This article is compiled from Tianfeng Securities's "external risks rise, gold and copper trend differentiation" and China International Capital Corporation's "external risks lead to short-term market fluctuations".

External risks rise and market shocks increase

In August, the volatility of the market has gradually increased and investor sentiment has been weakened, mainly for the following reasons:

① the United States is approaching the election, the potential escalation risk of Sino-US friction

Recently, the Trump administration has made extensive use of executive orders to pressure and threaten Chinese companies directly, bypassing the judiciary, in an apparent attempt to use Sino-US relations to create issues for the general election and win over conservative right-wing voters to influence the election.

On August 5th, the US State Department issued a press statement entitled "announcing the expansion of Clean Networks to protect US assets", naming Chinese technology companies such as China Mobile Limited, Huawei, Baidu, Inc. and BABA. U.S. law enforcement agencies are urged to restrict these "untrusted" Chinese companies from doing business in the United States or internationally, including revoking and terminating the authorization of telecommunications services, and prohibiting Huawei from bidding for submarine fiber optic cables. Block apps such as TikTok and Wechat. At present, there is a tendency to further increase the number and influence of Chinese enterprises involved in the follow-up of this practice.

② A new round of US rescue plan may fail

Nasdaq's all-time high depends largely on investors' positive expectations of both monetary and fiscal easing. However, the recess of the US Congress is coming, and a new round of financial rescue bill has not been introduced in the bipartisan saw-saw, and it may even be difficult to give birth. Federal unemployment benefits have been suspended for more than a week, and 30 million unemployed people now rely on state unemployment benefits to survive. On the other hand, the number of unemployment benefits in the states varies widely and is generally lower than the federal subsidy of $600 a week, which will put pressure on consumer spending in the United States.. If a new bailout fails, it will be a significant negative for US stocks' liquidity and risk appetite.

The performance of US stocks has a greater impact on the liquidity and risk appetite of An and H shares. According to data from the first week of August, money has flowed out of the Chinese market (including H shares and A shares) slightly for three weeks, with a net outflow of 4.449 billion for the whole week for four consecutive weeks, slowing down from previous weeks.

Fundamentals of technology stocks remain strong

China International Capital Corporation believes that in the short term, the market may wobble and absorb the impact of the above factors, but driven by improved fundamentals and policy easing, the positive trend of the market is expected to remain unchanged. However, considering the higher certainty of growth, we are still optimistic about the new economy sector.

From the Q2 earnings data, the basic strength of technology stocks is still strong, as can be seen from cloud computing, 5G and semiconductor equipment sales:

① Cloud Computing: 2Q20 North American Cloud Capital Expenditure grew by 8%, slightly exceeding expectations

2Q20's combined capital expenditure on cloud computing in North America grew 8 per cent year-on-year, slowing from 31 per cent of 1Q20, but slightly exceeding Factset's consensus forecast of 5 per cent. According to Factset's consensus forecast, 2H20/2021 's global cloud computing capital expenditure is expected to grow by 8% and 13% compared with the same period last year. Excluding non-cloud factors such as the reduction in investment in Alphabet Inc-CL C's office facilities and the growth of Amazon.Com Inc's logistics warehousing construction, it is expected that 2H20 cloud computing capital expenditure will still rise steadily.

② 5G: Qualcomm Inc Q2 results exceed expectations, 5G mobile phone shipments are optimistic for the whole year

Qualcomm Inc Q2 adjusted revenue of $4.89 billion, basically flat from a year earlier. With regard to Q3's performance outlook, the company expects Q3 revenue of $73 to $8.1 billion, and adjusted revenue is expected to reach 55-63

Billion US dollars, with a median of 5.9 billion US dollars, + 16% compared with the same period last year. Of this total, the revenue of the QCT division is 4.3 billion to 4.9 billion US dollars, and the median income is up 27% year-on-year. MSM chip shipments are expected to be 145 million to 165 million, with a median of 155 million, an increase of 2% year-on-year and 19% month-on-month growth, mainly from low-end mobile phones and newly released mobile phones. For the shipment of 5G mobile phones in 2020, Qualcomm Inc predicts that it will remain unchanged at 175 million to 225 million handsets, and now tends to the upper limit of this range, and the outlook for 5G mobile phone shipments is optimistic.

