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How To Deal With The Trough Effect

2010/10/25 18:03:00 56

market

The current position and time are getting closer to the bottom of our judgement.

We have repeatedly stressed that after PPI meets the top, we have repeatedly stressed that

equity market

It will be judged by the bottom (from the overseas experience that the stock market may have a certain lag), and we also judge that the PPI will begin to go down in September.

If the market collectively recognised our view, then the bottom of China's stock market is likely to arrive ahead of schedule.

Although the market has recently reached a new low, many stocks have not created a new low synchronously. The most obvious is financial stocks (non securities stocks). Insurance stocks have been strong after the last low, and they have won the index.

The reason is that, judging from our judgement on the insurance industry,

Insurance

The industry is different from the securities industry. Although the insurance industry is greatly influenced by the securities market, the insurance business of the insurance company can be regarded as the bottom line of its value, while the securities sector has no such advantage.

According to our valuation of the insurance industry, the bottom line of the valuation of China Life and Ping An is 18 and 40 yuan respectively. In fact, the two stock prices have dropped to this position and have stopped.

Finally, it needs to be reminded that if the government fails to meet the expectations of the market, the market is likely to remain in a downturn in the coming market. This risk needs short-term investors' vigilance.

However, in the past period of time, government officials frequently went out to investigate the local economy, and the economic downturn and potential risks also attracted the attention of the high level. The plan to stimulate the economy is necessary and timely implemented in order to avoid greater harm to the Chinese economy.

At the same time, this kind of economic stimulus plan may also become the government's measures to avoid the Olympic depression.

Generally speaking, investors in the medium and long term can consider setting up positions gradually in the process and waiting for the opportunity of macro warming.