On Tuesday, the stock market and most commodity futures had another day of sharp decline. There is never a shortage of jokes on days of sharp decline.
An investor told a reporter from Futures Daily: “The recent market situation is really like ‘no one recognizes the fall’.”
Also An investor said to the reporter: “I lost my money.”
The reporter asked: “Where did it go?”
The investor made a dumbfounded expression, and then said: “I lost it to the stock market…”
The stock index continued to fall
Why does the stock market, which everyone thinks will be bullish in the next year, fall before it gets bullish?
Zhongda Futures Macro Researcher Zhou Zhiyun told reporters that there are three reasons for the recent sharp fluctuations in the stock market: First, the U.S. bond yields have risen sharply, which has tightened valuations and liquidity. Concerns have intensified; second, the Saudi oil hub was bombed and inflation expectations rose again, which in the current context has intensified market concerns that the Federal Reserve will not relax liquidity; third, the U.S. dollar index has stopped falling and stabilized, which often corresponds to the closing of U.S. dollar liquidity The tight trend also has a certain impact on the domestic stock market.
As for the reasons for the recent stock market decline, Cheng Xiaoyong, director of the Baocheng Futures Financial Research Institute, believes that there are three main points: First, the chain reaction caused by the turmoil in the external financial market, and the decline in domestic stocks The sectors are also sectors that saw larger gains last year, such as alcohol, food and medicine, etc., while cyclical stocks still rose; secondly, the government work report sets the tone for fiscal and monetary policies in 2021, and some policy exits are a certainty Things have affected some sectors; third, economic indicators show that the strongest stage of China’s economic recovery has passed, and the profit driver has gradually weakened.
“The accelerated adjustment of the stock index in this round is mainly due to the rise in long-term interest rates in the United States, commodity price fluctuations, and the spontaneous adjustment and equilibrium of its own core assets.” He, a macro researcher at Zhonghui Futures Hui said that on the one hand, the market’s recent consensus that the 10-year U.S. bond yield will continue to rise, which will put heavy pressure on highly valued equity assets, has continued to strengthen, leading to resonance adjustments in the global technology and highly valued white horse sectors. Against the background that the U.S. non-farm payrolls data in February was stronger than expected and the US$1.9 trillion stimulus expansion plan was passed, Federal Reserve Chairman Powell’s speech did not attempt to curb the rise in long-term interest rates. At present, the 10-year U.S. bond yield has risen to 1.59%. The market has unanimously expected the U.S. bond yield to rise. Coupled with rising inflation expectations, there is still an upward trend in the future, which may continue to put pressure on high-valuation sectors. On the other hand, as the U.S. economic recovery accelerates and U.S. bond yields continue to rise, the interest rate gap between China and the U.S. continues to narrow, with the U.S. dollar index rising above 92 for the first time in more than three months. At the same time, the RMB exchange rate against the U.S. dollar has depreciated sharply, with the The price fell sharply by more than 500 points on Tuesday, falling below 6.5. When the U.S. bond yield rises to a certain level, it will attract the return of funds and increase the allocation of U.S. bond assets, thereby affecting the inflow of foreign capital. In the past two weeks, funds have continued to flow northward. Among them, A-shares are favored by foreign investors, mainly represented by liquor. Core assets have experienced a larger adjustment in this round.
In fact, the epidemic situation in the United States has eased and economic recovery expectations have increased, leading to an increase in U.S. bond yields. As the “anchor” of global asset pricing, U.S. bond interest rates have rise has a negative impact on stock market valuations. Therefore, fund group stocks that benefited from loose liquidity suffered heavy losses, and “valuation sales” occurred.
Cheng Xiaoyong believes that for the U.S. stock market, the price revaluation caused by rising U.S. bond yields is still continuing and will not be changed by the large-scale inflow of equity funds. There may be structural differentiation or style switching in the U.S. stock market. Technology stocks or growth sectors that have gained too much in 2020 will experience valuation adjustment pressure due to rising U.S. bond yields, while cyclical stocks may be affected by economic recovery and inflation expectations. The performance is strong, which means that a large amount of money flowing into stock funds may be overweight cyclical stocks or inflation-hedged stocks.
