Anatomy of the large cap market.
A shares have already entered a negative cycle, with trading volume continuing to decline below 600 billion, which is still below zero. The change in market positioning may be the main problem, leading to capital turning from virtual to real and the stock market's status further declining. Hong Kong stocks, on the other hand, show signs of improvement.
The June ISM Non-Manufacturing PMI for the United States was 48.8, significantly below the expected 52.6, and 53.8 for May. The contraction rate is the fastest in four years, but S&P Global's services PMI was as high as 55.3, the highest since April 2022. These two groups of conflicting data are quite confusing, making it difficult to determine whether the US economy is good or bad. Anyway, the US stock market is constantly rising, and has produced huge risks. The U.S. 50ETF(SH:513850) rose nearly 7%, with a premium rate of over 9%; the U.S. 50ETF(SZ:159577) rose more than 6%, with a premium rate of nearly 7%. The GF Nasdaq ETF (SH:513870) rose more than 3%, with a premium rate of over 5%. 判断 In unfavorable A-share market situation, the fund is flowing towards Nasdaq technology ETF and Nikkei ETF, etc.
With the driving force of the US stock market, Asia-Pacific stock markets continued to rise across the board, especially the TOPIX index in Japan, which opened today and has been rising all the way, with the highest touched at 2,890.52 points, breaking through the intra-day historical high point set in December 1989. Compared with the Nikkei 225 index, which covers only 225 component stocks, the TOPIX index covers a wider range of stocks, as it includes more than 2,000 component stocks and more accurately reflects the overall picture of the Japanese market: it is not painted to beautify the index by relying on pulling part of the individual stocks, and has higher value. Similar ups and downs and losses and gains have shown that money is profit-seeking.
The activity of the Hong Kong stock market is evident from the IPO. George Chan, global head of IPO at Ernst & Young, said that the Hong Kong IPO market will see a significant improvement over the next five years starting from the second half of this year. Ernst & Young's capital team in Hong Kong is very busy, expecting the number of new listings to increase in the second half of the year. There may be more medium-sized IPOs with fundraising between HKD 2 billion and 5 billion. Marcia Ellis, global co-chairman of the Morrison Foerster law firm's private equity business, said that the capital markets team in Hong Kong is currently very busy and expects many companies waiting to list on the A-share market to decide to list in Hong Kong instead. Clearly, while the A-share market is in a state of restructuring, the Hong Kong stock market is taking over the IPOs from the A-share market. The premise for this is to first raise the Hong Kong stock market.
Looking at the capital flows in the past two days, large-cap stocks in the Hong Kong market have performed well, such as Tencent (00700), Netease (09999), and others in the gaming sector, with the release of new summer-related games.
Bank stocks have performed even better, with several points to note: 1) The majority paying high dividends and having a high dividend yield. According to the announcement, the four state-owned banks, namely the Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), China Construction Bank (CCB) and Bank of Communications (BOCOM), will all distribute dividends in July, with a total scale of nearly 300 billion yuan. Of these, ICBC and CCB's dividend distributions are both over 100 billion yuan. CCB (00939), ICBC (01398), BOC (03998), and BOCOM (03328) are all trending steadily; 2) Marginal improvement in real estate policy, which has led to a benign improvement in banks' financial situations; 3) Market expectations for a slowdown in the net interest margin decline of banks and for a bottoming out of fundamentals.
The European Union will on Thursday confirm a temporary tariff of up to 37.6% on Chinese brand cars such as BYD, Geely, and SAIC, as well as Tesla, BMW, and other Western automakers made in China. Germany opposes but France, Italy, and Spain support it, while some countries such as the Czech Republic, Greece, Ireland, and Poland are still discussing it. Overall, the possibility of significantly reducing or canceling the additional tax rate before July 4th is small, as the market has already anticipated it, and it has little impact on auto stocks. However, between July 4th and November 2nd, the EU will conduct supplementary investigations, and there will be four months of negotiations between China and the EU before the final arbitration measures are introduced, so there should still be room for negotiation between China and the EU before final arbitration measures are introduced.
Automotive news has been warming up. The Ministry of Industry and Information Technology (MIIT), the Ministry of Public Security (MPS), the Ministry of Natural Resources (MNR), the Ministry of Housing and Urban-Rural Development (MOHURD), and the Ministry of Transportation (MOT) have announced the list of pilot cities for the integration of 'vehicle-road-cloud' for smart-connected vehicles, which include Beijing, Shanghai, Shenzhen, Guangzhou, Wuhan, Chongqing, Nanjing, Suzhou, Chengdu, and Hangzhou-Tongxiang-Deqing Consortium. Emerging automakers are continuing to gain strength, with Xpeng Motors (09868), NIO (09866), and Ideal (02015) all up more than four points. Specifically, Xpeng's autonomous driving research and development and production output have long been among the best of domestic automobile companies, and the first model by MONA is planned for release in August.
Last week, Li Auto's weekly order volume exceeded 0.01 million vehicles, which means that L6 and L7/9 sales rebounded, laying the foundation for July sales. NIO is the automotive brand with the most distribution of battery swapping stations and charging stations across the country, connecting with various automobile OEM brands regarding charging.
