Failed to Break through, No Rate Cut

Discussion on the depth of A-share market.

One day can go from breaking above 3400 points to breaking below 3300 points. It's not satisfactory.

From a macroeconomic perspective, the data for April is out, and it's indeed difficult to summarize.

Liquidity injection decreased significantly below expectations, expected to be around 1.7 trillion yuan, but actually around 1.22 trillion yuan. Specifically, household loans decreased by 2411 billion yuan, which is the weakest value in the past decade for this period, and household deposits decreased by 12 trillion yuan, which is a new low over the past year.

Loans continue to decrease, which is not unexpected, as before the May 1st holiday, barbecues were hot and real estate sales were cold, indicating that consumers' ability and willingness to consume are still in a weak recovery stage.

And the decrease in deposits seems surprising. Since people don't consume, how did they reduce their savings so much? The most widely held view is: paying off mortgages.

Currently, general banks have a pre-emptive mortgage payment plan of about three months later, so in April, deposits decreased significantly, and it's reasonable to infer that residents' savings will continue to decline in May and June.

Naturally, there are some inconsistencies in the data, but if most people still use their savings to pay off mortgages, it's natural to worry about consumer confidence and recovery progress.

Therefore, after the macroeconomic data for April came out, A-shares surged and then jumped into a plunge, even predicting a more pessimistic outlook for the market.

This also raised speculation about interest rate cuts. Recently, commercial banks have started to cut interest rates, partly because lending rates are already very low, which may lead to a reversal of deposit-taking and loan-granting, and another reason is to continue guiding residents to change their savings behavior, increase consumption and investment willingness.

China Renaissance believes that an interest rate cut is needed, and the market has already discounted some of the expected scale of the cut. Currently, 10-year treasury bonds are below 2.75% MLF.

China Renaissance believes that if the interest rate cut is 5 basis points, it's a bit awkward; if it's 10 basis points and consistent with past expectations, then a 20 basis point cut would be super-expected.

However, there's also a possibility of no rate cut. If so, the market may fall even further, which is a good phrase for "positive news to buy more".

According to this morning's announcement from the People's Bank of China, it only continues to make excessive purchases without cutting interest rates.

Total, the A-share market failed to break through 3400 points in the short term and is currently trending downward, with the main estimate still being the market's most concerned topic.

According to the Zhishilou A-share temperature gauge, the current market temperature is 26.3°C, which is at a low level.

Reference position: 100% - 26.3% = 73.7%

Based on a total assets of 150,000 yuan, the actual position is approximately 65%.

Main index estimates have changed, with the mid-term estimate leading to a decline in the Shenzhen Composite Index, while the new energy sector has rebounded and caused the ChiNext50 Index to slightly rebound.

Consumer index estimates remain stable with some slight decline; medical sector is still under pressure and recently had a significant decline, which also led to the ChiNext50 Index remaining in a downward trend.

In summary, the mid-term estimate is no longer viable, and other sectors cannot recover either, so we have to slowly simmer again.

Last Thursday's 41st round of investment was 1000 yuan, with an initial capital of 47,000 yuan and cumulative losses of 98.74 yuan.

The investor has already set up automatic investment, with a weekly investment of 1000 yuan. If you want to follow, please note the reminder every Thursday.

This article was first published on WeChat public account: Cailiao. The author's views do not represent Hexun's stance. Investors should operate according to this article at their own risk.