Anatomy of the large cap market.
Today there was a big reversal in A-shares, with all three major indexes up significantly, and Hong Kong stocks also steadily rising with a closing increase of 2.06%.
Yesterday, the CSRC approved CSI Financial to suspend margin securities lending from July 11th and to close out all existing margin securities lending contracts before September 30th. The exchange's margin securities lending margin requirement has been raised from 80% to 100%, and private funds have been raised from 100% to 120%. This will be implemented from July 22nd. For a long time, the market has complained about the short-selling nature of margin securities lending, as only institutions can lend securities to make money by shorting. This is inherently unfair to retail investors. This time, the regulatory authorities have finally listened to the market's voice and taken timely measures to directly restrain short-selling. Although the scale of margin securities lending is not particularly large, its impact on the market in a bearish market is significant, and the key is that the regulatory authorities have released their will and determination to crack down on short positions. Under the limelight, the short-selling forces will inevitably have to converge and can only make money by going long.
The Federal Reserve has once again sent a dovish message. When testifying before Congress, Powell said that the Fed does not need to wait until inflation falls below 2% before cutting interest rates. This change in attitude is clear. Coupled with the significant downward revision of non-farm payroll data in the United States, the probability of the first rate cut in September has already risen significantly. The NASDAQ and S&P in the US stock market continue to hit historic highs.
The US CPI data for June to be released tonight at 20:30 is quite important, with investors focusing on core CPI. If the US core CPI rises between 0.15% and 0.20% on a month-on-month basis, it will further push up the US stock market, but perhaps short-term high points will accelerate. If it is below 0.1%, then there will undoubtedly be a sharp rise. Regardless of other situations, it is expected that core CPI will show a decline, but the magnitude is not expected to deviate too much.
If the rate cut does begin in September, then the space for domestic monetary policy will be opened up, and a reduction in interest rates and reserve requirements in Q4 will be worth looking forward to.
Under this great backdrop of expectations, sectors related to interest rate cuts will be sought after by the market. Firstly, the real estate sector, such as Seazen Group (01030), CG Services (06098), China Resources Land (01109), etc., is relatively sensitive, but the price increase is not relatively large, as the inflation data in the United States still need to be further observed.
而市场反响更强烈的是创新药这块，除了基本面国家鼓励创新药，国务院常务会议审议通过《全链条支持创新药发展实施方案》之外，更关键是海外降息走向宽松之后，医药类的资本开支会加大投资力度，海外市场业务会趋于好转，因此，相关昭衍新药(06127)、康龙化成(03759)、信达生物(01801)等涨幅都在6个点以上。
Consumer stocks are also showing vitality. Among them, consumer electronics such as Q Technology (01478), whose company announcement forecasts that the shareholders' share of the group's comprehensive surplus profit for the six months ending June 30, 2024, may increase by about 400% to 500% compared to the six months ending June 30, 2023. Unexpectedly, the performance was so explosive that it directly rose 24.13%, with Sunny Optical (02382) and Cowell (01415) also being stimulated. Duty-free shops such as China Tourism Group Duty Free Corporation (01880) also rose sharply by 7.65% today. This wind vane must be paid attention to, as it is very likely that it will begin to emerge from the bottom.
Tesla continues to rise, which is a positive boost for domestic car companies. The market has shifted its focus to bottomed-out stocks such as Xpeng Motors (09868) and Li Auto Inc (02015). The Xpeng MONA M03 new model had a global debut with an expected official release in August, which is poised to become a superstar product in the A-class pure electric market. Automotive-related suppliers are also on the rise, such as PSS company (Premium Sound Solutions) under AAC Technologies (02018), a leading global high-end audio system supplier. Popular models such as the KIA Niro, Xiaomi SU7, and Li Auto L Series have all used AAC Technologies/PSS company's speaker products. Today, it rose more than 6 points once again.
Good news comes from the upstream lithium battery. The China Automotive Power Battery Industry Innovation Alliance released battery market data for June and the first half of 2024 that showed the total power battery and other battery output reached 84.5GWh in June, a monthly increase of 2.2% and a year-on-year increase of 28.7%, driven by the new energy vehicle market. Sales were 92.2GWh, increasing by 18.4% monthly and 51.2% annually. Among them, the sales volume of power batteries was 69.3GWh, up 23.3% monthly and 37% annually. With the gradual digestion of high lithium salt inventory in the lithium industry and the driving force of lithium salt demand because of factors such as new energy vehicles going overseas, the supply and demand pattern of the lithium salt industry is expected to improve after the fourth quarter of 2024, which will drive the price to turn around. Ganfenglithium, which was mentioned in the individual stock report yesterday, rose by 8.88% again today.
Baidu Group (09888) has successfully garnered attention with its robotaxi; Tencent (00700), Meituan (03690), and other leading stocks' prices have remained strong, while Alibaba (09988) is struggling. Today, there is a rumor that Jack Ma returned to Hangzhou on July 6th and appeared at the Alibaba headquarters. The last time Jack Ma returned to China, Alibaba announced "the most significant transformation the company had undergone in 24 years", redefining the governance relationship between Alibaba Group and its various businesses and launching the "1+6+N" organizational structure adjustment. Zhang Yong stepped down, and Cai Chongxin and Wu Yongming, both of the "Eighteen Arhats," took over as Chairman of the board and CEO, respectively and so on. We don't know whether there will be new initiatives this time, but Alibaba rose by 2.46% today.
