This week has witnessed a notable rebound in the A-share market, with the North Stock Exchange 50 Index experiencing a remarkable 9.63% increase over the course of the weekThe ChiNext Index, which primarily tracks high-growth companies, rose by 4.66%, while both the Shanghai Composite Index and the Shenzhen Component Index also reflected a positive trendTrading volume has expanded modestly to approximately 6 trillion yuan, indicating a renewed interest among investors.

In terms of financing activities, investors injected a net purchase of over 13.6 billion yuan this week, bringing an end to three consecutive weeks of net sellingNotably, the electronics and computer sectors attracted more than 3 billion yuan in net financing each, while the machinery and communication sectors also garnered over 1 billion yuan eachConversely, the banking, real estate, public utilities, and transportation sectors faced net outflows exceeding 1 billion yuan.

Statistics compiled by Wind reveal that the electronics sector alone received a staggering net inflow of 13.2 billion yuan from major investorsNot far behind, the basic chemical sector saw over 4.6 billion yuan in net inflows, while the machinery sector attracted more than 3.4 billion yuanOther industries, including automobiles, power equipment, defense industrials, and biotechnology, also showed robust inflows of over 1 billion yuan eachOn the downside, the banking industry faced a significant outflow of 1.7 billion yuan, followed by retail and petroleum sectors which also recorded sizeable outflows exceeding 1 billion yuan.

Market trends indicate a rising number of companies releasing performance forecasts as the preparation for annual reports for 2024 gets underwayBy the close of trading on January 17, 304 companies had issued their performance forecasts for the 2024 fiscal year, accounting for over 70% of all companies that have released similar forecasts thus far.

Stocks anticipated to report increased earnings have demonstrated considerable strength throughout the week, suggesting that a bullish performance trend may be emerging

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For instance, SANDE Technology announced on January 17 that it expects to achieve a net profit ranging from 138 million to 152 million yuan in 2024, which represents a year-on-year growth of 156.81% to 182.86%. Following this announcement, the stock surged to the daily limit of 20%, setting a new high not seen in a year and a half.

SANDE attributed the impressive growth figures to a significant increase in the delivery volume of its unmanned intelligent equipment products, leading to a remarkable uptick in operating revenue when compared to last year.

On the same day, Lianhua Technology also announced an expected net profit of 90 million to 135 million yuan for 2024, bouncing back from previous lossesThis announcement resulted in Lianhua Technology's stock also hitting the daily limit.

Other companies such as Yiyi Co., Yongshuntai, and Guodian Measurement have all seen their stock prices reach their daily limits the day after announcing anticipated profit increases, with Pioneer Electronics hitting its limit for two consecutive daysStocks of other companies like Bojun Technology, Liyuan Technology, and Yuanhang Precision have also experienced substantial gains.

On January 13, Zhengdan Co. announced it expects to achieve a net profit of between 1.1 billion and 1.3 billion yuan for 2024, representing a staggering increase of 110 to 130 times year-on-yearThroughout the week, Zhengdan’s share price appreciated by 7.16%, reaching a six-month high.

The surge in Zhengdan’s stock price is attributed to a substantial growth in sales volume and average prices of their key products, TMA (Trimellitic Anhydride) and TOTM (Tri-Octyl Trimellitate). Enhanced sales coupled with stable unit costs led to a dramatic increase in revenue and profits for the company, boosting net profits attributable to shareholders significantly year-on-year.

Other companies like North China Pharmaceutical reported a 24-fold increase in net profit expectations for the year, seeing a price increase of 6.83% this week; Huayuan Holdings predicted an increase of up to 848.87% and saw a stock surge of 16.64%; while companies such as Zhongke Electric, Shuanglin Co., and Wutong Holdings projected profit growth of over 300%, experiencing notable stock performances as well.

Looking towards the future, China Merchants Securities has conducted an in-depth analysis, suggesting that with the continuation of a series of policies aimed at expanding domestic demand, the macro economy is expected to witness a critical turning point in 2025. This may signal a transition from the latter stages of economic decline to the early stages of recovery

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Such a shift would imply a gradual warming of market demand, leading to an increase in corporate orders, potential expansion of production scales, and improved management of costs, all pointing toward an optimistic resurgence in corporate profitability.

At present, the landscape of high-return asset scarcity is becoming increasingly pronounced as traditional investment channels struggle to meet investor demandAgainst this backdrop, the capital market is attracting substantial amounts of resident funds due to its potential and opportunitiesChina Merchants Securities anticipates that, motivated by a desire to preserve and enhance asset value, a significant influx of resident funds into the stock market is expected to inject ample liquidity into the marketConcurrently, financing activities are likely to remain active, influenced by prevailing market sentiment and investor confidence.

Benefiting from abundant liquidity, growth-oriented investment strategies may deliver superior performance in 2025. In terms of investment direction, fields such as artificial intelligence (AI) are poised for significant prospects due to technological advancements and expanded applicationsIndustries centered on self-sufficiency inherently relate to national economic security and may reflect immense potential in core technological enterprisesEmerging sectors like intelligent driving are on the verge of revolutionizing transportation, while lithium resources are experiencing continuous demand growth due to the burgeoning new energy industryMoreover, gold remains a stable investment choice amid economic uncertainties, capable of anchoring investment portfoliosInvestors who can effectively target these sectors stand to realize lucrative returns.

BoHai Securities has indicated that as the Spring Festival approaches, a prevailing sentiment of market caution may emerge, while overseas uncertainties may arrive at a sensitive juncture, posing challenges to the short-term liquidity environment of the market

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