Xinhua: Lots of Positive Factors Supporting A-Shares

Xinhua put out an article in support of the stock market on Wednesday. The article itself isn't anything special. Rather, the need to put this out signals there's worry about a shift in sentiment. The 3000 level was important for the Shanghai Composite. Chinese retail investors follow technical analysis closely. Many investors expected the "national team" would step in and defend that level. Instead, it was taken out swiftly and in size, while the Chinext fell to a bear market low.

Shares bounced in early trading on Wednesday, but the Shanghai Composite is off by 0.9 percent at 11 AM. The tracking portfolio of stocks with heavily pledged shares is down 1.5 percent.

iFeng: 新华社：多方积极信号将支撑A股行稳致远

Affected by various factors such as the external environment, A shares suffered a drop on the 19th. Market analysis, in the falling market, there are already many positive factors in the A-share market. The continuous improvement of the performance of listed companies, continuous inflow of external funds, steady advancement of reform and opening up policies, and other favorable factors will support A-shares to stabilize and make progress.

...“Benefiting from the brand upgrading of consumer medicine, the international tourism sector witnessed a very good performance growth, mass consumer products also showed a good performance growth, and the performance of such companies as milk and condiments rose sharply,” said Yang Delong, chief economist at Qianhai Open Source.

Wind data shows that as of the close on the 19th, the leisure service industry in Shenwan's first-tier industry has risen by 8.57%, the food and beverage industry by 1.46%, and the pharmaceutical biotechnology industry by 1.14%, which is obviously better than other industry sectors.

In the market, the head stocks of companies with performance support have performed well. For example, since the beginning of this year, China’s national travel has risen by over 50%, Chenguang Stationery has risen by over 25%, and Suning’s e-commerce has risen by over 8%.

From the external environment, the continued inflow of foreign capital also shows the confidence of the global market for A shares. Wind statistics, as of the 19th, Shanghai Stock Exchange totaled 15.473 billion yuan this month, a net northbound inflow of 56.704 billion yuan this year; Shenzhen stocks total inflows to 14.926 billion yuan this month, this year, a net inflow of 11.310 billion yuan from the north.

...From the industry point of view, the performance of companies related to consumption upgrades has grown faster. Data show that the top five A-share market revenue growth in the first quarter of the industry are building materials, computers, food and beverage tourism, textile and clothing, light industry manufacturing, revenue growth rate were 33.65%, 26.13%, 23.95%, 21.79%, 21.78%.

The cyclical industry has also clearly recovered. Data show that in the first quarter of the A-share market, the industry ranked in the top five net profit growth rate for the mother industry was building materials, steel, telecommunications, catering, tourism, and non-ferrous metals, of which, the net profits of steel and non-ferrous metals were 91.14% and 37.18%, respectively.

They doth protest too much:

The deepening of the dividends of the reform and opening up measures has continued to be released. Many positive signals point to the long-term benefits of the A-shares.

In March, the Shanghai and Shenzhen Stock Exchange perfected the delisting system, clarified that major listed companies were not allowed to resume listing, etc., to promote a better "metabolism" of the market; in June, the innovative and start-up companies issued the CDR matching system, and the emerging economies could receive further support; Another round of special law enforcement inspections has further improved the capital market environment...

"In recent years, China's financial regulatory reform measures have been successively implemented, which has effectively enhanced the institutional facilities of China's capital market, significantly improved the country's securities market environment, and laid a solid foundation for the long-term stable and healthy development of China's stock market." Tian Lihui said.

The recent landing of a number of open policies also points to a positive effect on the capital market. For example, A-shares are included in the MSCI Emerging Markets Index and the Global Benchmark Index. This month, the regulators canceled QFII and RQFII's restrictions on the repatriation of related funds and the principal lock-up period requirements.

“From a macro point of view, in recent years, China has made more reforms to the capital market and financial markets and has been expanding its opening up. These have brought positive changes to the A-share market and are conducive to the healthy development of the capital market. The market is stable and far-reaching," said Yang Delong.

For some of the recent market concerns, there has been relatively positive feedback recently. For example, Xiaomi Group said on the 19th that it decided to implement the listing plan for Hong Kong stocks and China Depositary Receipts step by step. This, to a certain extent, eased the market's concerns about the funding constraints.