On July 17th, the Shanghai Composite Index retreated to around the 3800-point mark in the morning session. Only approximately one thousand companies across the entire market advanced, with the dividend index being the sole major index to post gains, indicating a shift in market sentiment from exuberance to pessimism.
Regarding the full-year trajectory of the A-share market, strategist Chen Guo maintains his "N-shaped" forecast. He believes the market is currently presenting a rare "golden buying opportunity" for the year, with major indices poised to achieve new periodic highs in the second half. The core reasoning is as follows:
1. The Q2 GDP growth of 4.3% represents the economic trough, with an anticipated improvement in growth rate during the second half of the year.
2. The Q2 micro-level capital flow situation in the A-share market constitutes a liquidity bottom, which is expected to improve in the latter half of the year.
3. Proprietary sentiment indicators suggest recent A-share market sentiment has neared low levels.
4. In the second half, a large number of established assets are in the early stages of profit recovery while still trading at low valuations.
5. Numerous high-quality, genuine Chinese technology companies are set to list on the A-share market in H2, which is expected to attract incremental capital inflows, potentially boosting market activity and risk appetite.
Chen Guo posits that the aforementioned five conditions are superior to those in the first half, suggesting the Chinese stock market may stabilize and embark on a volatile upward trend in the near term. From an asset allocation perspective, he continues to favor sectors including non-bank financials, traditional and new energy, internet, pharmaceuticals, consumer goods, and leading genuine technology companies within the domestic AI industry chain.
"Buy when sentiment is pessimistic, and let's meet again at new highs," Chen Guo stated.
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