Three Angle Reveals A Share Risk Cautiously Treat October Market Quotation

At present, the market sentiment is unprecedentedly high, but from the three perspectives of profitability, prosperity and economic cycle, they are all prompted.

Risk, we October.

With caution, it is suggested that the proportion of the consumption sector should be reduced in a timely manner, and the defensive disposition should be strengthened.

In October, the industry portfolio was as follows: (1) consumption: Food and beverage, agriculture, forestry, animal husbandry, fishery and medicine; (2) growth: electronic components and computers; (3) periodical finance: recommending non silver, electricity and utilities.

Profit model: turn around in the month and be cautious in disposition.

According to the latest industrial gross profit figures released at the end of September, the profit of industrial enterprises in August worsened, and fell by 0.6% in the same month.

Fourth quarter asset turnover, profit margins, debt growth rate three rounds of collective misfire, corporate profit improvement space is limited, we still take a cautious view of the traditional cycle industry as the leading industry.

Industry boom model: focus on boom and recovery industries

Based on the data of investment and added value, we have made a preliminary judgement on the prosperity of major industries.

From the perspective of the industry's fundamentals, more cyclical industries have fallen into recession and over time. Relatively speaking, automobile, furniture, textile and garment consumption sectors are in a better economic climate.

Economic model: matching consumption and defending

In October, the investment gap continued to descend, and CPI remained depressed. It is a big probability event. From the historical experience, A shares have a big downward pressure during the recession.

In terms of industry performance, the cycle sector is obviously in a weak position, while the growth industry of medicine, media, computers, telecommunications and other consumer industries is better than the market.

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HSBC has put forward 4 reasons for inflation.

First of all, China's risk-free interest rate may decline, which is beneficial to the stock market.

"Targeted easing and new quantitative tools (such as PSL) can reduce borrowing costs and provide liquidity," HSBC wrote in the report.

The second reason is that "the new leadership of China, the blueprint for economic reform and the reform of state-owned enterprises" will reduce the risk premium of stock market.

According to HSBC estimates, the recent stock market risk premium has dropped from 10.67 in mid 2012 to 9.15.

Third, market sentiment is improving and more mainland investors are participating in the stock market.

HSBC said in its report: "the 1 month average market participation rate has surged to nearly 3 year high, including the Shanghai and Shenzhen stock markets."

The ETF in the overseas market tracking A shares also showed good performance. Since September, Deutsche X-trackers Harvest CSI 300 China A-shares Fund (ASHR) rose 4.5%, Market Vectors, up 4.3%.

HSBC analysts also mentioned some driving factors at the corporate level, including the accelerated depreciation of fixed assets, the reduction of tax burden, and the reduction of interest burden by low cost financing.