After the joint strong rebound of the Hong Kong and A shares, how do institutions view the future market?

After experiencing a significant decline in the past few days, A shares and Hong Kong stocks finally saw a strong rebound.

Today, the three major indices of A-shares all surged, with the Shanghai Composite Index up by 3.48%, the Shenzhen Component Index up by 4.02%, and the ChiNext Price Index up by 5.2%. In terms of sectors and individual stocks, the tourism hotels, aeronautical airports, and brokerage sectors all experienced collective explosive growth. Songcheng Performance Development, Guilin Tourism, and many other tourism stocks hit the limit up, China Southern Airlines, Air China Limited reached the limit up, BOC International, GF Securities hit the limit up, and East Money Information surged by 10%.

Hong Kong stocks soared! The Hang Seng Index rose by nearly 1500 points, up over 8%, the Hang Seng TECH Index briefly surged over 18.4%, marking the largest single-day increase since the index was launched. Internet technology companies experienced a violent rebound. Bilibili surged by 40% at one point, Kuaishou, Li Auto surged over 34%, JD.com, Meituan surged over 32%, Tencent rose over 23%, and Alibaba surged over 27%.

Today, the Financial Stability and Development Committee pointed out in a special meeting that relevant departments must effectively fulfill their own responsibilities,Actively introduce market-friendly policies and cautiously implement contractionary policies.Regarding Chinese concept stocks, the regulatory agencies of both China and the United States are maintaining good communication at present.Positive progress has been made and efforts are being made to formulate specific cooperation plans.This significant bullish news is an important reason for the strong rebound in the stock market, and to some extent, it helps stabilize market confidence.

After all, since early March, the SSE Composite Index has dropped from a high of 3500 points, once falling below 3100 points, with a cumulative decline of over 11% in just half a month. The Shenzhen Component Index has fallen by over 14%, and the ChiNext Price Index has fallen by over 12%.

Hong Kong stocks have recently plummeted miserably! In the past month, the Hang Seng Index has fallen by over 17%, with the Hang Seng Tech Index plummeting by more than 22%.

Why the sharp decline?

Regarding the recent major declines in A-shares and Hong Kong stocks, institutions believe that they are mainly affected by expectations of the Fed rate hike, the Russia-Ukraine conflict, large-scale outflow of foreign capital, recurrent epidemics, fragile market sentiment, falling financial data, and disappointed rate cut expectations.Factors such as these.

Tianfeng Securities' Liu Chenming believes that since March, the A-share and Hong Kong stock markets have rapidly declined, reflecting investors' multiple worries about the future market, including widespread epidemic fluctuations domestically, unclear economic prospects and growth stability, continued uncertainty in the Ukraine situation, intensified anti-monopoly measures, friction in the Sino-US financial sector, and massive foreign capital withdrawals. These naturally include unstable factors that may affect the future market, but currently, it seems more like panic emotionally, with market risk appetite plummeting rapidly and showing indiscriminate selling phenomena.

Bohai Securities believes that the recent dramatic plunge in the Hong Kong stock market and massive outflow of foreign capital have suppressed investors' risk preference, leading to fragile market sentiment. The decrease in buying pressure has further intensified the market's decline. Although the latest economic data exceeded market expectations, structural hidden concerns persist. Following the fall in financial data, the disappointment in the MLF rate cut expectation on the 15th also caused some disturbance in the market.

Huafu Securities believes that the recent domestic outbreak of the new crown epidemic, the 'internal worries' of the spring cold, and the unclear geopolitical situation, coupled with the withdrawal of overseas funds from the listing shares, have led to confusion in the market's expectations for several core variables. In addition, the failure of the interest rate cut expectation has poured cold water on investors once again.

Valuations are already attractive.

Several institutions believe that, althoughthere may still be fluctuations in the short term, the valuations of A-shares and H-shares are already attractive.There is no need to be too pessimistic about the market at present, after all, every deep plunge is for jumping higher.

