China'S Stock Market Is Beginning To Show A Warm Bloom.

In March 31st, the turnover of two cities in Shanghai and Shenzhen rose to nearly 700 billion yuan, supporting the stabilization of the stock market.

The Shanghai composite index closed at 3003 points, a slight increase of 0.11%.

Judging from the performance of China's stock market in March, the Shanghai composite index rose by 11.8% and the Shenzhen constituent index rose by 14.9%, of which the Shanghai composite index rose the biggest monthly increase since May 2015.

From these signs, China's stock market has begun to warm up, and the confidence of the market is also recovering.

But how the Chinese stock market went in April depends on the following three factors.

One is to see the situation of capital inflow in China's stock market, the two is the change of US dollar exchange rate index, and the three is whether China's economic fundamentals have improved.

Judging from the current situation, why China's stock market can have these achievements in March, to a large extent, is related to capital inflow, and the flow of capital has become an important indicator of the stock market trend.

For example, in June 2015, the turnover of two cities in Shanghai and Shenzhen rose to more than 2 trillion, the stock market index rose sharply, and then the capital gradually flowed away, and the stock market plummeted again.

By the beginning of February this year, the turnover of the two cities had fallen to less than 400 billion, and only recently recovered to more than 600 billion yuan.

This shows that capital inflow has become the most important factor to promote the rise of China's stock market in March.

From the current situation of China's capital flows, not only the central bank's excessive monetary policy has injected most of the liquidity into the market, but the data in January or March will be quite radical.

Of course, the liquidity of the market is large, and whether it can enter the stock market is an uncertain factor.

Whether these funds flow into the stock market or enter the housing market depends on the expectations of the two markets.

The performance of China's stock market in March is a sign that confidence in the Chinese stock market is rising and the stock market is expected to stabilise. This may be an important factor in the flow of capital into the stock market.

Coupled with the recent release of the stock market leverage, the "national team" has begun to enter.

For example, the social security fund, the state foreign exchange reserve platform company enter the A shares and so on, all indicate that the government intends to promote the development and prosperity of China's stock market.

Also, the national development and Reform Commission's opinion on deepening the reform of the economic system in 2016 announced yesterday that we should deepen the reform of the capital market, promote the healthy development of multi-level capital markets, raise the proportion of direct financing, and timely start the "Shenzhen Hong Kong Link".

These signs also see the government's desire to promote the development of China's stock market.

Therefore, investors should pay close attention to the trend of the government.

Of course, this year, the government promoted the development of China's stock market and absorbed it in 2015.

The lesson will surely be a lot more careful.

From the external environment, the Fed's monetary policy shift led to a very early shock.

In March, it began to calm down, and the capital began to flow to emerging markets, so that the stock market and foreign exchange market that had fallen sharply at the beginning of the year had a favorable turn.

Such as Brazil, Turkey, Russia and other stock market rose by a large margin, which also made the global market stable in March.

That is to say, at the beginning of this year, the negative factors such as financial market turbulence, strong dollar, emerging market currency plummeting, oil and commodity collapse, and a large number of funds escaping from emerging markets were now reversed, and the whole international market began to change.

According to Credit Suisse's observation of foreign capital inflows in the 6 major Asian stock markets (Taiwan, Southern Dynasties, India, Indonesia, Philippines and Thailand), foreign investors bought a net total of $10 billion 500 million in March, which is the month of the ninth largest net inflow in 1996. Whether the foreign investment will enter these markets in April, the key is to see how the US dollar exchange rate index changes.

The US dollar exchange rate index has fluctuated from 93 to 100 in most of the time since March 2015. Yesterday, the index fell to 94.4 level.

Judging from last week's situation, the US dollar's upward momentum is weakening as the market expects the fed to raise interest rates in the near future or reduce interest rates sharply this year.

If the US dollar exchange rate index is still weakening in April, global capital will still flow to emerging markets.

This will also increase momentum for China's stock market.

But whether the US dollar exchange rate index is really turning around will be able to be seen in April.

Then the trend of China's stock market in April will depend on China's economic situation.

It is estimated that MPI will still be in a weak position today, because the results of the survey conducted by the central bank entrepreneurs in the first quarter of this year were announced yesterday. The macroeconomic index of entrepreneurs was 21.1%, down 1.6 percentage points by the season, and by 8.1 percentage points.

59.2% of the entrepreneurs thought the macro economy was "cold", 39.4% thought it was "normal" and 1.4% thought it was "hot".

That is to say, the vast majority of entrepreneurs in China are still not optimistic about the current economic situation.

In addition, the export and domestic orders index was 41% and 39.1%, respectively, all down by 3 percentage points over the same period in 2015.

Orders for exports and domestic enterprises increased by only 11.4% and 11.6% compared with the previous quarter, while the other 55% felt flat, and 30% thought it was reduced.

That is to say, the current import and export situation of China's economy is also not optimistic.

Of course, the hot property of domestic first tier cities and some second tier cities will play a supporting role in the current economic growth.

But how far can this economic growth be driven by soaring housing prices?

More importantly, the rising prices of housing in these cities will also attract funds that might have entered the stock market to the housing market.

Coupled with the recent record of some of the biggest state-owned enterprises, such as banking and petroleum, these are all important factors that affect the April stock market in China.