Category: Money tips Release Date: 2006-01-03
Quotes of the key factor in the current round of increases is money driven, rapid influx of capital market, stock market wealth effect appears, it is mainly due to stock reform of the price increases in the prices of international resources as well as the anticipated appreciation of the RMB.
Quotes from the current round of last year, since starting December 6, the overall market as well as some industries have experienced substantial increase. To December 5, 2005 closing basis, as of May 16, the Shanghai index rose 49.49 percent, the Shenzhen Composite Index rose 53.32%. This phase non-ferrous metal plate an average 211.81 percent; food, oil, household chemicals, machinery, commercial or more than 80%.
After nearly half a year rise in the current market had risen too fast, pulling up the domestic stock market in some sectors plate rapidly rising prices for international resources have recently been showing down trend, as well as concerns about further macro-control makes the market momentum for further rapid rise in apparent inadequate.
Callback need to pay close attention to the risk
May began, the Shanghai index to six trading days on the fast-foot 1500 points, crossed the 1,600 points, close to 1,700 points. And the Shanghai stock market turnover hit a record high of two. From a historical comparative perspective, the "5.19" Quotes, "6.24" Quotes are delivered in a record amount of days later, the follow-up caused by unsustainable capital market down. From this perspective, since the Shanghai stock market trading volume in May of two new high merits our attention.
In summary, we believe that broad market has entered a high short-term region, shock will be increased, in particular, is too large for some initial gains, stocks have been rising rapidly, the need to pay close attention to the risk of callbacks. Recommended to avoid early or too large industry, plates, and individual stocks, rallies lighten up, reduce the stock position, to avoid the risk of the overall market correction; may be appropriately concerned about the iron and steel, electric power, automobile and coal industries plates compensatory growth opportunities.
The long-term bull market is a foregone conclusion
In the past five years, the world's major economies, the stock market rally gratifying. Not only India, Brazil, Russia, rose up to 170% of the emerging markets, Japan represented a more serious long-term bullish markets have been oversold, even the U.S. dollar devaluation in the U.S. stock market has demonstrated a strong multi-party. In the global market, "arrogant deep hum" in five years, China's stock market was experiencing the longest and deepest bear market decline.
Other hand, this round of a bear market, it not only made China's stock market uncertainty --- one of the biggest state-owned shares in circulation problem was solved, but also the stability of the value of A-share investment, predictability greatly increased. Quotes of the round up, although the expected benefit from the appreciation of the renminbi, China's sustained high economic growth and the internationalization of China's stock market trend, but to a greater extent be attributed to the split share structure reform.
The long term we still stick to our strategy in 2005, the report's view: split share structure reform will spur China's stock market long-term prosperity and long-term lay at the bottom of the stock market.
Listed company's profit growth
Situation from the fundamentals of listed companies, 2005 Annual Report and in 2006 a quarterly data: A shares of the company's overall profitability has been declining, but we think a quarter would be profitable at the bottom of A-share companies, the future of listed companies, especially listed companies, the leading earnings growth will be significantly restored. Including building materials, motor vehicles and parts, machinery and equipment, communications, household appliances, electric power, transportation and other industries will be bottomed out rebound profitability; while banks, real estate, retail, food and beverage, nonferrous metals, medicine, telecommunications services and other industries profitable will continue to maintain steady growth, annual growth is even likely to exceed market expectations. Further stated that the major trend of the RMB appreciation, China's stock market attractive to foreign capital continuously strengthened.
Short-term adjustment pressures exist
In summary, although long-term perspective, we firmly believe that China's stock market bull pattern has been formed, but the existence of the short term, the stock market to adjust pressure.
We recommend that institutional investors taking advantage of broad market adjustments, adjust the position structure. We believe that the future rise in price will be more driven by the performance in the stock market Stock Quotes has divided the case of capital and profits will be further concentrated to high-quality enterprises.
(The author is director of the Department of Bohai Securities Research Institute)
