20180813-中国银河国际证券-China_Galaxy_A-Share_Morning_Comments__晨会纪要__4页_997kb

China Galaxy A-Share Morning Comments Summary (August 13, 2018)

Core Content

The A-share market on August 13, 2018, showed mixed performance, with the SHCOMP consolidating in the morning and experiencing a decline in the afternoon due to the underperformance of the coal sector. However, the ChiNext index remained resilient, climbing above the 1,500 level. The overall market sentiment was cautious, and the low turnover limited the potential for a full-scale rebound. The three major indices managed to rebound near the end of the trading session.

Key Market Observations

• Market Performance:

  • SHCOMP: Consolidated in the morning, but lost ground in the afternoon due to weak performance in the coal sector.
  • ChiNext: Resilient, climbed above the 1,500 level.
  • Shenzhen Market: Weaker in the afternoon but rebounded near market close.
  • Most Sectors: Reported gains, but the overall market was not supported significantly.
  • Turnover: Substantially shrank, indicating reduced investor activity.

• Sector Highlights:

  • Property Sector: Outperformed due to strong home sales and increased discounts for first-time buyers.
    • Top Gainers: Nacity Property Service (603506.CH), Shenzhen Properties & Resources (000011.CH), and Shandong Denghai Seeds (002041.CH).
  • Agriculture: Benefited from the inclusion of grain, corn, and wheat seeds in the fiscal subsidy program for agricultural insurance.
  • Pharmaceuticals: Positive outlook on the OTC segment and distribution sector, with recommendations for Renhe Pharmacy (000650.CH), Jointown Pharmaceutical (600998.CH), and Liuzhou Pharmaceutical (603368.CH).

Macro Outlook

• Reform Focus: The central bank is expected to fine-tune monetary policies to create a looser liquidity environment.
• Exchange Rate: The RMB may face further downward pressure despite no proactive depreciation.
• Asset Classes: The bond market is anticipated to rebound ahead of the equity market in H2 2018.

Sector Recommendations

Construction

• Positive Outlook: Infrastructure sector is seen as a growth area.
• Recommended Stocks: CRCC (601186.CH), CCC (601800.CH), China National Chemical Engineering (601117.CH), Gezhouba Group (600068.CH), Gold Mantis Construction Decoration (002081.CH), and China Design Group (603018.CH).

TMT

• Top Picks:
  • Cloud Infrastructure: Inspur Electronic Information (000977.CH), Sangfor Technologies (300454.CH)
  • Saas: Shanghai Weaver Network (603039.CH)

Auto

• Sales Decline: Passenger vehicle sales dropped 5.5% in July.
• Positive Brands: Proprietary brands of SAIC and Geely remained strong.
• Recommended Stocks: SAIC Motor (600104.CH), Huayu Automotive Systems (600741.CH), and Xusheng Auto Technology (603305.CH).

Recent Reports

• Strategy H2 2018 Outlook: Focus on identifying stocks with attractive value and growth potential.
• Healthcare: Recommend sub-segment leaders with low valuations and strong growth potential.
• Media H2 2018 Outlook: Content is the key growth driver in the post-traffic era.
• Quantitative Analysis: Exposure increased amid market declines.
• Bonds: RRR cut to ease liquidity risks; tight global liquidity may limit rate downside.
• Non-Bank Financials: CDR details announced; 10 brokers appointed for domestic listing of innovative companies.
• Military & Defence: Pay attention to risks of military-focused funds amid sector correction.
• Electronics: Market plunge offers buying opportunities; prefer consumer electronics and IC leaders.
• Consumption Upgrade: Positive outlook on the consumer sector due to strong policy support and demand.

Disclaimer and Risk Statement

• The document is issued by China Galaxy International Securities (Hong Kong) Co., Ltd.
• Information is based on reliable sources but not guaranteed for accuracy or completeness.
• No representation or warranty is made regarding the information.
• The analysis does not consider individual client circumstances and is for general reference only.
• Past performance is not indicative of future results.
• Readers are advised to consult independent financial advisers before making investment decisions.

Disclosure of Interests

• China Galaxy International may have financial interests in the subject companies, potentially equal to or exceeding 1% of their market capitalization.
• Some directors, officers, and employees may be associated with the subject companies.
• The firm may participate in financing transactions, provide services, or hold positions in the securities of the mentioned companies.

Copyright

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• Unauthorized reproduction, redistribution, or publishing is strictly prohibited.