Recently, there has been a big rebound in the global epidemic, and the most interesting of these is India. According to data, as of noon on April 25th, Beijing time, India had newly added 349691 confirmed cases of COVID-19 in a single day. The number of confirmed cases exceeded 1 million in the last three days. A total of 16.96 million confirmed cases of new coronary pneumonia were reported, a record number of new cases in a single day. There were 2767 deaths from new coronary pneumonia. At the same time, mutated viruses are raging, Japan is experiencing the third wave of the epidemic, the epidemic in Oregon in the western United States has worsened, and the epidemic in Europe is still spreading.
In this context, how will the global capital market that has already bubbled function? Analysts believe that, first of all, the global economic recovery has fallen into bleak again, so growth stocks and cyclical stocks may face pressure, but there may be opportunities for group stocks. In particular, the core assets of A-shares under the background of the falling dollar may be favored by foreign investors; secondly, due to the severe epidemic in India, as the world's super-large spice exporter, the spice industry may be stimulated in the short term. In addition, India is also a very important pharmaceutical producer, and raw materials, preparations, etc. may be sought after.
The global epidemic rebounded
Under the global epidemic, a microcosm of national governance occurred in Iraq. Haiwainet, April 25, according to AFP report on the 25th, a fire broke out on the evening of the 24th at the designated hospital for the new crown pneumonia located in the southeast of Baghdad, the Iraqi capital. Up to now, 82 people have died and 110 people have been injured.
The fire broke out at midnight. At that time, there were 30 new crown patients in the intensive care unit, and many family members of the patients were accompanying them in the ward. Since the hospital did not have a fire protection system, the fire spread quickly to multiple floors and ignited many flammable products. According to the Iraqi Civil Defense Department, “Most of the dead died after taking off their ventilators because they needed to move, and others died of suffocation because of smoke inhalation.” Iraqi President Saleh and Prime Minister Kadimi ordered the deepening of the fire. survey. The Iraqi government has announced three days of national mourning for the victims of the fire.
Compared with the chaos in Iraq, India can be described as terror. On April 25, the "India Express" described the epidemic in India as follows: "India is like a ship that is completely drifting with the flow." Chinanews, April 25, according to foreign media reports, the latest data from the Indian Ministry of Health show that as of At 8 o'clock on April 25, local time, there were 349691 new confirmed cases in the past 24 hours, setting a record for the highest number of new cases in a single day since the outbreak in India for 4 consecutive days, and the highest number of new cases in a single country in a single day in the world.
Indian Prime Minister Modi said that the new wave of "tsunami-like" epidemic has shaken the entire country. As the epidemic situation in India continues to worsen, many countries are worried. Iran, the United Kingdom, Canada, Singapore and other countries have successively introduced entry restrictions for Indian tourists.
Due to the existence of India, the epidemics in other countries seem to be covered up. In fact, judging from the recent situation, it is not optimistic. According to Xinhua News Agency, in view of the rapid increase in the number of new crown cases nationwide, Tokyo, Osaka, Kyoto and Hyogo Prefecture in Japan launched the third round of the new crown emergency on the 25th and implemented more stringent prevention and control measures.
Although the United States and Europe have the fastest vaccinations in the world, there are still outbreaks in some areas. Satellite News Agency, Moscow, April 24. According to the latest statistics on the new crown epidemic released by Johns Hopkins University, the United States has 62,399 new confirmed cases of new crowns in a single day, and an increase of 852 deaths.
The market in the context of the epidemic
There have been two major changes in the global market recently: one is the US dollar, and the other is US debt.
Let's first look at the US dollar. Since its peak on March 31, the US dollar index has fallen all the way, and as of the close of last Friday, the index has hit a new low in this round.
Followed by U.S. debt. Since March 30, the US 10-year Treasury bond yield has fluctuated downward from a high of more than 1.76%, and has fallen below 1.56% so far.
So, what happened during this process? The answer is the ongoing epidemic and vaccine incidents. On March 31, local time, French President Macron announced stricter national restrictions on the new crown virus. France officially ushered in the third wave of the epidemic. Almost at the same time, the US epidemic reached its fourth wave. Then came the vaccine accidents of AstraZeneca and Johnson & Johnson. Then, there is the third wave of the epidemic in Japan and the great "collapse" in India that is being staged. These events are reflected in the capital market as the U.S. dollar slump (the easing will continue), and the U.S. bond yields slump (inflation is not so fast because of insufficient demand).
