Why Did A-Shares Drop Again? Yuan Depreciation Fears, Trade War, Technicals

Everything is horrible again in China thanks to a modest drop in the A-share market.

iFeng: 谁是大盘杀跌的幕后黑手？三大利空突袭

Who is the black hand behind the curtain?

I. Risk of RMB devaluation approaching

On June 21, the onshore renminbi fell below the 6.50 integer mark against the US dollar for the first time since January ; offshore renminbi fell below the 6.51 yuan mark against the US dollar. As of the press release, onshore RMB against the US dollar reported 6.5035.

Deng Haiqing, chief global economist at Haiqing FICC Channel, believes that the devaluation of the RMB exchange rate is a high probability event. In the midst of the divergent economic trends in China and the United States, the differentiation of the US-China monetary policy, and the appreciation of the US dollar, the Chinese policy layer should never repeat the tragedy of “abandoning foreign reserve and security exchange rates” from 2014 to 2016. Instead, it should imitate Europe and Japan (2014- In 2015, the exchange rate of the Euro and Japanese yen depreciated by 20%, which in turn promoted the economies of Europe and Japan, avoided normalized intervention in the foreign exchange market, and allowed the RMB exchange rate to depreciate at a reasonable level. In the context of Trump's unbelief, the trade issues between China and the United States have intensified, completely changing the basis for the equilibrium exchange rate of the renminbi against the US dollar, and the United States has no reason to criticize the devaluation of China’s exchange rate if it has the wrong circumstances. Instead, the devaluation of the renminbi can greatly improve China's passive situation in the trade war and allow China to gain greater room for maneuver.

Second, the trade war dark clouds

In recent days, Sino-U.S. trade frictions have continued to hit favorable news, especially in the United States.

The Spokesman of the Ministry of Commerce announced at the press conference on the 21st that on the basis of the consensus reached in Washington on May 19th, the two sides conducted specific consultations on agriculture and energy in Beijing in early June and were widely welcomed by all parties. It has been agreed that the manufacturing and service industries will conduct specific consultations in the near future, and at the same time conduct specific consultations on the structural issues of bilateral concern.

The Chinese side believes that the previous consultations between the two parties are positive and constructive. They are in the interest of both peoples. They conform to the established rhythm of China’s reform and opening up and are in line with the principles of the WTO. However, it is deeply regrettable that the US is becoming more volatile and intensifying. To provoke a trade war, the Chinese side has to make a strong response.

Third, the market is still not completely out of the shadow of the crash

Analysts believe that after the release of pessimism and concentration of risks, the market will soon catch a breather, especially the "self-rescue behavior" began to stir, and the index has also rebounded after a sharp fall, but the market is still in the risk and emotional digestion , short-term Did not release the rebound signal, so there are still repeated here.

When will A shares bottoming be completed?

For the short-term market, Tianxin Investment stated that the current market confidence is still devastated by the trade war, and the long-term axis of the trade war is still continuing. The external market is subject to greater uncertainties, so the short-term market needs to be stimulated by external factors. It is the buffer of time that can better change the current trend. With the release of panic, the appearance of heavy yin is also accelerating the formation of the bottom state of the market. From a technical point of view, the stock index needs to pay attention to an integer mark of 2900 points, and the GEM index is still in an empty state. After the new low, the overall trend needs to be reconstructed.

Tianxin Investment indicated that the construction of the bottom of the market is not a one-off process. It can be effectively confirmed after repeated depreciation and recovery. At the same time, changes in the external environment will also have a significant impact on the current market conditions. Therefore, in the recent operations, the control is good. His own desires and position, waiting for the formation of the bottom , while seizing the opportunity to fall out, low position Jiancang blue chips with performance support and well-growing technology stocks.

Xiangcai Securities said that due to the plunge on the first day of the festival (19th), the market is currently in a more panic-stricken atmosphere . This atmosphere needs a certain period of time to repair, so the index room and intra-block return The repetition is also normal, but investors do not have to be too panicky, and the probability of a lower limit of 1,000 shares will be greatly reduced. Although the disk continues to adjust today, the stocks of the two cities fell to a total of about 90 stocks.

Xiangcai Securities believes that since the bull market peaked in June 2015, there have been several consecutive major falls in the market in the past three years. The reasons for each major fall are different, but there is a commonality: the market after each major crash There has been a relatively obvious band rally market , and in most of the band's rally market, no matter how subject stocks are replaced, the new shares have never been absent. In other words, the probability that the new stocks will become the main force for the future rally is very high, but only among them. The opportunities for the near-end, high-quality, and underestimated new shares are relatively large.

In view of the current market recovery after the sudden fall of popularity takes time, repeated will still exist, but this does not affect the perspective of investors to upgrade the strategy, Xiangcai Securities proposed to do a good job in advance of high-quality varieties of strategic attention and tracking to prevent the broader market suddenly caught the bottom after hitting the bottom . Due to the fact that market funds are still lacking, we are still pinning our perspective on small-cap stocks , especially those with excellent quality, low valuation, and high growth , for possible band opportunities that may occur after a continuous plunge .