How does the external market affect A-shares?
“The rise in U.S. bond yields may lead to a decrease in capital inflows. As the interest rate gap between China and the United States narrows, some international capital returns to the United States, and the cost of funds increases. For high valuations As for the sector, the accelerated recovery of the economy has weakened its profit prospects on the numerator side, and the rise in interest rates has increased the parameters on its denominator side, so the market adjustment is relatively large. In addition, we need to be wary of imported inflation pressure. U.S. Treasury Yields On the one hand, the rising rate represents the expectation of economic recovery, and on the other hand, it represents the risk compensation brought about by rising inflation. For A-shares, imported inflation often means that the profits of small and medium-sized tourism companies have been eroded, and there is the possibility of unexpected currency tightening.” Cheng Xiaoyong explain.
“Domestic senior officials have warned of the risk of bubbles, real estate controls have been implemented frequently in many hot cities, and there are signs of policy tightening. Negative factors at home and abroad have resonated, causing group stocks to plummet recently. The CSI 300 and SSE 50 indexes have a high proportion of group holdings, and group holdings have fallen sharply. However, even if most individual stocks rise, it is difficult to offset the drag of group holdings on the index. Therefore, the index has fallen recently in the market, except for funds reporting on group holdings. The phenomenon of large-scale rise in individual stocks other than stocks is divided.” An industry insider who did not want to be named told reporters.��It is expected to gradually ease. Therefore, the recent market rise of polyester varieties such as PTA and ethylene glycol is not yet solid enough. Supply-side pressure may gradually emerge in the later period. In the short term, polyester varieties may follow the oil price to maintain a high oscillation and consolidation trend.
Crude oil prices rose sharply due to geopolitical conflicts. It was later confirmed that the attack did not cause loss of life and property, and crude oil prices fell after rising. On Tuesday, the chemical sector followed the decline in crude oil prices, and PTA positions continued to decline that day, falling 4.78% following the commodity sector.
The expectation of tight supply of crude oil prices has not changed for the time being. International investment bank Goldman Sachs raised Brent crude oil futures prices by US$5/barrel to US$75/barrel in the second quarter, and raised its target price for the third quarter to US$80/barrel.
“The main logic of PTA trading is that the increase in cost will give it a strong boost. In the early stage, the price of PX increased significantly. As the price of crude oil fluctuated, the price of PX changed up and down. , the current quotation from individual suppliers is US$690/ton, which is still in a strong range.” Xie Wen, senior analyst at Zhongda Futures, said that in terms of supply and demand, there has been a lot of PTA maintenance recently, and a 2.5 million-ton PTA device in the Northeast was installed in March. The vehicle will be shut down for maintenance on the 6th and is expected to last about 2 weeks. A 1.4 million-ton PTA unit in East China will be shut down for maintenance on March 6 and is expected to last for one month. A 1.2 million-ton PTA unit in the northwest has been shut down, and its restart is to be tracked.
“The current PTA processing fee fluctuates between 300-400 yuan/ton, which is at a low level. In March, many PTA manufacturers have maintenance plans, and the conditions for low processing fees It is not ruled out that more maintenance will occur, so there will be a supply contraction of PTA in the short term.” Zhou Ao said.
In the view of industry insiders, the decrease in supply and increase in demand has led to a significant strengthening of the basis. The current strengthening of the basis has led to the cancellation of PTA warehouse receipts and flowed into the market. From March 3 to 9 , a total of 5,675 PTA warehouse receipts were canceled.
PTA is boosted by crude oil prices, and the cost side supports the market; PTA processing fees are difficult to rise, and PTA maintenance volume continues to rise; polyester operating rate increased by 25% year-on-year, reaching 92 %; the fundamentals of reduced supply and increased demand promote an upward movement in the PTA price range. “Considering that the recent disturbances in commodity trends are more affected by the 10-year U.S. bond yield, short-term PTA prices may fluctuate greatly. The tight supply of crude oil has not changed for the time being. After crude oil prices stabilize, There is a high probability that PTA prices will rise in the future,” Xie Wen said. </p