MSCI Adjustment Institutions Are Firmly Optimistic About The Pro Cyclical Market

On November 30, A-share rose and fell back, out of the unexpected market.

In the early morning, the big finance represented by banks strengthened sharply. The Shanghai index once rose to 3456 points, only 2 points to reach the highest point in the year. The market sentiment was high.

Unexpectedly, the market suddenly reversed in the afternoon, bank stocks dived, and hit the plate in the end. And the market style suddenly switched from big finance to science and technology, non-ferrous finance, consumption and other sectors.

It is worth noting that November 30 coincides with the semi annual adjustment results of MSCI constituent stocks which take effect after the closing. In the last three minutes, northbound funds are busy adjusting positions and exchanging shares. In the late call auction of northbound funds, the fund game is fierce. The highest buying price is over 23 billion, but the last minute outflow is more than 10 billion. Finally, the net inflow of funds to the North was 5 billion. In the end, some of them were hit by the blue chip and the call market.

By the end of the day, the Shanghai index was at 3391.76 points, down 0.49%; the Shenzhen composite index was at 13670.11 points, down 0.15%; the index was at 2631.89 points, up 0.49%. The turnover of the two cities was 950.7 billion yuan.

After the close of the day, looking for the future trend of the A-share market.

The reason of strange market

November 30, Monday, the A-share trend is confusing.

The large financial sector, mainly composed of insurance, banks and securities companies, continued to make a strong and large-scale upward attack on the morning of last Friday, making the Shanghai Stock Exchange 50 break through the consolidation platform in recent months, and the Shanghai composite index is only two points short of 3458 points, the highest reaching 3456.74 points.

However, at about 10:40, the market was not able to attack enough, and the big financial sector turned around. In the afternoon, it formed a unilateral downward trend, and the Bulls did not have much resistance.

Bank plate smashed the plate, Shenwan secondary industry index showed that the bank index rose 4% in the morning and fell 1% in the closing. Among them, ICBC rose nearly 4% and fell 1.3%.

In the afternoon, the Shanghai Stock Index dived all the way, falling to 3400 points, after rising 1.4% at one time, and finally falling 0.49%.

On the afternoon of the same day, the financial sector fell down, giving opportunities to other sectors, while sectors such as science and technology, non-ferrous finance and consumption rose. At the end of the day, the media, nonferrous metals, electronics, computers, etc. in Shenwan class industries led the rise.

It is worth noting that on November 30, the adjustment results of MSCI China A-share index review took effect after closing. 39 stocks were newly transferred in and 32 stocks were eliminated at the same time.

According to the data of tonghuashun, at 14:56, the net inflow of Beishang capital was only 7 billion yuan; at 14:57, the net inflow was more than 20 billion yuan; at 14:59, the net inflow reached 23.7 billion yuan; at 15:00, the net inflow of Beishang capital was 5 billion yuan.

Finally, three minutes to the north out of the market.

On the same day, industrial and Commercial Bank of China, Guizhou Maotai, China Ping An, China Life Insurance, Wuliangye, Gree Electric appliances were smashed during the call auction.

So, why this strange trend?

Some institutions interviewed by the reporter also resumed trading and looked for reasons after closing.

Huang Jiefeng, manager of Wolong Chuangxin fund, believes that, with the strong boost of PMI data, although the early market was strongly driven by financial stocks, the U.S. stock index futures fell rapidly, and the Hang Seng Index dived, dragging down the A-share market.

"On the other hand, the market in recent days several strong plate short-term cumulative rise is larger, afternoon diving led to early part of the profit-making funds to cash in and settle ahead of time." Huang Jiefeng said.

Lin Jiayi, CEO of Xuanjia finance, also believes that the undervalued sectors such as finance and travel have recently been driven by the favorable vaccine and overseas recovery. The valuation of leading enterprises such as China Merchants Bank has reached a historical top of 1.8 times Pb. In the short term, due to the lack of sufficient funds in the first half of the year, the momentum is relatively weak after reaching a high valuation.

"After a year's worth, it's hard for investment institutions to wait for a good valuation, and the reduction after a big rise is also very reasonable, adding short-term speculative funds to leave the market, forming today's market situation." On November 30, Lin Jiayi said.

