Many policy dividends to be released in 2020

On the first day of market opening in 2020, with the new year's "gift package" of the central bank, A-share also ushered in a good start. By the end of January 2, the three major A-share indexes had opened higher, with the Shanghai index up 1.15%; the Shenzhen composite index up 1.99%; and the index up 1.93%. Individual stocks rose, and nearly 90 stocks rose. The total turnover of Shanghai and Shenzhen stock markets was 751.5 billion yuan, and the net flow of capital from the North exceeded 10 billion yuan. The author believes that the first day of A-share is a good omen - indicating that the A-share market will be more worthy of expectation in 2020 in the context of economic growth maintaining resilience, continuous transformation of growth momentum, more flexible and moderate sound monetary policy, and accelerated reform and opening-up of the capital market. From the policy point of view, on the new year's day of 2020, the central bank's comprehensive reduction of standards came to the ground, and there was applause. On January 1, the central bank announced that in order to support the development of the real economy and reduce the actual cost of social financing, it decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on January 6.

This reduction is a comprehensive one, reflecting counter cyclical adjustment and releasing more than 800 billion yuan of long-term funds. The author believes that this reduction is conducive to promoting credit and reducing financing costs, and effectively increasing the stable sources of funds for financial institutions to support the real economy. It not only maintains reasonable and abundant liquidity, but also helps to boost market confidence and provide strong support for real economic growth and A-share valuation. From the perspective of economic data, although China's economic growth has fallen, compared with major global economies, China's economic growth is still among the top, at a medium to high speed level. On December 31, 2019, the China purchasing manager index released by the service industry survey center of the National Bureau of statistics and China Federation of logistics and purchasing showed that the China Manufacturing Purchasing Manager Index (PMI) was 50.2%, which was the same as that of last month, and was above the boom and bust line for two consecutive months, with a steady rise in prosperity. From the perspective of 13 sub indexes, only 4 indexes declined slightly, while the rest indexes rose or remained flat, indicating that external demand improved significantly, market demand expanded as a whole, enterprise procurement and production accelerated, market prices rebounded, employment remained stable, new driving forces grew steadily and rapidly, the role of consumer goods industry in economic support was enhanced, and economic operation became stable. Moreover, from the perspective of the index trend in 2019, the market supply and demand remain expanding, the economic structure continues to optimize, and the effect of counter cyclical adjustment is obvious.

At the same time, various economic indicators show that the fundamentals of China's healthy and stable economic development have not changed, and the general trend of China's economy is still in a "stable, positive, long-term positive" situation. From the micro level, the performance of listed companies shows obvious signs of recovery. According to Ifind data of tonghuashun, 281 of the 570 listed companies whose A-share has issued 2019 performance forecast as of December 26 of last year had performance forecast, accounting for 49.3%. From the perspective of net profit indicators, 137 companies are expected to have a net profit of more than 100 million yuan in 2019, 91 of which are small and medium-sized enterprises, accounting for more than 60%; 110 companies are expected to have a year-on-year growth rate of net profit of more than 100%. It can be seen from the performance forecast of listed companies that the profitability of the economic entities represented by listed companies has gradually increased, the signs of recovery are obvious, and the market vitality has improved. From the perspective of capital volume, this year's A-share market is still "good money".

In addition to continuing to increase investment in basic endowment insurance, social security fund and enterprise annuity, occupational annuity, which has launched investment and operation plans in many places, is also expected to speed up its entry into the market. The cancellation of QFII and rqfii investment limits will further broaden the channels for overseas institutional investors to invest in China and greatly enhance the participation of foreign investors in the Chinese market. At present, MSCI, FTSE Russell, S & P Dow Jones and other international mainstream indexes have successively incorporated a shares into their index system, and the index inclusion factors and weights are gradually increasing. This year, more incremental funds will continue to flow into the Chinese market through the allocation of these indexes. The author believes that there is also a big bonus in the A-share market this year, which is the various reform measures promoted by the current capital market. For example, the gem registration system reform, the new three board deep reform, the delisting system reform and the opening-up and other market-friendly reforms will be gradually implemented in 2020, which are the expected policy dividends of the A-share market this year. With the release of these policy dividends, the A-share market will be more mature in 2020.