On the 14th, the US and European financial markets experienced severe turmoil. The yield curves for US 2-year and 10-year treasury bonds were inverted for the first time since 2007, while the yield on 30-year treasury bonds fell to a record low. Affected by this, US stocks plummeted across the board, and the Dow plummeted 800 points. In the European market, the yield curves of British 2-year and 10-year treasury bonds were inverted for the first time since 2008. Furthermore, German and French 10-year treasury bond yields both hit record lows. Affected by this, the three major European stock indexes also experienced a collective decline.
Why did peripheral stock markets plummet? Can A-shares get rid of peripheral influence and get out of the independent market? Let's first take a look at some investors' opinions:
Investor A: The sharp decline in US stocks is probably mainly due to expectations, because the two-year ten-year period is inverted. From the perspective of historical statistics, it is a precursor to the financial crisis.
Investor B: If it's a recession, there are still many variables. Retail investors shouldn't speculate on this.
Investor C: The domestic stock market is already at a relatively low level, so it's not very likely that there will be another sharp decline.
The bond market warns the US and European stock markets to plummet
On the 14th, US stocks fell across the board. The Dow Jones index plummeted 800 points, or 3.05%, the biggest one-day decline since this year. The NASDAQ fell 3.02% and the S&P 500 fell 2.93%.
Meanwhile, the European market also experienced a sharp decline. The British FTSE 100 fell 1.42%, the French CAC40 fell 2.08%, the German DAX fell 2.20%, the Dutch AEX, and the Russian RTS all fell more than 1.6%.
As for the reason for the sharp decline in European and American stock markets, the market boils down to the inversion of long-term and short-term treasury bond yields. On the 14th, the yield curves of US 2-year and 10-year treasury bonds were inverted for the first time since 2007, and the yield on US 30-year treasury bonds fell to a new low of 2.0813%. On the UK side, interest rates on 2-year and 10-year treasury bonds were also inverted for the first time since the 2008 financial crisis.
Affected by the sharp decline in European and American stock markets, the Nikkei 225 index was 2% lower today, the Hang Seng Index was 1.4% lower, the A-share market, the Shanghai Composite Index was 1.7% lower, the Shenzhen Index was 2.1% lower, and the GEM index was 1.9% lower. However, the subsequent trend gave everyone a sigh of relief. Both the Shanghai and Shenzhen markets opened lower and moved higher.
The low valuation of A-shares has great investment value
In the past, investors often complained that A-shares had always followed the decline and didn't keep up with the rise. However, today, A-shares have finally followed a relatively independent trend. They were only affected at the opening of the market. Soon, the market calmed down. Under the leadership of relevant weighted stocks, the index fluctuated upward.
It should be said that since 2015, the A-share market has gone through 4 years of adjustment. The current valuation is very low and already has great investment value. The price-earnings ratio of the Shanghai Composite Index is 12.6 times, the Shanghai and Shenzhen 300 is 11.9 times, while in the US stock market, the Dow Jones is 18.9 times, the NASDAQ is 31.5 times, and the S&P 500 is 20.6 times. Judging from this data, the value of the A-share market, especially the large-cap stocks and blue-chip stocks, is obvious.
Long-term capital is gradually being allocated to A-shares
Judging from the economic data for July that have just been released, although the growth rate of some data has declined, overall, China's GDP growth rate is still leading among major countries. As A-shares are included in MSCI and FTSE Russell, foreign capital continues to enter, likeBlackRockThe Qiaoshui Fund has already deployed China and A-shares. Furthermore, in the A-share market, the amount of repurchases made by listed companies set a record this year, and insurance funds are also making a fool of themselves. They are listed as soon as they get the chance, and long-term capital is gradually being laid out.
LujiazuiOpinions:
As an ordinary investor, you should be confident now that US stocks have risen so high that a pullback is normal, yet the A-share market has been adjusted for so long, and there is no basis for a sharp decline, whether from a fundamental or technical point of view. Looking at the medium to long term, the probability of going up is much higher than going down, so even if there is a short-term decline, it's a good time for layout.
Reporter: Gu Zhiyi, Liu Yue
Editor: Fan Jia, Chen Weipeng