An executive of a fund company said, "today's plate and theme short-term switch fast, because near the end of the year, do more short-term, lock in earnings. And at this time, the funds for the market style switching have different views

In addition, Zhang Ting, chief strategist of GESHANG financial management, believes that November 30 is the half year adjustment of MSCI constituent stocks, which takes effect after the half year adjustment. Many foreign investors concentrate on bidding at the end of the day. The stocks transferred out by the index have a big drop, and the stocks transferred in by the index have a better rise.

"Today's plate obvious switch, the probability and the adjustment of MSCI have a certain relationship, but on the other hand, it also shows that the undervalued plate may have certain profit taking operation after the sharp rise in November." Zhang Ting said.

Pro cycle is still tuyere

Looking forward to the future, the institutions interviewed by the reporter are almost unanimously optimistic about the pro cyclical undervalued plate.

"Comprehensive consideration, the current strong cycle plate < optional consumption < cycle growth, strong cycle plate (nonferrous metals, chemical industry, steel, mining, banking, real estate, etc.) has stronger periodic opportunities; optional consumption (furniture, household appliances, hotels, airports, cinemas, etc.) also has a strong profit recovery space; and the cyclical growth plate (automobile, electrical equipment, mechanical equipment, building materials, etc.) also has a strong profit recovery space There is still profit support. " Zhang Ting said.

And big finance is still the most popular plate in the pro cycle.

Ma Cheng, chairman of juze investment, believes that although the financial sector suffered a setback on November 30, the big financial market has not ended. The main logic is as follows:

First, the valuation of major financial institutions, especially banks, is quite low, with an average price to book ratio of 0.7, which is the basis for the rise of banks;

RMB devaluation will continue next year, which is a good second time for us dollar appreciation;

Third, with the mass production of vaccines in the post epidemic era, especially in the first quarter of next year, after the epidemic situation is under control, the global economy recovers, and the financial sector also has typical business cycle characteristics, which is the endogenous driving force for the future rise of the financial sector.

"For today's financial sector, we think it is more caused by the Shanghai Composite Index's approach to the previous high and the fund's unwillingness to pursue the rise, which leads to insufficient capacity. However, its inherent undervalued value and the driving logic of experience recovery remain unchanged, and we will continue to look at this sector in the medium and long term. As for the whole market, we believe that with the further economic recovery next year and the relatively loose monetary policy, the market will continue to fluctuate upward in the medium term, and there are more structural opportunities within the market. " Ma Cheng said.

In fact, in the post epidemic era, institutions are generally optimistic about Pro cyclical industries under economic recovery.

Huang Jiefeng pointed out that throughout the world, the good news of vaccine is frequent, the global economy is gradually recovering, the domestic economic fundamentals are more solid and stable, and the long-term good trend of the capital market remains unchanged. Therefore, the non-ferrous metals, chemical industry and other pro cyclical sectors with obvious advantages in valuation and sustained economic recovery will continue to be favored by the market, and short-term correction is a good opportunity for positive layout Keep track.

Zeng Yu, the research director of Yihu investment, pointed out that the global recovery has entered a new normal, and we should be alert to the valuation contraction driven by the upward inflation. The pre cyclical undervalue is still the first choice, followed by the recovery industry after the epidemic. However, the growth industry with high expectation and high overvalue has fallen out, so we can start the layout on the left side.

Xia Fengfeng, the fund manager of the future star fund of private placement network, believes that in the medium and long term, undervalued cycle varieties, including finance and real estate, are still on the rise, and there is no reason for pessimism in terms of its fundamentals or capital.

It is also a common practice for institutions to lock in early earnings and tend to invest conservatively at the end of the year, which is another reason for institutions to choose Pro cyclical sectors.

Lu Ping, manager of Meili investment fund, said that in the last month of this year, institutional strategies generally tended to be conservative, and the consensus was to adjust positions to high-quality, low-level and pro cyclical stocks in preparation for next year. "The adjustment of component stocks is in favor of science and technology, medicine and consumer sectors. Specifically, we are optimistic about gold, aluminum, copper and new energy vehicles in the nonferrous metal plate, and adjust the lower buying points of pharmaceutical stocks under the impact of large performance supporting semiconductor industry stocks and centralized mining and bad luck." Lu Ping said. However, there are also institutions looking for other investment opportunities.

Lin Jiayi said, "in the future, the main market is to continue to buy enterprises with low value and high cost performance. After two consecutive years of rapid rise in A-share market, the price performance ratio is relatively low, and Hong Kong shares have a greater opportunity in the coming year."

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