③ semiconductor equipment: global semiconductor sales increased by 5.11% in the first half of 2020 compared with the same period last year, and the performance guidance of overseas leading companies is good.

Global semiconductor sales in the first half of 2020 were US $208.67 billion, up 5.11% from the same period last year, while China's semiconductor sales were US $71.56 billion, up 5.50% from the same period last year. Global and Chinese semiconductor sales continued to grow positively in June compared with the same period last year, and the semiconductor industry is booming. The revenue growth rates of United Microelectronics Corp, Anli, LAM Research, TEL and SUMCO in the second quarter were 23.2%, 31.0%, 18.2%, 45.5% and 0.7% respectively compared with the same period last year. The revenue growth in the second quarter is obvious, and the annual performance guidance is more optimistic. Benefiting from 5G development, server construction and storage demand expansion, the development trend of the global semiconductor industry is still upward.

No bubble, no prosperity! We will usher in the biggest technology bubble in Chinese history.

Technology stocks are now overvalued, which may be the reason why many investors can't get their hands on technology stocks.

"in the context of Sino-US confrontation, scientific and technological blockade, and the national system, we will usher in the biggest science and technology bubble in China's history. A few days ago, Zhang Wei, chairman of Cornerstone Capital, put forward the above conclusion on the "Cornerstone Class-Huawei's way of Management" held by Cornerstone Capital.

Reviewing the history of the Nasdaq technology stock bubble, Zhang Wei pointed out that the survival rate of technology companies listed between 1999 and 2001 was only 6.8%, but the great enterprises that survived changed the way of life of all mankind and improved the well-being of all mankind.

He said: objectively, bubbles are of positive significance in promoting the technological revolution and the development of the national economy. In modern history, real prosperity often comes after bubbles burst. To a certain extent, bubbles are the way for us to move forward.

Zhang Wei suggested that since bubbles are inevitable, regulators should face and attach importance to bubbles, promote the continuous reform of China's capital market, and strengthen the crackdown on violations of laws and regulations, so as to guide and make use of the positive side of the bubble as much as possible. promote technological progress and economic growth, at the same time, reduce the adverse effects of bubbles and protect the interests of investors.

In fact, every technological revolution in modern history was accompanied by huge financial bubbles, canal fever during the industrial revolution and railway fever in the steam and railway era. It was after these bubbles and the recession they caused that they ushered in a real boom.

All five technological revolutions have experienced financial bubbles.

A brief review of Xiake's market

The science and technology market can be counted from 1995. The background is as follows: in the 1990s, the service industry gradually replaced manufacturing as the pillar industry of the US economy; the economy entered an era of high growth and low inflation (average GDP was 3.8% and average CPI was 2.6% in 1992). At the same time, the Federal Reserve stopped raising interest rates since 1992; the development of science and technology has changed from the electronic age to the computer age, and the Internet has sprung up. Emerging science and technology policies are constantly beneficial, such as the "information superhighway" strategy in 1993 and the "next generation Internet" plan in 1996. The Internet is regarded as a technological revolution on a par with railways in the 18th century, cars and radios in the early 19th century.

Although Greenspan warned of "irrational exuberance" in 1996, in hindsight, this was only the beginning of the rise. The market began to enter the bubble stage in 1999, and the Nasdaq reached its peak of 5132.5 on March 10, 2000. The market ended in: six interest rate increases since June 1999, Microsoft Corp antitrust case judgment in April 2000, Internet company performance decline, and so on.

Cloud computing, 5G, AI and other new technologies will profoundly change people's lives in the future. these technology themes are worthy of long-term attention, and if there is a sharp fall and correction, it may be a good opportunity to get on the bus in the long run.