign: in the past year or so, the small and medium-sized stocks are generally at a high level, and now these stocks have encountered a lot of selling chips pressure. Such as Internet technology, Hsin Chuan technology and other GEM Board since last year, the big bull stocks have recently suffered a big decline, and their downward trend in the main selling pressure has been basically formed. This trend is spreading in the growth enterprise market. It also means that the trend of the medium and short term growth enterprise market is not optimistic.

In addition, the recent regulatory strictness will also pressure the theme stocks. New Zealand Lanshi heavy lifting record of 23 consecutive trading boards, this week by regulators direct risk warning. The major brokerages are required to strengthen investor education, prompt customers to withdraw their orders, and no longer continue to commission the purchase of the stock. At the same time, the concept of "high delivery and transformation" leads the good faith electric appliance to announce 10 to send 3 plans. After two days of publication, the market will also have a psychological pressure on the small and medium-sized stocks in the market.

From the above we can see that the pressure on the market is increasing, especially in small and medium-sized stocks. However, at present, the strong pattern of Shanghai market has not changed completely. This is mainly due to the incremental capital to actively enter the market, underestimate the value of the blue chip short-term strength is expected to continue.

Next week, Shanghai-Hongkong Stock Connect The formal operation will become the most important factor in the market. Shanghai Hong Kong Tong is the beginning of internationalization of China's capital market. A shares Far-reaching impact. In the short term, due to the undervaluation of the blue chip A+H and the expectation of blue chip T+0, the blue chips will still be good for the short term. However, the opening of Shanghai and Hong Kong will be good for small blue chip stocks, but will also be bad for small cap stocks.

Unlike the A share market, small and medium capitalization stocks are different. In Hong Kong stock market and international market, small and medium capitalization stocks are generally left behind by investors, with little volume and valuations without significant premium. After the opening of Shanghai and Hong Kong, the domestic market will be quickening up with the international market. At present, the gem, which is up to 66 times the price earnings ratio, will inevitably encounter the pressure of a great return of valuation.

In summary, the author thinks that Central line of stock index The trend will continue to be supported by incremental funding, but upward pressure is growing. More importantly, investors must realize that valuations of high and medium valuations of small and medium capitalization stocks have been returned or opened. In addition to undervaluing value stocks, the risk of investment in individual stocks will increase significantly.

On the operation, investors are still advised to change positions. First of all, we should meet the theme stocks with no performance support, and then pay attention to the undervalued varieties with more marginal safety margins. Chances are that since the second half of this year, the price of international crude oil has dropped from $100 / barrel to below US $80 / barrel, which has brought about a rare decline in costs for chemical and shipping companies. In spite of the large increase in short-term related varieties, there will be more definite trading opportunities in the callback.