A-share closing review | Multi-track efforts, index deep V-reversal, what happened? Can the rebound continue?

On January 8, the market hit a bottom and rebounded throughout the day. The Shanghai Composite Index fell by more than 1.6% in midday trading, while the ChiNext Index fell by over 3% at one point. In the afternoon, there was a collective rise in stock prices followed by a shakeout. By the close of trading, the Shanghai Composite Index rose by 0.02%, the Shenzhen Component Index fell by 0.54%, and the ChiNext Index fell by 0.98%. Over 3200 stocks in the two markets declined, with a total turnover of 1.24 trillion yuan for the day, an increase of 183.4 billion yuan compared to the previous day. According to Chinese securities firms, analysts believe that today's rebound is partly due to boosting confidence and also related to policy. In the morning, the National Development and Reform Commission and the Ministry of Finance issued a notice on the implementation of a large-scale equipment update and old-for-new consumer goods policy by 2025. This includes supporting the exchange of old household appliances, with a maximum subsidy of 20%; implementing subsidies for the purchase of new digital products such as smartphones, with a subsidy of 15% of the product's sale price, not exceeding 500 yuan per item, and other favorable policies. Last night, there were also some favorable developments in industries such as elderly care and Siasun Robot & Automation. In terms of market performance, several super sectors broke out in the afternoon, with Siasun Robot & Automation concept stocks collectively rebounding, and more than 10 stocks such as Aishida Co., Ltd. hit the limit up. Data center power concept stocks remained active, and Hangzhou Huasu Technology rose for three consecutive days. Consumer stocks showed partial strength, with retail and elderly care leading the way, and Fujian Dongbai hit the daily limit. It is worth noting that the home appliance sector strengthened today, with Jiangsu Chunlan Refrigerating Equipment Stock hitting the daily limit. On the downside, cyclical stocks such as non-ferrous metals and rare earths collectively adjusted. In terms of main capital flow, funds favored industries such as shipping ports, logistics, and home appliances; funds fled from industries such as communication equipment, securities, and semiconductors. Institutional viewpoints: Looking ahead, EB SECURITIES believes that the core contradiction of policy supporting market operation remains solid, and if the market prefers marginal rebound in the short term, small-cap growth stocks may see oversold recovery. Can this rebound continue? Guolian: There is a high probability of market stabilization in the short term Guolian believes that the market tends to stabilize quickly after a rapid downturn. After reviewing cases of market weekly declines exceeding 5% since 2010, turnover generally decreases, and the market tends to stabilize in the short term. On the other hand, if the central economic work conference is taken as a time point, the current downturn has already exceeded the historical average. Market sentiment and some valuation indicators have reached historical lows, demonstrating the investment value of the equity market. The reading of the GLDI sentiment index has returned to below 10%, close to market sentiment after the market oversold in January 2024, indicating a high probability of market stabilization in the short term. In addition, the dividend yield of the Shanghai-Shenzhen 300 Index and the Wande All-A Index against the 10-year treasury bond has reached a level above 2 standard deviations, indicating that the cost-effectiveness of the equity market is gradually returning. Industrial: In the short term, the "dumbbell-shaped" configuration may persist Industrial believes that in the short term, as the fundamental and policy aspects are still to be confirmed before the two sessions, the market is still in the expectation-driven phase and may present a "dumbbell-shaped" configuration of large-cap dividends and small-cap themes. Since the end of September 2024, policies have reversed but fundamental reversals are still pending verification, the market mainly trades based on liquidity and valuation recovery logic, with a low correlation between the index and industry and a focus on small caps and dividend styles structurally. Looking ahead, the period between January and February is still a window of data and policy, with improved fundamentals yet to be confirmed, suggesting that the short term may continue to maintain a "dumbbell-shaped" configuration. EB SECURITIES: If the market prefers marginal rebound in the short term, small-cap growth stocks may see oversold recovery EB SECURITIES believes that the core contradiction of policy supporting market operation remains solid. Both the fourth quarter monetary policy meeting of the central bank in 2024 and the work conference in 2025 mentioned "cutting interest rates and reserve requirements at the right time". Given that the first quarter is the traditional peak season for credit, coupled with factors like peak tax payments, it is expected that the central bank may implement reserve requirement cuts before the Spring Festival to support market liquidity. The expected relaxation of domestic policies and stable exchange rates will provide strong support for the A-share market to withstand external risks. Against this backdrop, the risk of further irrational sell-offs in the large market is not high. After a wave of panic sentiment has been released, it is expected that a short-term adjustment may be coming to an end, allowing for a stable market. In terms of allocation, if the market prefers marginal rebound in the short term, small-cap growth stocks may see oversold recovery, and attention can be paid to directions such as AI+ and semiconductors; the continuous increase in domestic demand policies, major consumption remains a relatively certain direction, such as retail, cinema chains, ice and snow economy, tourism hotels, and other specific areas; in a low-interest rate environment, the value of dividend sectors such as electricity and utilities is highlighted. Orient: The market's volatile upward trend remains unchanged, and technology innovation will be the short-term focus Orient points out that the negative impact of external disruptions on the market is gradually diminishing, with a decrease in short-term investor risk appetite, a temporary respite in the market, and the main stock indices building a short-term bottom; however, in the medium to long term, the market's volatile upward trend remains unchanged, and the theme of technology innovation that is autonomous and controllable and meets the requirements of new productive forces will be a short-term focus. Hot sectors: 1. Semiconductor sector rebounds The semiconductor sector rebounded, with GigaDevice Semiconductor Inc., with a market value of over 70 billion yuan, hitting the daily limit up, Rockchip Electronics rising for two consecutive days, Darbond Technology, and Giantec Semiconductor Corporation rising by over 10%, Foshan NationStar Optoelectronics, and Telink Semiconductor (ShanghaCo., Ltd., Shanghai Fullhan Microelectronics, SigmaStar Technology, BOE HC SemiTek Corporation, Sprint Precision Technologies and others have all seen their stock prices increase.Review: Ningxing Securities believes that "AI + terminals" is expected to lead a new round of consumer electronics innovation cycle. 2. Consumer stocks have fluctuated and risen. Consumer stocks have fluctuated and rebounded, with home appliances, retail, e-commerce, WeChat mini stores, and other areas leading the gains. Shanghai Kaytune Industrial and Jiangsu Chunlan Refrigerating Equipment Stock have hit the limit up. Review: On the news front, on January 8th, the National Development and Reform Commission and the Ministry of Finance issued a notice on implementing a large-scale equipment update and old-for-new policy for consumer goods by 2025. Sinolink stated that domestically, the old-for-new policy has been clearly continued, and the follow-up policy may be further intensified. This article is reprinted from "Tencent Stock Picking", GMTEight Editor: Chen Xiaoyi.