Zhang Yidong: The Intermediate Market Has Entered A Stage Of Backwardness.

The risk appetite of the A share market has improved significantly in recent years, and the index rebound is expected to continue strong. However, it still reminds us that market sentiment is often a hindsight, so we must be proud but not to lose our mind.

In the medium term, risk is rising and opportunity is falling out. But in the game, everyone will be greedy and fearful in the short run, especially in the A share market. The herd effect is always higher and higher, and it will become more and more exciting.

In the shock of the stock market at the beginning of last week, we had been giving institutional investors a lot of encouragement, air, and refuting rumours and clarification.

Now, the "Fifth Plenary Session", "Xi Ma Hui" and the superposition of A shares are driven by the continuous trading of brokerage stocks.

The risk appetite has been greatly improved. The major institutions and public opinion have raised the bull market. This is in line with our prediction in mid autumn September that "the fall of autumn market dynamics four: risk appetite is warming up, and the logic of policy care" is mentioned again - "the bull market being used".

"Love in late autumn" market is perfect, while intermediate rebound has entered the stage of inflation.

Since its launch in mid September, love strategy in late autumn to winter (November 8th), the gem index has rebounded nearly 50%, and the Shanghai Composite Index has rebounded by 20%.

This round of intermediate market is still expected to continue, there are at least four support: 1) after the release of water, there is no need to worry about economic growth in the short term.

(2) there are many bright spots in recent domestic politics and diplomacy to enhance market risk preference.

(3) too much money and poor economy, "being used"

The expected improvement.

(4) short covering, especially insurance and private placement, can still be improved.

However, this round of mid-level quotations will be spread from the "decisive battle emerging growth stocks" that we have said before to the trading opportunities of the value added stocks of the main board which represented by the securities companies, which means that the intermediate rally has entered the second half.

Although the follow up market may be phased up rapidly, but we expect that the rise will be more difficult to surpass the late autumn stage, and there will be a concussion in the three quarter.

(1) the IPO restart, revised the purchase system, reflects the supervision of the stock market's ha ha, also shows that regulators for short-term A share market position recognition and normalization of confidence, in the short term, if there is a disturbance of early profit taking, it will not end the market, but provides a short-term opportunity.

The experience of nearly five IPO restarts shows that there are differences and shocks in the short term after the announcement of the IPO restart (from the first IPO to the date of listing), but the popularity of the Shanghai Stock Exchange in the short term (5 and 1 months) has been positive after the IPO.

In July 2015, as the stock market plummeted, the SFC suspended IPO. After four months, IPO resumed and the stock market financing function was fully restored. It is an important sign of normalization of capital market.

The IPO restart will enhance the vitality of the capital market, promote its healthy and orderly development, and further reflect the importance of the capital market in the national strategy. It will actively serve the national structural adjustment, industrial upgrading and economic pformation.

(2)

The rate increase in December is a foregone conclusion. The impact on the A share market is still reflected in the exchange rate, and the short-term RMB exchange rate will remain strong.

On Friday, the number of non farm workers in the United States increased by 271 thousand people in October, much better than that of 182 thousand people, pointing to a significant increase in the rate of interest increase in mid December.

It was reminded that in November 6th, this data day was an important node of the market, mainly to observe the impact of US interest rate hikes on the US dollar and the RMB exchange rate.

Because we believe that the RMB exchange rate forecast is a key variable affecting the future market interpretation, which is related to the issue of capital flight and the initiative and flexibility of domestic economic policies.

In the coming years, the US economic situation, the pace of US interest rate increase, the US dollar trend, and China's own reform, pformation, RMB internationalization and debt problems are also important variables affecting the RMB exchange rate expectations.

In the short term, although the US interest rate hike is expected to rise, the reform of the 8.11 RMB exchange rate will eventually become stable, and the RMB internationalization strategy, such as the SDR accession, will bring greater impact on the RMB exchange rate. Therefore, the pressure on the short-term RMB risk assets is not great. The A share market will not end, but in the future, it is necessary to pay attention to the substantive impact of the US interest rate hike.

In the short term, the market rose rapidly to the three quarter of the close trading area, followed by short-term shocks are normal, does not affect the upward trend of the market, therefore, strengthening pactions can get more excess returns in the next stage.

If the expected divergence in the short term, especially if the IPO restart is triggered by concerns of retail investors and the strong strength of the US dollar index, investors are still advised to optimize the A share investment opportunities in the concussion.

In the background of "more money, poor economy and asset shortage", when the stock market's risk appetite has improved significantly, the market has at least one stage of self reinforcement and self expectation. This stage is stronger than holding money, and it can participate in the value share trading machine and selected new shares and high-quality growth stocks compared with cash.