Behind A-Share Surge: Will "Golden September" Come?
Beijing, August 30th - On the last trading day of August, A-shares witnessed a long-awaited surge.
The Shanghai Composite Index (SCI) rose by more than 1% at one point, the Shenzhen Component Index (SCI) surged by over 3%, and the ChiNext Index (CNE) jumped nearly 4%.
Almost all industry sectors saw gains, with insurance, gaming, real estate services, consumer electronics, and semiconductors leading the way.
Only the banking and precious metals sectors declined.
The total trading volume on both markets exceeded 870 billion yuan, with nearly 4,700 stocks rising.
Concurrently, the Hang Seng Tech Index rose by more than 3%, with Li Auto and XPeng Motors increasing by nearly 8%.
What caused the sudden explosion in the A-share market?
Analysts believe that the main drivers behind today's A-share rally are the loosening of high-dividend asset clusters, stimulating a bullish sentiment in small and medium-sized stocks; marginal improvement in liquidity in September; continuous efforts in economic stabilization policies; and market news about "reducing existing mortgage loans."
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Drivers: Loosening of High-Dividend Asset Clusters + Liquidity Improvement + Policy Efforts Firstly, today, large-cap stocks represented by bank stocks continued to decline, making small and medium-sized stocks more popular.
At the same time, the loosening of high-dividend asset clusters has led to a return of liquidity, and a rebalancing of capital distribution within the market.
Ju Feng Investment Consulting stated that the pullback of the six major banks today released a large amount of capital, accelerating the rebound of A-shares.
Hua Fu Securities said that the market value ratio of institutional investors and the performance of large and small cap styles are highly correlated.
Generally, when the proportion of institutional investors in the total market value of A-shares increases, the market style tends to favor large-cap stocks, and when the proportion of institutional investors decreases, the market style tends to favor small-cap stocks.
Yang Delong, Chief Economist at Qianhai Source Fund, said that previously, funds rushed into low-valuation, high-dividend sectors represented by banks, giving the A-share market a bond-like characteristic, which is also a manifestation of low market confidence.
Today, value growth stocks and small and medium-sized stocks rebounded significantly, showing signs of a market style shift.
Secondly, the mid-year report disclosure is nearing its end, and the bearish factors are landing.
As the mid-year report disclosure of listed companies approaches its end, while many companies' performance is positive, some performance-disturbing factors are about to fade away.
CITIC Construction Investment pointed out that the mid-year performance disclosure is nearing its end, and both bullish and bearish factors will land, which may start a new round of market speculation.
However, due to the current overall market sentiment and lack of confidence, the space and continuity of speculation need to be observed.
Stocks that have been oversold and low-position growth may become more active due to the repair of sentiment and may present phased opportunities.
In addition, with the financial reports landing, new signals for mid-term capacity cycle configuration may also be found.
Thirdly, the RMB exchange rate has rebounded strongly.
Today, the onshore RMB exchange rate against the US dollar rose to its highest level since June 2023, at 7.0845.
Analysis suggests that as the yield on US Treasury bonds falls and the interest rate differential between China and the US improves, RMB assets have become more attractive.
In addition, the recent performance of the RMB exchange rate reflects changes in the global economic environment and the joint effect of domestic and foreign policies.
Looking forward, the RMB exchange rate will continue to find a new balance point in two-way fluctuations, showing greater flexibility and resilience.
Guotai Junan Securities believes that the appreciation of the RMB is mainly affected by the decline of the US dollar, followed by the recent narrowing of the China-US interest rate differential, and finally the swap fluctuations of offshore and onshore RMB against the US dollar.
Looking ahead, interest rates and the China-US interest rate differential remain the dominant factors in determining the RMB exchange rate.
From this perspective, after the Fed's rate cut in September, the market may re-evaluate the future US dollar interest rates, which means that the RMB faces relatively limited downside risks in the short term.
Fourthly, there is a piece of news about "reducing existing mortgage loans" that has gone viral in the market.
Securities China cited market news that the relevant parties are considering further reducing the interest rates on existing mortgages, allowing the existing mortgage loans with a scale of up to 38 trillion yuan to seek mortgage transfers, in order to reduce the debt burden on residents and boost consumption.
According to the relevant plan, existing mortgage customers can renegotiate the mortgage interest rate with banks without waiting until next January (the usual interest rate adjustment time).
Analysis suggests that if true, it will reduce the burden on residents and benefit consumption.
Fifthly, there are positive signals from policies.
According to the People's Bank of China's official website on August 29th, the People's Bank of China recently held a symposium with experts, scholars, and financial enterprise leaders.
The meeting stated that in the next phase, the People's Bank of China will implement the requirements of the Central Political Bureau meeting on "macro policies to continue to exert force and be more forceful," continue to adhere to a supportive monetary policy stance, strengthen counter-cyclical adjustments, use a variety of monetary policy tools, and increase financial support for the real economy.
At the same time, research and reserve incremental policy measures, enhance macro policy coordination, and support the consolidation and enhancement of the economic recovery trend.
Can the "Golden September" market come?
Zhejiang Securities Research Report said that for A-shares, the current main economic data such as industrial added value, retail sales, and fixed asset investment are relatively weak, and the domestic economic fundamentals are still bottoming out.
Against this background, the core of A-shares' stabilization and upward movement may lie in the improvement of valuations, which may depend on the systematic opening of the Fed's interest rate cut cycle, leading to a re-allocation of global funds.
However, as mentioned earlier, the steady US employment, the unexpected recovery of real estate, and the expected acceleration of fiscal expansion may lead to a significant increase in future reflation risks, thus the expectation of interest rate cuts may continue to retract, which means that A-shares in September may continue to fluctuate.
Ju Feng Investment Consulting said that at present, the further repair of the domestic fundamentals and the substantial release of liquidity are important factors affecting the market.
At present, with the marginal improvement of both, it may bring a short-term boost.
In terms of specific direction, you can continue to focus on opportunities in sectors such as high dividends, gold, consumption, pharmaceuticals, and semiconductors.
Dongguan Securities' research report on August 30th said that overall, as the mid-year report disclosure is about to end and entering the traditional peak season in September, the market trend is still worth looking forward to.
Therefore, the subsequent market trend is expected to show a fluctuating repair, and it should be relatively optimistic in the medium and long term.
Pay attention to the support of the moving average and the changes in the volume.
In terms of sector selection, it is recommended to focus on opportunities in sectors such as semiconductors, electrical equipment, TMT, and large consumption.
CITIC Construction Investment believes that the Fed's interest rate cut signal in September is strong, and the turning point of the A-share market is gradually brewing.
Looking at the fourth quarter, overseas uncertainties will land one after another, and domestic policies are expected to intensify, which is expected to break the valuation pressure brought by the negative cycle of sentiment.
In the short term, in September, both fundamentals and liquidity have shown marginal improvement signals; domestic counter-cyclical policies are expected to be strengthened and combined with the peak season of "Golden September and Silver October."
Yang Delong believes that the "Golden September and Silver October" market has historically had a larger upward momentum.
On the basis of fiscal and monetary policies working together, it may improve many economic data, and the market's pessimistic expectations may change.
At yesterday's China Life mid-term performance release, Liu Hui, Vice President of China Life, said that the overall valuation of A-shares is at a low level in the market and has long-term configuration value.
With a series of capital market reforms and regulatory new regulations being introduced, it has a positive significance for promoting the capital market ecology and improving the level of long-term returns.
Under the background of high-quality development and solid promotion of the development of new quality production forces, fields such as technological innovation, advanced manufacturing, and green development contain rich long-term investment opportunities.
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