Unconsciously, 2020 is already halfway through. In half a year, the COVID-19 epidemic has spread around the world, and we have witnessed too much history: the US stock market has been circuit breaker four times, and international oil prices have gone negative overnight… The absolute price fluctuations and spreads of many varieties have exceeded the performance of investors. Can your little heart still bear the past knowledge? With the collective release of funds from global central banks and the recovery of demand, many varieties have shaken off the trough and emerged from the “V” shaped market. What investment opportunities are there in the market in the second half of the year? Will the magic market happen again?
The stock index has emerged from a “V” shaped market
Yesterday was the last trading day in the first half of 2020. A-shares collectively opened higher in early trading. After oscillating upward, they repeatedly consolidated at high levels. The Shenzhen Component Index and the ChiNext Index both hit new highs in four and a half years and continued to oscillate at high levels in the afternoon. Looking at yesterday’s market, securities firms and insurance companies pulled the market strong, and electronic manufacturing, consumer retail, park development, and the semiconductor industry chain performed strongly, while only the automobile industry chain fell into adjustment. At the technical level, analysts believe that the Shanghai Stock Exchange Index broke through the 3,000-point mark under the cover of weight, and the chips above the heavy pressure area have become loose. The follow-up of funds is not strong, the volume cannot be effectively amplified, and the strength of multiple parties is not enough to support the breakthrough. Short-term rush A high retracement will be a high probability event.
Looking back at the first half of 2020, as the COVID-19 epidemic spread rapidly around the world, the global economy was severely affected. Central banks and governments of major economies implemented a large amount of unprecedented easing stimulus. policy. From late February to mid-March, the huge uncertainty brought about by the epidemic hit global stock markets. The US Dow Jones Industrial Average and the S&P 500 Index plummeted more than 35%, both hitting new lows since the fourth quarter of 2016. They are the only five stocks in history. circuit breakers, four of which occurred in March this year.
As of yesterday’s close, in the first half of the year, the Shanghai Composite Index fell by 2.15%, the Shenzhen Stock Exchange Component Index rose by 14.97%, the GEM Index rose by 35.60%, and the Small and Medium-sized Enterprises Index rose by 20.85%. As the COVID-19 epidemic spreads around the world, A-shares have led the world, bringing a perfect end to the first half of the year.
Overall, the stock index has moved out of a “V”-shaped market, and the differentiation of the global market has become increasingly obvious. “Actually, the market still provided great investment opportunities in the first half of the year.” said Hua Xiang, an analyst at Yongan Futures. Judging from the half-year trend of global stock indexes, A-shares are relatively strong. During the decline in March, compared with the nearly 30% decline in European and American stock markets, domestic stock indexes were relatively resilient. The Shanghai Composite 50 Index and the CSI 300 Index fell by about 10%, while the CSI 500 Index fell even less. The main reason is that domestic epidemic prevention and control measures are more powerful and effective, and the overall valuation of domestic stock indexes is lower than other global stock indexes.
As for the differentiation of the trend of the domestic stock index itself, Huaxiang said that the performance of the CSI 500 this year was stronger than that of the other two stock indexes, mainly due to the industry distribution of the CSI 500 The content of Chinese science and technology and medicine is relatively high, and it has benefited more from the science and technology theme since 2019 and the medical theme since this year. Moreover, the CSI 500 futures discount is relatively deep and has a good safety cushion. The weakness of the CSI 500 in the past two years has put its valuation in a more attractive position.
He believes that the economic data from April to June support the global economy’s recovery from heavy losses, and the Federal Reserve’s asset purchases provide sufficient liquidity to the market, so the global stock index The rebound is justified. “But we must also note that U.S. stocks are currently in a state of high valuation, and the uncertainty of the epidemic and the slowdown in the Fed’s balance sheet expansion will bring risks to it.” He said that in view of the linkage of global stock indexes, the direction of domestic stock indexes The downward drive mainly comes from this. Domestic stock indexes will continue to be stronger than overseas in the future, and they are still optimistic about the main line of technology in the long term. If they are affected by overseas declines, it will be a better time to make arrangements.
Crude oil is the “most historic commodity” in the first half of the year
Crude oil won the title of “the most historic commodity” in the first half of 2020, absolutely because of its strength. In the second quarter, under the influence of the epidemic and inventory expansion, coupled with the “force-to-long” effect produced by the market trading structure, the price of WTI crude oil futures 2005 contract fell to -$37.63/barrel on April 20, creating an unprecedented situation in human history. Negative oil prices.
