Ping An Securities: Fed rate cut turning point approaching, A-share liquidity expected to marginally improve

According to the latest information from the Wise Finance APP, Ping An Securities released a research report stating that the current A-share market has incorporated many pessimistic expectations. The valuations of major market indices are mostly at historically low levels below the 20th percentile. As the prospects for the US election are about to become clear, the turning point for the Fed's interest rate cut is approaching, and the domestic easing space is further opening up, the internal and external liquidity environment facing A-shares is expected to marginally improve, and structural market opportunities are increasing. It is recommended to focus on performance prosperity and policy support for layout, pay attention to investment opportunities related to new quality productivity (TMT/electric power equipment/national defense military industry/mechanical equipment, etc.), high-end manufacturing, and state-owned enterprise reform.

Last week, A-shares generally adjusted

The Shanghai Composite Index fell by 2.7% for the whole week, with dividend performance relatively resilient. The Shanghai Dividend and CSI Dividend Index rose by 1.0% and 1.4% respectively; the ChiNext Index, the STAR 50 Index, and the Bei50 Index fell by 2%-6%. The average daily turnover of A-shares for the week fell to 586.8 billion yuan; the total net inflow of stock ETFs for the week was 5.48 billion yuan, mainly dominated by large-cap ETFs such as the SSE 300. In terms of industries, the automotive industry rose by 0.9% for the whole week, while the adjustment range for the petroleum and petrochemical, electronics, construction, non-ferrous metals, and coal industries was between 5%-6%.

Domestically, the issuance of local government bonds accelerated in August, and the activity of state-owned enterprise mergers and acquisitions increased

From a fundamental perspective, the issuance of local government bonds accelerated significantly in August. Nearly 1.2 trillion yuan of local government bonds were issued nationwide in August, an increase of nearly 490 billion yuan from July; the net financing scale was nearly 820 billion yuan, an increase of nearly 630 billion yuan from July, which may support the rapid growth of infrastructure investment.

On the policy front, first, there is an expansion of high-level opening up to the outside world to cultivate new momentum for the development of trade in services. On September 2, the State Council issued the "Opinions on Promoting High-level Opening up to Drive High-quality Development of Trade in Services," fully implementing the negative list for cross-border trade in services; promoting the import of high-quality life services such as medical health and cultural entertainment; optimizing export credit and increasing support for enterprises to explore international service trade markets through diversified financial tools. On September 5, the Ministry of Finance and four other departments issued the "Notice on the 'Zero Tariff' Policy for Drugs and Medical Devices in Hainan Free Trade Port." Second, there is the improvement of the management of departing personnel in the CSRC system. On September 6, the CSRC issued the "Provisions on the Supervision of Departing Personnel Investing in Enterprises Intending to Go Public in the CSRC System (Trial)," extending the prohibition period for departing personnel to invest; expanding the scope of strict supervision of departing personnel; proposing higher verification requirements, including investment background, source of funds, etc. In addition, some listed central SOEs released merger and reorganization plans last week, and the activity of mergers and acquisitions is increasing.

Internationally, the interest rate reduction trend continues, focusing on the second round of the US presidential debate next week

From a fundamental perspective, US manufacturing activity and the job market continued to cool in August. The US ISM Manufacturing PMI in August recorded 47.2, staying below the boom-bust line for 5 consecutive months. The new orders index continued to decline from 47.4 to 44.6; the output index dropped from 45.9 to 44.8, the lowest since May 2020. In terms of employment, the US added 142,000 non-farm jobs in August, with the previous figure revised down from 114,000 to 89,000; the unemployment rate slightly decreased from 4.3% in July to 4.2% From a liquidity perspective, interest rate cuts remain the main trading clue overseas this week. The 10-year US Treasury yield fell by nearly 20 basis points to 3.7% this week, while the US dollar index also fell by 0.5% to 101.2, and the three major US stock indexes dropped by 2%-6%. In terms of exchange rates, the offshore RMB exchange rate saw a slight appreciation of 0.1%, with the USD to offshore RMB exchange rate closing at 7.09. In the commodity market, COMEX gold fell slightly by 0.1% this week; additionally, under concerns about the slowdown in the US economy and shrinking demand, WTI crude oil fell by 8.0% this week.

Furthermore, attention is on the second round of TV debates on September 10th. The US presidential election situation remains tense, with Harris and Trump's polling support rates as of 2024/9/4 at 48.3% and 46.5% respectively. This debate may become a key indicator for this election