Disk observation
The three major stock indexes made a weak correction on Tuesday, with individual stocks falling more than rising. The total transaction volume of the two cities was 1.308344 billion. Looking at the disk, industries such as transportation services, hotels and restaurants, and shipping were among the top gainers, while tourism, brewing, semiconductors, and other industries were among the top losers. There were 42 companies in the two cities that reached the daily limit and 28 companies that fell below the limit. Northbound capital inflows were 1.474 billion. The Shanghai Composite Index fell 2.00% to 3446.98 points, the Shenzhen Component Index fell 2.33% to 14350.65 points, and the Chuang Index fell 2.34% to 3224.15 points.
Outlook
Before we start our outlook, I want to tell you a story. A child with his father in the yard of his home in winter. While the child was playing, he discovered that some of the bark of the fig tree in the yard had peeled off and the branches were completely withered. As soon as he touched it, one of the branches broke off with a "clack" sound. So, he said to his father: "Dad, that tree is dead a long time ago. Cut it down! Let's plant another one." However, his father did not agree. He said: "Perhaps it is indeed dead. But it may still sprout branches after the winter - maybe it is recharging its strength! Remember, child! Don't cut down trees in winter." The fruitless father Unexpectedly, in the second spring, this apparently dead fig tree actually sprouted new buds again, and felt the coming of spring like other trees. Only a few branches actually died. This story is the source of the Western proverb "Don't cut down trees in winter."
Yesterday, in our closing comments, we mentioned the relative "restraint" of short-term monetary policy easing. The 10-year treasury bond yield announced last night continued to rise by 151BP, which to a certain extent confirms our view that the central bank is in the midst of monetary policy. Judgment of "punch-in moment". However, "pull back" is a short-term phenomenon, and the current weak market adjustment is a normal phenomenon in the economic cycle. We cannot predict the weather in the stock market tomorrow, but we can judge the seasonal changes in the stock market through the valuation percentile range of the index.
Do you still remember the valuation percentile mentioned in our closing comment on that day "Using "Three Mirrors" to Look at Today's Market Fall"? Currently, the CSI 500 Index, which represents small and medium-sized companies, has a price-to-earnings ratio of only about 21.86 times, which is at the valuation percentile of 7.33% since 2015 (lower than the last statistics). The most interesting thing is that the CSI 500 Index has recently risen to a stage high, but the price-to-earnings ratio and the price-to-earnings ratio percentile are declining. This shows that the performance growth of the CSI 500 constituent stocks is faster than the increase in valuation, which is a good sign for the slow-moving index. Very good foundation. Successful investment requires not only a certain understanding of the financial market, but also faith and patience. "Don't cut down trees in winter" is not a proverb, but should become the source of our investment belief.
Operational strategy
The total turnover of the two cities has been higher than one trillion for 20 consecutive trading days, indicating that the market is still in an incremental game. In terms of operation, it is recommended to pay attention to opportunities in anti-falling sectors (such as brokerages, military industry, and new energy) during the correction, and select stocks from these sectors with "exceeding expectations" in mid-term results.
Li Yanjun, senior investment consultant of Guangfa Securities, practicing certificate number: S0260612110012