A shares have been very strong recently. After experiencing short-term fluctuations, the Shenzhen Component Index and the ChiNext Index both hit new highs this year, and the Shanghai Composite Index is almost reaching 3,900 points. After the index rises in volume, a new upward resonance is about to begin. There is a feeling that it is getting stronger and stronger in the market: 4,000 points may really be coming this time!
This confidence does not come out of thin air. Looking back at the history of A-shares, every time the market wants to break through key points, it is basically successful if several forces of policies, funds, and fundamentals form a joint force. For example, at the end of 2014, interest rate cuts and leveraged funds came in, the index reached 3,000 points in one month; in 2019, the sharp inflow of foreign capital and the implementation of 5G technology drove the market out of a wave of market trends. The situation is quite similar now. The Federal Reserve may need to cut interest rates and have policy support from domestic ultra-long-term special government bonds. In addition to the return of foreign capital, several factors are working together.
Compared with the typical bull market in 2007 or 2015, the market is actually healthier now. In the past, the A-shares' price-earnings ratio was 40 or 50 times, and the financing leverage ratio was also high. Now the Shanghai and Shenzhen 300 price-earnings ratio is only about 13 times, and the financing balance accounts for only 2.5%. The overall valuation and leverage are not that exaggerated. Therefore, even if the market fluctuates during the impact of 4,000 points, the foundation is more stable and the possibility of sustainability is higher.
Recalling the current bull market, there are actually three solid support behind it:First, the policy is no longer a single-point attack, but a systematic cooperation: there are both long-term government bonds for infrastructure, and the manufacturing conference promotes intelligent and green manufacturing, and financial opening is still introducing foreign investment. This combination punch is more sustainable than the previous simple "release" of "water". Second, the capital market is no longer performed by foreign capital alone, and domestic capital has begun to slowly keep up, the outflow of main funds has decreased, and the financing balance has gradually stabilized. Once the Fed really cut interest rates, domestic and foreign investment will form a joint force, and the market will easily open up space; third, corporate profits are also improving, and overall marginal improvement is ushering in, and economic recovery is becoming a real profit.
Of course, although the opportunity is good, you cannot blindly chase high prices. Some sectors that are rising too fast, such as AI and robots, may have profit-making selling pressure in the short term; if the overseas economy fluctuates, it may also affect A-shares emotionally. Therefore, it is best to control your position well. It is more appropriate to leave some cash to prevent fluctuations. In terms of allocation, you can focus on both: in the short term, the manufacturing and consumption leaders that are encouraged by policy and capital attention; in the medium term, you can plan blue chips such as banks and insurance that have not yet risen and have low valuations, and they have a lot of room for compensation.
In short, 4000 points is more like a natural goal than an end point. The current policies, funds and profit improvements are resonating, and the overall market environment is healthier than before. If transactions continue to be active and foreign capital continues to flow in, the market may be strengthened. For investors, staying rational, grasping the main line, and making arrangements at low prices is more important than guessing specific points. This round of market may not only be a threshold, but also a new beginning for the medium- and long-term development of A-shares.
