The entire line is boiling.
Stimulated by the news of the formal commencement of the hydropower project on the Yarlung Tsangpo River, today's Water Conservancy and Hydropower Sector surged, with multiple stocks such as Power Construction Corporation of China, Ltd hitting the daily limit; the mining blasting Concept, Cement, Construction Machinery and other sectors also rose; the Steel Sector climbed, with Xinjiang Ba Yi Iron & Steel reaching the daily limit; the UHV sector rose sharply, with Jiangsu Ankura Smart Transmission Engineering Technology hitting a 20% limit.
In terms of ETFs, the Building Materials Sector skyrocketed, with 富国基金 Building Materials ETF, 国泰基金 Building Materials ETF and Building Materials ETF 易方达 hitting the daily limit, with the latest premium/discount rates being 2.73%, 2.68%, and 2.52% respectively; the Infrastructure Sector also followed suit, with 华夏基金 Infrastructure 50 ETF, 国泰基金 Infrastructure ETF, 银华基金 Infrastructure ETF and 广发基金 Infrastructure 50 ETF rising by 7.27%, 6.66%, 6.41% and 6.27% respectively.
From the perspective of Turnover Ratio, 富国 Building Materials ETF's turnover rate soared to an exaggerated 546.51%, while Building Materials ETF 易方达, 华夏 Infrastructure 50 ETF, and 国泰基金 50 ETF all exceeded 100%, which clearly shows the enthusiasm of investors in grabbing holdings.
Among them, Building Materials ETF 易方达 obtained a net subscription of more than 0.1 billion shares during the trading session.
Tianfeng believes that in terms of the construction phase of the Water Conservancy and Hydropower project, it is important to focus on construction diversion, blasting, foundation treatment, dam construction stages, and the corresponding building materials used; the engineering phase should pay attention to the main design and construction, foundation treatment, blasting and key equipment for water diversion tunnels; on the materials side, the focus should be on the Cement Sector and the Water Reducer Sector.
Morgan Stanley published a research report stating that the Yarlung Zangbo River downstream hydropower project in Tibet officially began construction on July 19, with a total investment of 1.2 trillion yuan. The bank expects that during the construction phase, the Cement and Steel Industries will directly benefit, with total cement demand for the project estimated to reach between 20 million to 30 million tons, with an annual demand of 1 million to 1.5 million tons.
From today's ETF market trends, domestic ETFs that may benefit from the downstream hydropower project of the Yarlung Zangbo River track indices such as Construction Materials, CSI Construction & Engineering Index, State-owned Enterprises One Belt & One Road, and Construction Machinery themes.
According to the official website of the CSI Index, the CSI All Share Construction Materials Index selects listed company securities involved in the construction materials field from the CSI All Share Index as index samples to reflect the overall performance of securities of companies listed under this theme.
The top ten weighted stocks of this index are CONCH CEMENT, Beijing New Building Materials Public, Beijing Oriental Yuhong Waterproof Technology, SKSHU Paint, Tibet Tianlu, Zhuzhou Kibing Group, Huaxin Cement, Xinjiang Tianshan Cement, Zhejiang Weixing New Building Materials, and Guangdong Tapai Group.
In terms of scale, among the ETFs tracking the Construction Materials Index, the largest is the Cathay Funds Construction Materials ETF, with the latest scale being 0.685 billion yuan, while the E Fund Construction Materials ETF has the lowest fee rate, with a management fee and custodial fee of only 0.2% per year, placing it in the lowest cost tier of the market.
Among the ETFs tracking the CSI Construction & Engineering Index, the largest is the YinHua Funds Construction ETF, with the latest scale being 0.428 billion yuan. The GF Fund Infrastructure 50 ETF is the only ETF tracking construction projects, with the latest scale being 2.432 billion yuan.
In addition to the launch of super projects leading to an increase in demand in the building materials sector, the industry’s anti-involution has also accelerated the clearing of supply in the building materials sector.
On July 7, the State-owned Assets Supervision and Administration Commission and the All-China Federation of Industry and Commerce jointly released an industry initiative, in which 33 construction enterprises collectively resisted "involution-style" competition, promoting the shift from "relationship competition" to a healthy track focused on technological innovation and engineering quality.
The National Development and Reform Commission has released a document stating that it promotes high-quality development of new urbanization, mentioning the use of "two重" and "two新" funds as a lever to increase investment in key areas of new urbanization.
Guosen pointed out that under the positive guidance of policies, the construction and building materials industry is expected to reach a consensus and compete in an orderly manner on the supply side, while benefiting from the release of incremental demand from urban renewal on the demand side. The overall supply-demand pattern is expected to marginally improve. Currently, the sector's valuation and hold positions are at the bottom, and under the upgrading of the industry's anti-involution, the building materials cycle sector may welcome improvements.
Citi issued a report stating that the project has macroeconomic significance. If estimated with a 10-year construction period, it is expected that in the first year, it will drive China's investment and domestic GDP growth rates to increase by 0.23 and 0.09 percentage points, respectively. Citi stated that this reflects an acceleration of policy implementation in the face of visible downward pressure on the domestic economy. With the commencement of Supply Side Reform 2.0, the launch of super projects is expected to provide support for the demand side, potentially slightly alleviating the pressures on economic growth and employment.
