Category: Money tips Release Date: 2007-06-29
Review market trends this week,
Stock index shot up this week, down, in addition to continuation of Monday's rally last Friday, the index was down unilateral movements for the week fell 209.35 points, below 2,700 points to close at 2673.21 points, a strong stock shocks. With the inventory management of credit funds and irregularities in the stock market accounts, as well as singing Air China A-share market and frequent statements, profit-taking pressure to focus on the outbreak, and trigger market expectations of management control, finance, real estate, steel, petrochemicals and food and other heavyweights, as well as pre-or large stocks have a dramatic correction, leading stock indexes have plummeted Wednesday, and Friday one-day drop in more than 100 points, hitting the biggest weekly decline in this round of Quotes. This week, the market volume is still large, but gradually shrinking. Better performance this week, oil, household chemicals, paper packaging, communications and computer hardware industries, the relatively weak performance of real estate, finance, steel, petrochemical and food industries.
Market outlook next week
We believe that the recent market volatility will remain high strength, short-term is expected to suffer a technical rally. Although the market long-short divergence, but in January a huge volume makes the market long-short between the two parties to resolve a certain extent, we expect this situation will continue, and thus the market will still continue the pattern of high volatility.
The recent market funds face short-term pressure is likely to encounter. Inventory management, credit funds and irregularities in the stock market accounts will result in some speed up the outflow of illegal funds; government officials prompted the risks and the stock market dropped sharply this week, is also a serious blow to the confidence of investors to do more, and because the Spring Festival approaching, part of the funds will be profitable settlement, which funds out of A-share market, as well as the fund redemptions increased; with the stock market's sharp drop in January surge in the number of A-share accounts have begun to come down quickly; while part of the fund to respond to redemption pressures, as well as institutional investors control the position, sale out of stock also accelerated the outflow of funds. In addition, since the market bubble in line for the local identity; lift the ban in February the number of large non-tradable shares in the market where the future is uncertain stronger motive to sell; and worried about an overheated economy caused by increases in interest rates is also expected to bring up on the market to the pressure.
On the other hand, from the performance of listed companies to disclose terms notice in 2006, good profit growth of listed companies, while the annual report of Quotes has not yet commenced; additional indicators in oversold stocks led the index is expected to start under a certain degree of rebound.
Supported by the fundamentals of the stock market is currently running no significant change, China's macro-economic situation and the performance of listed companies continues to improve, the current market valuations are at a reasonable range. The appreciation of the RMB and foreign trade surplus made the market situation of excess liquidity in the short term will not be fundamentally changed. We remain optimistic about the long term A-share market bull market, continue to adhere to a positive long term growth investment strategy.
Recent Investment Strategy
We are both offensive and defensive in the near future will remain relatively balanced trade allocation strategy, continue to strengthen the defensive asset allocation. We will actively annual reports and dividend distribution market, concerned about the future performance expectations clear and high-growth enterprises, give full consideration to the reasonable valuation, to avoid early or too large stocks. We will actively explore a private placement, the overall market, asset injection and restructuring of the company subject matter, and continue to focus on two tax benefit from the merger of industry and the annual report is expected to better company performance. At the same time we have a monopolistic position to reap high profits, may lead to a highly regulated industry with caution. We continue to insist on machinery and equipment industry, food and beverage, pharmaceutical and other consumer goods and retail, tourism, hotels, banks and other senior services strategic configuration status and focus on the relatively low valuation of second-line blue chips; concerned about the chemicals, transportation, building materials , paper and packaging is relatively cheap and inflection point near the valuation industry.
1, maintenance of food, commerce, tourism, medicine and other consumer services sector strategy configuration
China is in the consumption structure is being upgraded, the demand for branded consumer products will maintain rapid and stable growth, while consumption has entered the peak season; the tourism industry affected by the 2008 Olympic Games, results of operations will be greatly improve; the pharmaceutical industry benefit from the Eleventh Five-Year Planning and health care reform, along with people's medical and health emphasis to increase and the aging population in China is entering stage, the demand for traditional Chinese medicine will maintain rapid growth. Leading companies in the industry have been relatively high valuation of the case, we will focus on growth is better, a relatively low valuation of second-line blue chips.
2, continue to maintain the equipment manufacturing industry, the strategic position of super-distribution
China's economy is entering the era of heavy chemical industry, equipment manufacturing industry by the State policy support, China's huge demand for infrastructure construction to allow the industry will continue strong. With the evolution of the process of heavy and chemical industries and the global transfer of manufacturing to China, machinery and equipment manufacturing industry in the upgrading and development, and their exports have also shown a clear increasing trend of rapid expansion of the industry to be less cyclical. Judging from the current annual reports of listed companies has been published performance point of view, the industry performance excellence in 2006, coupled with its rapid growth in the next three years, is expected to clear, to continue to maintain its strategy of super-distribution.
3, concerned about the relatively low valuation of the chemical industry, transportation and other industries
At present, China on the specialty chemicals industry, a stable growth in demand, with monopoly of scarce resources and at the bottom of chemical industry chain, but with technical barriers and management advantages of the various sub-sectors leading the company's performance in the future to maintain the stability of rapid growth, but specialty chemicals industry, the relatively low valuation, which is relatively attractive.
In the high level of overall market valuation of the circumstances, the relatively low valuation of the highway, aviation, airports and other transportation steady growth in defense industry growth in the stability of the performance, sufficient cash flow and a high proportion of the dividend yield the valuation of benefits that stand out, the industry is less affected by increases in interest rates, while the income tax benefit adjustments on the branches within the industry.
4, concerned about the inflection point may be approaching the power industry, construction materials and paper packaging industry
Market turning point is approaching the power industry has been expected, the state press to enlarge and environmental constraints of small policy changes will benefit the industry consolidation, the industry leader for companies. Coal linkage policies will likely be introduced, but also conducive to ensure that the power industry profits.
Glass, cement and other building materials sub-sectors of the inflection point may have occurred, the state energy-saving and environmental protection policies to restrict the formation of industry overcapacity repression and accelerated the industry consolidation, we focus on the core competitiveness of the industry with leading companies.
Paper packaging industry through the pre-competition, oligopoly in the market has basically been formed in recent years consumer demand for paper is expected to maintain steady growth, we focus on an integrated forest companies and pulp and paper technical advantages of the leading companies.