According to media reports, at the Thailand factory completion ceremony and new energy vehicle production of the 8 millionth vehicle unveiling ceremony, Wang Chuanfu, Chairman of BYD (01211), said that BYD officially entered the Thai market in 2022, and during the 18-month period from January last year to now, BYD has become the best-selling new energy vehicle in Thailand; for every three new energy vehicles sold, one is from BYD. In addition, he revealed that BYD's Thai factory was completed in just 16 months since its start of operation and that plug-in hybrid models will be introduced in Thailand in the future. The leader's expansion logic to overseas markets is continuously strengthening, and therefore can withstand the pressure of Buffett's shareholding reduction.
The 2024 World Artificial Intelligence Conference and High-Level Forum on Global Governance of Artificial Intelligence began in Shanghai on July 4th. As an annual event of the AI industry, the exhibition scale, the number of participating companies, the number of highlights, and the number of new product launches have reached their historical highs. Regarding the future development of AI, the general consensus is that differentiation will emerge in the future, and it is estimated that only a few can survive. Baidu’s Li Yanhong said: “Everyone should focus on application instead of models!”, and the application end is indeed the primary driving force for promoting AI. On this aspect, Zhihu (02390) has done well by releasing a new AI product called “Zhihu Direct Answer”, which is a product that generates answers based on the real-world Q&A data of creators according to users' questions and is the formal productization of Zhihu's AI search function. It is estimated that this new product will bring about performance catalysis. Another Fourth Paradigm (06682): In Q1, the AI platform business revenue of Xianzhi AI has skyrocketed by nearly 85%, and the revenue proportion has exceeded 60%. Applications that can generate performance in the future will be sought after by the market.
The strong performance of Hong Kong stocks is mainly due to the stability of heavyweight stocks, and it is still a structural market. The strength of the periphery also played a leading role. At the same time, attention should also be paid to the rise of commodities, including gold. The logic is the Middle East situation and the expectation of interest rate cuts by the Fed. Among them, Lao Pu Gold (06181) is the brand that was the first to promote the concept of 'ancient gold' certified by the China Gold Association. According to Frost Sullivan's data, based on the revenue of 2023, the company's market share in the Chinese ancient gold jewelry market and the gold jewelry market is 2.0% and 0.6%, respectively. The company has opened 33 self-operated stores in well-known commercial centers in 14 cities in China. It rose nearly 11 points today and became a new trend indicator for gold stocks.
Sector Focus
The Ministry of Culture and Tourism, the National Development and Reform Commission, the Ministry of Finance, and other nine departments jointly issued the "Guidance on Promoting High-Quality Development of Tourism Public Services." The guideline proposes to use 3 to 5 years to basically build a tourism public service system that is structurally complete, standards-based, operationally smooth, high-quality and efficient, and matches the high-quality development of the tourism industry. The effective supply of tourism public services has expanded significantly, and the service efficiency has been significantly improved, enhancing the service guarantee capabilities for weak areas, peak periods, and special groups, significantly improving the public's satisfaction with tourism public services.
Main varieties: Fosun Tourism and Culture (01992), Tongcheng Travel (00780), MGM China (02282).
CRRC Corporation (01766): Inclusion in the FTSE China A50 Index, New signings maintain steady growth trend
China Resources Gas (01193): Pricing expectations are increasing, and the profits of overseas long-term contracts for resale are expected to recover.
Recently, the company separately signed a comprehensive energy project framework agreement with China Resources Beer and China Resources Gas, which will run from January 1, 2024, to December 31, 2026, for three years. From 2022 to May 2024, 52% of the cities at or above the prefecture level across the country have implemented price adjustments for residential gas use, and the average price increase is 0.20 yuan per cubic meter.
Comment: The global natural gas price center has fallen back, and domestic demand-push policies have continued to be implemented, indicating a turning point in profitability for city gas. The company's target for retail natural gas sales volume growth of at least 7% is expected to be achieved by 2023. Due to more mergers and acquisitions, the growth of the company's natural gas sales is superior to that of its peers. The company has 276 urban gas projects, increasing by three annually, distributed in 25 provinces in China, with a total gas sales volume of 38.78 billion cubic meters, an 8.1% increase from the previous year. The sales growth of industrial and commercial gases has remained stable compared to the same period last year, with even low double-digit percentage YoY growth in a single month in the second half of the year. Based on the optimization of gas sales structure, the gas supply to residents has improved compared to last year, and there has been a significant increase in commercial and industrial gas sales, which supports higher profits and improvement of gross margin. With the support of slightly improved commercial and industrial demand, the growth of the company's natural gas volume has risen from 6.9% YoY growth in 1H23 to 7.6% in 10M23. The company's Tianjin project JCE incurred a loss of RMB 780 million in 2022. The company is still negotiating subsidies with the Tianjin government in the hope of making up for the loss. The positive aspect is that the Tianjin City resident gas price was adjusted last September, which is expected to help JCE recover some of its losses. Since the beginning of this year, natural gas consumption in China has shown a recovery growth under the backdrop of domestic economic recovery. The "coal-to-gas” trend in the industrial sector may accelerate again and reverse the weak trend this year. With the international gas price hitting the bottom and rebounding, overseas long-term contract profits in 2023Q4 and 2024 are expected to recover.