“In the first half of the year, crude oil went out of an obvious pit-digging market, and the overall trend showed a decline first and then an increase.” Senior Analyst of Zheshang Futures Chemical Industry Wang Wenlin said that the epidemic is an important variable that caused crude oil to “fall into the sinkhole” this year. According to him, the COVID-19 epidemic broke out in my country in January, and city lockdown measures were adopted. By late February, the epidemic broke out overseas, and Europe and the United States implemented stay-at-home orders. China, Europe and the United States successively fell into economic stagnation. Refinery operations dropped sharply, and demand dropped, leading to Crude oil prices were lower. Subsequently, the crude oil market entered a phase of double negative supply and demand. In March, OPEC+ production reduction negotiations broke down, and Saudi Arabia increased production and lowered its official sales price protection share. Prices continued to fall under the double negative pressure of supply and demand. In April, OPEC+ reached a three-stage production reduction agreement. The first stage was to reduce production by 9.7 million barrels per day, of which Saudi Arabia will reduce production by an additional 1 million barrels per day. It will be implemented in May. However, the continued high production from March to April resulted in Global storage capacity is being filled rapidly, and concerns about insufficient tank capacity have led to oilThe decline will continue to push up the investment demand for U.S. stocks and other assets such as gold, which will also be beneficial to the price of gold from another aspect. Overall, Duffy believes that he can continue to be optimistic about precious metal prices, and London gold prices may reach US$1,850 per ounce within the year. However, we should pay attention to the risk that the phased recovery of the U.S. economy will temporarily suppress precious metal prices.
Non-ferrous metals are still the “most IN” commodities
Regarding the big “V” shaped “trendy” trend, non-ferrous metals are not absent either. They fell sharply in the first quarter and rose sharply in the second quarter. Nonferrous metals are still one of the “most IN” sectors in the commodity market.
“The overall trend of nonferrous metals in the first half of 2020 also showed a ‘V’ shape.” Nanhua Futures analyst Zheng Jingyang told a reporter from Futures Daily that the collective decline of nonferrous metals in the first quarter was mainly due to It is because of concerns about the outbreak of a liquidity crisis. Nonferrous metals surged in the second quarter. On the one hand, they were recovering from the previous sharp decline caused by tight liquidity. On the other hand, the strong recovery in domestic demand drove inventory reductions beyond expectations.
Zheng Jingyang introduced that the outbreak of the new coronavirus pneumonia in January has led to increasing market concerns about economic growth. Moreover, as the epidemic accelerated its spread overseas, pessimistic demand expectations led to an overall weakening of nonferrous metals. However, the real sharp decline occurred after the oil price and stock market plummeted, which was when the liquidity of the US dollar was most tense.
After the U.S. stock market plummeted in March, the Federal Reserve adopted an extremely loose monetary policy, lowering the benchmark interest rate directly to zero. At the same time, it adopted a response mode in times of crisis, opening up unlimited Quantitative QE was implemented and the balance sheet was significantly expanded in just two months, which significantly eased the tight liquidity situation. Moreover, after the epidemic in China eased, economic activities gradually returned to normal, infrastructure and real estate showed strong resilience, and non-ferrous metals rebounded collectively.
“Among them, copper has experienced a larger increase due to its strong financial attributes. In addition, the increase of aluminum has not been small, mainly because as the completion of housing continues to pick up, the real estate market has The explosion of end-end demand increased the consumption of copper and aluminum, and the destocking of copper and aluminum in the first half of the year far exceeded the levels of the same period in previous years.” Zheng Jingyang said.
For the second half of the year, in the face of the recurrence of the new coronavirus epidemic, the Federal Reserve will most likely continue its previous loose monetary policy. In Zheng Jingyang’s view, against the background of a weak US dollar, the promotion of overseas funds will make non-ferrous metals as a whole prone to rise but difficult to fall. Among them, copper and aluminum still have large upside potential, mainly because China, the largest consumer of non-ferrous metals, has a strong economic recovery and the resilience of demand for copper and aluminum is expected to be maintained.
He explained that in the face of the impact of the COVID-19 epidemic and economic downward pressure, infrastructure investment has become an important way to stabilize the economy. This year’s government work report mentioned increasing the issuance of special bonds. and the proportion of special bonds used in infrastructure construction will provide sufficient sources of funds for infrastructure investment. Therefore, it is expected that the growth rate of infrastructure construction will remain at a high level throughout the year, and consumption in the power sector is expected to be good.
Starting in 2019, real estate companies have shifted from “rushing to start construction” to “rushing to deliver”. From 2018 to 2019, the sales area of real estate companies continued to hit new highs because of the proportion of off-plan properties. As the ratio continues to increase, there will be a large number of off-plan properties waiting for delivery in the past two years, driving the continued recovery of real estate completions, and real estate-related consumption is also expected to benefit, including air conditioners. Therefore, against the background of low inventories and strong demand, copper and aluminum are expected to perform strongly in the second half of the year.
Nickel and zinc are still relatively weak. Zheng Jingyang introduced that although Indonesia’s early ban on mining has led to a relatively tight supply of nickel ore, the release of new ferronickel from Indonesia and the increase in nickel ore shipments from the Philippines will lead to a relatively excess supply of domestic ferronickel, coupled with the current poor profits of stainless steel plants. It will also limit the rise in nickel prices, so there is limited room for nickel prices to rise in the second half of the year. The motivation for rising zinc prices is also weak, mainly because during the mining-end production expansion cycle, the overall oversupply of overseas zinc mines has been slowed down by the epidemic, but it is still expected to occur.
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