Today's A-share market continued its recent volatile trend, and the overall market showed a moderate fluctuation. Previously, the transaction amount of Shanghai and Shenzhen stock markets exceeded 2 trillion yuan for many consecutive days, but today's transaction volume has converged, with the transaction volume being less than 2 trillion yuan throughout the day, and the transaction heat has cooled slightly compared with the previous period. In the market, the characteristics of protecting the index and falling stocks are more obvious. Weight stocks have always maintained a steady trend. Financial cycle and other sectors are also actively protecting the market to support the index. However, small and medium-sized stocks have adjusted to a certain extent, and individual stocks have differentiated their performance.
At present, since the adjustment at the end of August, the market as a whole has been in a stalemate stage of long and short tug-of-war. Behind this stalemate is the fragility characteristic of the capital side. On the one hand, the balance of margin financing and securities lending continues to break through, setting a record high since 2016, indicating that market participation enthusiasm is still there; but on the other hand, the average market guarantee ratio has declined, which means that investors' leverage ratio has increased, and the investment safety margin has decreased accordingly. Both bulls and bears have their own considerations in their current positions. They do not have enough power to promote the sharp rise of the index, nor do they lack factors that lead to the deep adjustment of the index, which puts the market in a stalemate.
Looking at history, this is a relatively typical manifestation during the adjustment process during the bull market. So, as the market volatile operation is expected to continue, who will break this deadlock? At present, the overseas Fed rate cuts and the performance of the domestic securities sector may become the key to short-term breakthroughs.
1. The Federal Reserve's interest rate cut is on the string. The market has been fully priced. The Federal Reserve will resume interest rate cuts in September, and the probability of a 25 basis point cut is expected to be 89%. This means value reconstruction for major global assets. The Fed's interest rate cut is usually good for US stocks and US bonds, negative for the US dollar index, and weaken the attractiveness of US dollar assets and drives global capital relocation. Historical experience shows that under the influence of the Federal Reserve's loose monetary policy, major global assets can often benefit from liquidity expansion and achieve good performance. This is a good thing for the A-share market as a whole;
2. The securities sector also benefits from domestic policy support and deepening reform of the capital market. In the context of accelerating the construction of a financial power, further deepening reforms remains the focus of the capital market's work in the second half of the year. Industry mergers and acquisitions continue to heat up. Driven by policies, deepening reforms and resource integration of financial institutions are the future development trends, and the differentiated operations of leading securities companies and small and medium-sized institutions promote the reshaping of the industry structure. Wealth management transformation and pan-wealth management specialty securities companies bring new growth. Residents' savings are accelerating their transfer to the capital market, forming a continuous source of incremental funds and bringing sustained momentum to securities firm business.
Overall, the current market is experiencing a relatively typical oscillation adjustment in the bull market. In the context of the core logic of the bull market not fundamentally changing, the oscillation in this stage can still be regarded as a wash-up consolidation in the bull market process. From the current market situation, to break this stalemate, on the one hand, we can focus on paying attention to the actual impact of the Fed's interest rate cut in September, and its boosting effect on global liquidity and market risk appetite is worth looking forward to; on the other hand, we can also pay close attention to the securities sector that has benefited from multiple policy stimulus in the near future but has not yet fully performed. As the "bull market flag bearer", if the sector can make efforts in the future, it may become an important engine to drive market breakthroughs.
For investors, they should stay on the sidelines as a whole and wait patiently for the end of the index fluctuation. In terms of positions, you can consider maintaining a 50%-70% position, which not only leaves a buffer for short-term fluctuations, but also can be deployed in batches when high-quality sectors pull back; in terms of configuration, you can pay attention to industries such as power equipment, medicine and biology, food and beverages, and have obvious profit improvements and low valuations. In the early main lines such as AI and big finance, focus on high-cut lows, focus on sub-fields such as innovative drugs, AI application side, and robots, and at the same time, appropriately layout mass consumption such as dairy products and condiments with a rebound in prosperity.