Yinhua Fund believes that China is relatively favorable in terms of growth and policy cycles, with relatively ample space for 'stable growth' policy reserves.Growth may gradually improve around the second quarter.Secondly, the market's absolute valuation is at a historically relatively low level, and its relative valuation compared to other major markets is also attractive; furthermore, inflationary pressure is relatively manageable, as a globally important manufacturing powerhouse, the Chinese market may be relatively more resilient.

Guosheng Securities believes that as the international situation gradually eases, andWith the imminent landing of the early rate hike basis point and subsequent rate hike balance sheet reduction guidelines at the US Federal Reserve's monetary policy meeting early Thursday morning,(it will announce the first rate hike basis point and subsequent rate hike balance sheet reduction guidelines), the A-share market may usher in a sustained rebound after continuous bottom probing. Focus on photovoltaics, semiconductors, new energy-related growth sectors, as well as thematic investment opportunities such as "stable growth" concepts, "digital economy", and "East to West calculation". In the short term, it is advisable to avoid continuous selling by northbound funds, particularly in sectors with relatively large positions such as consumer goods and home appliances.

Bohai Securities believes that in the short term, external risk factors and domestic risk aversion behavior still have the potential for repeated back-and-forth processes, which may drive the market's bottoming-out process. However, from a medium to long-term perspective, the expectations of the steady growth policy driving the recovery of corporate profits are relatively clear, and are expected to bring about a bottom-up trend in corporate earnings. The market's process of dissipating panic and risk aversion factors,are likely to bring about opportunities for bottom allocation within the year.。

CICC believes that the overall valuation of A-shares is in a relatively low position among major global markets, and the Hong Kong stock market is at a low level. In comparison of the forecasted P/E ratio for 2022, the valuation of the A-share market is at a moderately low level among major global markets; the valuation of Hong Kong stocks is slightly higher than only Brazil among 16 major markets, placing it in the second lowest position.

Golden Eagle Fund stated that currently, the price-to-earnings ratio of major index stocks and bonds has reached historical highs, while the price-to-earnings ratio of equity investments is becoming more prominent. In the future, as tensions ease between Russia and Ukraine,the market focus will return to the first-quarter earnings-driven market, with a decline in commodity prices and a restoration of risk appetite, A-shares may still experience a rebound.

Haitong Securities' Xun Yugen believes that it is difficult to grasp short-term market trends, and we need to have a medium- to long-term mindset. A-shares are currently at a relatively low level,and in the long run, there is still a high probability of making money at this position.If funds are not urgently needed, and can withstand the interim fluctuations, looking further ahead may potentially yield higher returns.

When will the stabilization occur?

至于市场何时企稳，有机构认为，目前市场仍在寻底、筑底过程中，但稳住经济基本面、流动性适当宽松、俄乌局势缓解、疫情好转等都有利于市场企稳回升。

东方证券邵宇认为，股市企稳有三方面因素，一是经济基本面要稳住，特别是宏观数据和微观数据相结合，能够显示稳定的信号，特别是一些先行的微观指标；二是流动性应当是适度宽松的，包括降准、降息的信号也较为重要；三是风险偏好要上升，若地缘冲突解除、疫情恢复的话，可能对风险偏好有提升的作用。

招商证券指出，目前市场上悲观情绪较为浓厚，但当前市场已经出现一些积极信号，可能已经开始进入经典的寻底、筑底的过程，4月中旬至5月中旬，等待诸多不确定因素落地，A股有望重新回到上行周期。

华夏基金认为，指数仍在寻底过程中，考虑到地缘局势特别是能源制裁的动向依然是短期最重要的决定因素，市场或有修复但依然不排除反复，直到情形进一步明朗和改善。从交易层面来看，近期止损盘较多，包括前期抄底的部分资金也出现了恐慌性杀跌，指数在企稳前大概率会有所缩量，如果外部环境配合，缩量后走平，就会形成一个明显的企稳信号。

Disclaimer: The opinions in the article are all from the original author, not representing the views and position of Gelonghui. It is especially emphasized that investment decisions should be based on independent thinking. The content of this article is for reference only and should not be taken as actual operational advice. Trading risks are self-assumed.

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