Please note that the first batch of CSI Central State-Owned Enterprises Dividend ETF Accessible Through the Hong Kong Stock Connect will be listed for trading on July 10th. The performance of four ETFs varied on the first day of listing, which may be related to the building pace of the new fund. According to Wind data, as of June 11, 2024, the cumulative net yield of the "CSI Central State-Owned Enterprises Dividend Index" for almost a year reached 23.69%, and the cumulative net yield for nearly three years was 67.55%. The cumulative net gain since the foundation of the index was 85.03%. In the short term, the red chip shares trading seems a bit crowded, but in the long run, the price-earnings ratio of the CSI Central State-Owned Enterprises Dividend Index is about 8.16 times, and the price-to-book ratio is about 0.81 times, with an overall valuation performance at a low level. Even after adjustment, the dividend yield is still worth paying attention to.
Sector Focus
Good news comes from the communication industry in our country: the key technology of 6G, marked by the integration of communication and intelligence, has made a new breakthrough, with 4G and 5G communication links expected to have the transmission capacity of 6G. Based on multiple key technologies for the integration of communication and intelligence, Zhang Ping, an academician of the Chinese Academy of Engineering and a professor at Beijing University of Posts and Telecommunications, and his team have built the world’s first field trial network for the integration of communication and intelligence of 6G. They have verified the feasibility of 4G and 5G links having the transmission capacity of 6G. The communication system is intelligently designed, and its capacity, coverage, and efficiency have been significantly improved.
This accomplishment and its innovative theory were published in the Chinese communication periodical "Communication Journal" in the form of an article. Compared with 5G, 6G has a higher rate, lower latency, wider connection density, and can achieve deep integration of communication, artificial intelligence, and intelligent perception. Artificial intelligence will enhance communication's ability to perceive and understand semantics. The ubiquitous communication of 6G will extend the tentacles of artificial intelligence to all fields and corners, and the integration of the two will accelerate the formation of new digital economic formats.
Major varieties: China Telecom (00928), China Mobile (00941), China United Network Communications (00763), China Tower (00788), ZTE (00763).
CRRC Corporation (01766): Inclusion in the FTSE China A50 Index, New signings maintain steady growth trend
GCL Tech (03800): Overseas Polysilicon Project Accelerates Landing and Continues to Expand Cost Advantage, Market Share Keeps Improving.
On June 3rd, GCL Tech announced that it had reached a cooperation agreement with Abu Dhabi sovereign fund Mubadala, and their subsidiaries will explore the first polysilicon project in Abu Dhabi. As the United Arab Emirates actively transitions to clean energy, the company's cooperation with the Abu Dhabi sovereign fund will also promote the development of the local photovoltaic industrial chain from the perspective of materials.
Comment: The company's overseas polysilicon project is likely to speed up its landing pace and start construction within 2024. The current market mismatch feedback does not affect the high-growth trend of the industry. On the demand side, photovoltaics will be deeply embedded in the construction of new power systems; photovoltaics plus solid-state batteries, efficient energy storage, and ultra-fast charging will create an energy base for low-altitude economics. Currently, the global industrial chain is undergoing profound restructuring, and China's photovoltaic industry's comprehensive overseas deployment is inevitable. In the next five years, the market size of perovskite stacked solar cells is expected to increase geometrically. The company exited the rod-shaped silicon field entirely in 23 years, focusing on polysilicon. The annual output of polysilicon was 0.2036 million tons, the entire cost of polysilicon decreased by 27% year-on-year. Meanwhile, the production costs at the Baotou base have dropped to 35.9 yuan per kilogram of polysilicon. The cost advantage over rod-shaped silicon has continued to expand, and the market share is expected to further increase. The company's modular production capacity expansion is accelerating, and the production capacity is expected to approach 0.5 million tons by the end of 2024.
The company's four major base capacities are expected to maintain relatively high utilization rates after the second quarter of 2024, and the overall cash cost/full cost is expected to reach below 34 yuan/40 yuan per kilogram by year-end, which still has significant advantages compared with the cash cost range of 35 yuan per kilogram of the excellent companies using the Siemens method. Recently, the company signed a three-year purchase contract of 0.425 million tons with polysilicon industry leader Longi, which is conducive to rapidly increasing market share and improving pulling efficiency through CCZ. In addition, the company has continuously improved the photovoltaic efficiency of perovskite components published by the acquisition of a 45% stake in Xiamen Weihua, which has been adopting Calcium titanium-cell technology for the last 23 years.
In 2023, the company's overall sales volume of 18,000 kiloliters, +28.10% year-on-year, significant growth. In terms of product structure, 10-30 billion yuan products' operating income was 401/1288/60 million yuan, respectively.