As the dollar and U.S. bond yields fell, the structure of the A-share market was also changing. Recently, many early-stage Baotuan stocks have continued to perform well, such as Shanxi Fenjiu, Pien Tze Huang, and Amike, including the recent Kweichow Moutai, Wuliangye, and Golden Dragon Fish. The logic behind this is that the U.S. dollar has fallen, and foreign capital needs to allocate more Chinese assets, and the Chinese assets that conform to foreign capital’s preference are the previous group stocks.
According to Wind data, since April, Beijing Capital's net purchase of A shares has exceeded 40.4 billion yuan, and Kweichow Moutai, Wuliangye, and WuXi AppTec have been increased by foreign investors. Analysts believe that under the current environment, there may still be some risk aversion in the funds in the equity market, and the money is running on good stocks that have been repeatedly verified. Growth stocks may struggle to obtain overall opportunities.
In addition, this past weekend, there was another news that attracted attention. That was an aunt from Liaoning who had forgotten the password of the trading software when she was abroad all year round. She recently came to cancel her account and found out that she had bought a stock that she had spent more than 50,000 yuan in 2008. Now the market value of her account has reached more than 5 million yuan. The investment philosophy of "buy stocks and hold them in the long-term" may bring some stimulus to high-quality stocks.
India's substitution should also be fermented?
In addition to core assets, due to the spread of the epidemic in India, some industries that replace India are likely to escape. Among them, there are two major industries worthy of attention: one is perfume, and the other is medicine.
Let's look at spices first. Statistics show that Indian spices are the most sought-after in the world due to their exquisite aroma, taste and taste. India has the world's largest spice market, and is also the largest producer and exporter of spices, with approximately 75 varieties of spices produced and exported. The spice industry in India accounts for the largest share of the global spice industry market for natural flavors. The most important natural flavors in India are peppermint oil, peppermint oil, spearmint oil, black pepper oil, Indian basil oil, lemongrass oil, Indian sandalwood oil, vetiver oil, etc.
India’s synthetic fragrances have developed relatively rapidly in recent years. Due to its bulk raw material production capacity and absolute cost advantages, it has gained a certain voice in the global synthetic fragrance industry, especially the bulk synthetic fragrances o-tert-butyl cyclohexyl acetate and p-tert-butyl acetate. Hexyl ester, threon acetate, and other products with relatively large output are dihydromyrcenol, ionone, benzyl salicylate, coumarin and other musk ring products. If spice production ceases in India, some spice substitutions are bound to occur in the country.
The second is medicine. According to an information obtained by a Chinese reporter from a brokerage firm over the weekend, a brokerage firm stated that if an Indian company suspends production on a large scale, the areas that may benefit include: preparation exports, raw materials and CXO. Among them, the export of preparations is the most clear. In 2018, among the top 20 American generic drug prescriptions, 9 were Indian companies, and it is estimated that the proportion may have been as high as 40-50%. If production is stopped, Chinese preparation export companies are likely to benefit. Moreover, the United States is very market-oriented, and the prices of shortage drugs can be smoothly increased.
APIs need to pay attention to whether the product is in competition or cooperation with India. If the raw materials are in direct competition from India, it will be very beneficial to Chinese companies once the other party suspends production. For example, in the field of raw materials for sartan, it is basically China Huahai, Tianyu, Manova Vs India Aurbondo, Divis, Myaln (Indian factory) and so on. And if there is a large proportion of APIs that are intermediates exported to India, which are further processed and sold to the world, it may not benefit.
CXO is also expected to continue the benefit trend. Indian companies are also major undertakings for global innovative pharmaceutical companies CXO. CXO is intensive in human resources, and India is likely to have a significant decline in undertaking capacity. Domestic CXO companies are also expected to benefit further.
Of course, from a human perspective, the whole world hopes that India will contain the epidemic as soon as possible. But when the epidemic is brought under control, market expectations will change again. At that time, inflation may once again become the main contradiction, and the trend of US dollar and US debt will change again. This requires dynamic tracking.
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