1. Short-term pressure of fund is hard to alleviate.
Fund capital being short: intensive bonus sharing + high positioning + redemption pressure. If we see fund capital by plus-minus method, new fund issuance will be the only plus, while fund bonus sharing and redemption are to cut capital.
Secondary market capital flows to initial public offerings, and annual equity financing reaches almost Rmb800bn. In the short run, initial public offerings in Feb 2010 will take over Rmb20bn. Since primary market and secondary market hold different preferences, initial public offerings will cause more severe negative impact than that of new share issuance and the former is totally a distributary of secondary market capital.
2. Policy regulation anticipation being the most in 1H2010, two elements that might alleviate policy anticipation need attention.
Estimation on political rhythm: Q2 2010 is fastigium to put forward regulation policy. Since governmental regulation policy is earlier than market anticipation, policy rhythm estimation becomes key element to influence market anticipation.
Attentions should be paid to two elements that influence domestic regulation policy estimation. Once the two aspects become true, anticipation on domestic deflation policy will drastically weaken, which will bring negative impetus to A-share market.
3. International market credit and policy risks add market changes.
International market risks increase. Negative elements such as credit and policy risks will lessen market risk preference, with the addition of surplus profit capital accumulation previously, overseas market will continue adjustment in short term.
4. Investment strategy: Priorities given to defense
This is the second trading week of Feb 2010 and atmosphere of spring festival holiday is growing. Market capital pressure exists all the while and outer market fluctuation risks enlarge, with the addition of long spring festival holiday in Feb 2010, investors keep cautious due to uncertainties of outer market and domestic policy anticipation; market is hardly to see robust rebound until positive political regulation signal, and adjustment risks still exist. Priorities should be given to defense all the same; taking good control of stock holding; investors may keep an eye on fields like commerce trading, food & beverage, tourism, aviation, paper making, etc.