By Qian Shuo
After falling to the lowest point of the year, the A-share market started rebounding from the bottom line last week.
In general, white-horse consumption stocks and growing technology stocks were leading the warming trend and restoring a stable market. However, on Friday, as the leading "unicorn" company, Foxconn, went public, Shanghai composite index broke down again, which exposed investors' fear and concerns.
This week, CATL will be launched on the Shenzhen growth enterprise board. Moreover, the Federal Reserve will announce the result of interest rate hikes. A series of factors, both from domestic and global markets, may challenge investors' risk appetites and affect the indexes.
The main benchmarks didn't change as much from the week before.
The Shanghai Composite Index was down 7.99 points, or 0.26%, to end at 3067.15. The Shenzhen Composite Index rose 36.17 points, or 0.36%, to close at 10205.52. The Growth Enterprise Index gained 1.97 points to 1711.52, leaving it with a slight 0.12% weekly gain. The Small and Medium-Sized Index advanced 33.53 points, or 0.48%, to finish at 7035.08.
Ever since last month, the great consumption sector has shown strong performance, especially stocks in food and beverage and medicine sectors. We will continue to see opportunities brought by consumption upgrading.
As the evaluation of A-share stocks become more and more international, the leading consumption stocks in A-share markets will benefit from the trend, and the giant consumption market and great consumption potential of China will produce more excellent companies.
On Wednesday, Kweichow Moutai went up and at one point was above 800 yuan mark. According to Kweichow Moutai's strong performance and the white-horse stocks' warming trend on recent trading days, related stocks appeared to be more attractive to the funds after A-share stocks were included into MSCI.
During the first three trading days after the inclusion on June 1st, the A-share market was first down then up. Even so the funds from the south were still active in response to the adjustment in the market. The total net inflow of funds to the north was 12.517 billion yuan.
Among them, Kweichow Moutai and 11 other stocks were on the top 10 most active stocks on the list during the first three trading days of the Shanghai Connects and the Shenzhen Connects.
On Wednesday, the CSRC issued 9 regulative documents regarding the details of CDR issuance, which meant the beginning of launching the trial of issuing stocks or depository receipts. In the documents, CSRC stressed that they would make reasonable arrangement for the timing and pace of the issuance by strictly controlling the number of enterprises and the amount of funds raised.
Encouraged by the news, the security sector along with the concepts of "unicorn", CATL, and venture capital went up, and some related stocks were active in the market. With the development of CDR, more oversea listed Chinese technology stocks will come back to the A-share market, and the situation of A-share technology sector will change gradually.
Therefore, stocks with unmatched evaluation and profits will be challenged by the new blood, and these new leading technology stocks will essentially be included into the indexes and optimize the indexes in the future.
At the end of last week, Foxconn officially went public, and the price was up 44.01% right after the opening of the market, with a total market value of 390 billion yuan. Before the good news of Foxconn, on June 7th, CSRC has accepted MI's application for IPO and listing. MI was the first application after the trial of CDR was launched.
The return of "unicorn" companies will accelerate the differentiation of growing stocks in the market, and those current leading growing stocks will be able to share the valuation premium of the "unicorns". Referring to the case of Qihu 360's return, "unicorn" companies will have obvious valuation premium.
Although in short term this will bring pressure to current stocks, it will promote the growth of the entire industry in long term. Investors can focus on industrial internet, internet finance, cloud computing and service, new media, and artificial intelligence sectors.
In general, although the market is still facing many uncertainty, or even some disturbance, the direction supported by related policies is confirmed.
According to the overall environment of the domestic market, expanding domestic demand, industry upgrading, and technology production are still the main focus of China's economic development. Biomedical, computer, military industry, new energy vehicle, and great consumption sectors are the hot spots in the market.
