Overnight, US stocks continued to be strong. The Dow rose four times in a row to new highs in the past four weeks, and the S&P and NASDAQ rose to new highs of more than three weeks. Japanese stocks and Korean stocks both rose more than 1% today, but A shares shrunk and fluctuated, and Hong Kong stocks pulled back slightly. The Hang Seng Index fell 0.53%, ending 10 consecutive gains.

Can Chinese assets continue to be strong?

1

J.P. Morgan Chase: Chinese stocks can still rise!

After the US, Eurozone, and UK labor data for April was released, J.P. Morgan Chase pointed out in the “Thoughts of the Week” section that despite the tight labor market, the inflation rate continues to decline, so it is believed that the central banks of the three countries should be able to cut interest rates before the end of the year.

After the release of the US non-farm payrolls data for April, which was lower than expected, the logic supporting the strengthening of US stocks began to slow down in June, and the logic supporting the strengthening of US stocks was restored. The author began to worry a bit about whether this would hinder the logic of safe-haven funds laying out overseas assets to a certain extent. However, yesterday, northbound capital continued to explode the purchase of A-shares for nearly 10 billion dollars, so there seems to be no need to worry.

J.P. Morgan also believes that although the April employment report continues to show the health of the US economy, investors should study the opportunities that exist in overseas markets that are currently less active but at a much lower cost.

As for the specific direction of overseas market opportunities, J.P. Morgan Chase is even more prominent. Wendy Liu's analyst team shouted in last week's research report:

We increased our stock holdings in China in May, and then patiently waited for the Chinese economy to recover at an accelerated pace.

According to Wall Street News, J.P. Morgan believes that China is in the early stages of recovery, and that policies and market dynamics are showing positive signs. It is expected that the peak of China's next expansion cycle may arrive in the first half of 2025.

J.P. Morgan expects the MSCI China Index and the Shanghai and Shenzhen 300 Index to rise to 66 and 3900 respectively by the end of 2024, which means that the latter still has room for 6.59% appreciation.

It is worth mentioning that J.P. Morgan analyst Wendy Liu mentioned in a TV report on April 30 that judging from the 2023 earnings performance, he is optimistic about the three non-essential consumer sectors of A-shares: communications, healthcare, and utilities.

2

Synthetic biology has exploded

Looking at the long-term perspective, under the aura where Technet stocks took the lead, the performance of the innovative drug sector was no less concessionary, and there has been a wave of upward momentum since April 22.

(The content of this article is a list of objective data and information and does not constitute any investment advice)

On the one hand, the pharmaceutical industry itself is a target favored by foreign investors. On the other hand, catalysts for the synthetic biological industry have been increasing recently. On the basis that the pharmaceutical industry itself has already declined sufficiently, it is tantamount to dry firewood burning.

Today, the A-share synthetic biology sector is unabated, and Fujilai rose to a halt by 20cm.

The May 4 report pointed out that the synthetic biology innovation team at the Future Food Science Center of Jiangnan University used synthetic biology technology to produce normal molecular weight hyaluronic acid using microbial fermentation, reducing the cost from tens of thousands of yuan per kilogram to several hundred yuan per kilogram.

The “2024 Report on the Work of the Government” mentions “actively building new growth engines such as biomantry, commercial aerospace, and low-altitude economy”. Institutions are generally optimistic about the development potential of synthetic biology as a new type of productivity, and it is expected that the future will still usher in policy catalysis.

Earlier, Tan Tianwei, an Academician of the Chinese Academy of Engineering, revealed that under the leadership of the Development and Reform Commission, the Ministry of Industry and Information Technology and the Ministry of Science and Technology, and other national ministries and departments are jointly developing a national action plan for biotechnology and biomantry, which is expected to be introduced in the near future.

Funds are also flowing into the pharmaceutical sector through ETFs, and many medical-themed ETFs ranked in the top 25 ETF share growth list in April.

The shares of Huabao Fund Medical ETF, Bosch Fund Hang Seng Healthcare ETF, E-Fangda Fund Pharmaceutical ETF, and Huaxia Fund Hang Seng Pharmaceuticals ETF increased by 2,092 billion shares, 1,538 million shares, 782 million shares and 690 million shares respectively in April.

Judging from the redemption situation of all ETFs in April, broad-based ETFs are still the main source of gold absorption. Last month's net inflow was 16.8 billion yuan, while themed ETFs had inflows of 1,275 billion yuan.

Judging from the ETF redemption situation. The share of broad-based ETFs increased by 8.143 billion shares in April, and themed ETFs increased by 5.133 billion shares during the same period.

3

Recent developments in public offering salary cuts

There have been intense discussions about public fund salary cuts, and there have been recent developments.

According to reports, a number of fund companies have now submitted compensation plans, and some have received approval, while others have not. The upper limit of the currently reported salary plan has a large year-on-year discount. In particular, the bank public offering dropped significantly, which is far lower than previously rumored.

The previously rumored maximum remuneration limit for fund companies has gradually receded from 15 million yuan, 5 million yuan, 3.5 million yuan, and 3 million yuan to the current minimum of 1.2 million yuan.

Regarding the rumor that a bank's salary limit plan was capped at an annual salary of 1.2 million, today's latest report quoted people from the public funding company as saying, “I haven't heard of it at all.”

As society moves from a fast-moving infrastructure stage to a stage of high-quality development, the importance of secondary distribution will increase accordingly.

Under the current situation where “funds make money, citizens don't make money”, the phenomenon of fund companies “protecting income from droughts and floods” has been criticized for a long time. The supervisory authorities have also guided the public offering industry's remuneration system in recent years.

In April 2022, the Securities Regulatory Commission issued “Opinions on Accelerating the High-Quality Development of the Public Fund Industry”, which mentions that fund managers should be urged to strictly implement the remuneration deferral system, strictly prohibit short-term incentives and excessive incentives, and include the level of compliance risk control, long-term investment performance, and actual investor profits in the performance assessment category.

In June 2022, the China Foundation Association issued the “Performance Assessment and Remuneration Management Guidelines for Fund Management Companies”, which clearly states that fund companies should establish and implement a deferred payment system for performance pay. The deferred payment period is not less than 3 years, and in principle, the amount of deferred payment for senior managers, fund managers and other key personnel is not less than 40%.

Generally speaking, the phenomenon of public fund salary cuts requires comprehensive consideration from various perspectives such as industry development, market environment, and regulatory policies.

For fund companies, under the wave of salary cuts, the management fee income that public fund managers depend on to survive was drastically reduced in 2023, and the operating income and net profit of fund companies also generally declined, further accelerating the pace of salary cuts, and even facing pressure to lay off employees. For employees, this could mean less revenue.

However, public funds play an important role in managing residents' wealth, and this is also a necessary adjustment.