Incremental funds are good for the A-share market

　　On October 21, the A-share market fell back after rising high. As of the close, the Shanghai Composite Index and the ChiNext Index rose slightly, the Shenzhen Composite Component Index rose by more than 1%, and the BSE 50 Index rose by more than 16%, reaching a record high. Over 3,700 stocks in the entire A-share market rose, 190 stocks reached their daily limit, and the market turnover reached 2.23 trillion yuan. From October 1st to October 18th, financing funds, stock ETF funds, and repurchases of listed companies have all performed positively, with a total net inflow of nearly 300 billion yuan.

　　Analysts believe that the above-expected policies have brought incremental funds to the stock market and promoted the restoration of the valuation of the A-share market. The market may fluctuate under the influence of overseas risks, but the medium-term upward direction remains unchanged.

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300 billion incremental capital inflow

　　The People's Bank of China announced on October 21 that it had launched the first operation of swap facilities for securities, funds, and insurance companies. On October 21, many banks including Industrial and Commercial Bank of China and Bank of China also announced the launch of the first batch of stock repurchase and holding increase loan businesses.

　　On October 18, the People's Bank of China and the China Securities Regulatory Commission jointly announced the official launch of the Securities, Funds, and Insurance Companies Interchange Facility (SFISF) operation from now on. To put it simply, brokerage funds can take the stocks in their hands and go to the People's Bank of China to exchange for higher-quality assets, and then take them to commercial banks to exchange for funds, and then continue to invest in the stock market. This move will provide high-quality assets to non-bank institutions such as securities firms, significantly improve the financing capabilities of these institutions, and thus continue to bring incremental funds to the stock market.

　　Data show that as of October 18, in terms of financing balance, the financing balance of the A-share market since October was 1.601642 billion yuan, a cumulative increase of 170.992 billion yuan, of which the financing balance increased by 107.486 billion yuan in a single day on October 8, the first single day Add amount record. In terms of repurchases of listed companies, with the official implementation of stock repurchases, increased holdings, and re-loans, listed companies have actively implemented repurchases since October. 60 listed company management have increased their holdings since October, totaling 178 million Yuan. In addition, since October, the cumulative net inflow of stock ETFs has exceeded 120 billion yuan.

　　As of October 18, the total net inflow from financing funds, stock ETF funds, and listed company repurchase funds has been nearly 300 billion yuan in October.

The A-share market is still on the rise in the medium term

　　As of the close of trading on the 21st, the rolling price-to-earnings ratio of Wind's A-shares was 18.29 times, the rolling price-to-earnings ratio of the CSI 300 was 12.96 times, and the total market value of A shares was 91.62 trillion yuan. The net outflow of main funds in the Shanghai and Shenzhen stock exchanges was 40.593 billion yuan. The number of stocks with net inflows of main funds was 1,833, while the stocks with net outflows were 3,263.

　　For the A-share market, “the equity market may fluctuate under the influence of overseas risks, but the medium-term upward direction remains unchanged.” Wei Wei, chief strategist of Ping An Securities, said that the signal of domestic policies supporting technological transformation has become clearer, with technology and growth sectors represented by technology and manufacturing benefiting more. Qiu Xiang, the co-chief strategist of CITIC Securities, said that the growth sector represented by manufacturing is still in the trading stage of policy expectations dominated by active funds, and the steady rise will continue for a long time. The high-quality growth and domestic demand sectors are expected to continue to dominate.

　　Yang Chao, chief strategy analyst at Galaxy Securities, said that the higher-than-expected policy has brought incremental funds to the stock market and promoted the restoration of the valuation of the A-share market. As economic fundamentals improve, the A-share market will rise further.