Chapter 223 The Bull Market Has Arrived
Tuesday, April 2, 2024.
Yesterday, the Shanghai Composite Index, Shenzhen Component Index and ChiNext Index all rose, with the Shanghai Composite Index closing up 1.19% at 3077.38 points.
Today, the Shanghai Composite Index opened slightly lower at 3076.88 points, then rose, then fell again and began to fluctuate. It closed up 0.03% at 3078.33 points in the afternoon.
After three consecutive days of sharp gains, the market began to hesitate.
On the news front, there are many things worth noting, and it's quite messy.
First, in the European stock market, the STOXX Europe 600 Banks Index hit a six-year high.
The index includes banks such as HSBC of the UK, BNP Paribas of France, Santander of Spain, UniCredit of Italy and UBS of Switzerland.
UBS, in particular, has surged 46% over the past year, reaching its highest level since March 2008.
European bank stocks have made a lot of money in this round of interest rate hikes.
Therefore, if we want to invest in bank stocks, the best time to invest is when the interest rate hike cycle is just beginning.
Looking back in history, that was the end of 2016.
At that time, the expected yield on domestic 10-year government bonds rose above 3% for the first time.
Nowadays, the domestic PMI has turned positive and the monetary policy remains loose. If things go as expected, in about two years, the economy will enter a stage of prosperity or even overheating.
By then, it is very likely that the country will enter the interest rate hike channel.
If bank stocks can still maintain their current dividend yield and low PE level by then, they will indeed be a good investment target.
However, we need to be careful.
At the end of the interest rate hike cycle, we must be careful about the potential economic crisis caused by high interest rates.
Therefore, it is best to sell in the middle of the interest rate hike cycle, after the stock price has risen to a certain extent, to prevent economic crisis and bank performance collapse.
During this round of interest rate hikes, community banks in the United States have collapsed repeatedly, and the aftermath continues to this day.
Second, the benchmark real estate stock Vanke A surged by more than 5%, hitting a new low of 8.5 yuan, breaking the psychological defenses of countless people.
The coldness of the real estate cycle is chilling.
Third, the U.S. ISM manufacturing index in March exceeded expectations and was 50.3.
Perhaps stimulated by this news, crude oil prices continued to rise. Brent crude oil rose 1% to $87.87, and WTI crude oil rose 1.5% to $84.48, reaching a new high since last year's high of $10.
Oil is the mother of inflation.
Stimulated by expectations of a Federal Reserve interest rate cut, crude oil prices have become a runaway horse, running northward somewhat uncontrollably.
During the inflation cycle, the commodities with the strongest financial attributes are crude oil, gold and copper.
So, during this period, the growth of these three assets has been very good, both domestically and abroad.
After these assets have seen a certain increase, the hot spots began to spread.
Today, as soon as the market opened, strong cyclical stocks began to rise across the board.
The three oil giants all opened higher, the copper mining leader Northern Copper once again hit the daily limit, Oriental Zirconium Co., Ltd. rose for two consecutive days, Jiaozuo Wanfang rose by more than 5%, and chemical, nonferrous metals, and oil transportation all rose significantly...
Amidst the turmoil, leading stocks Zijin Mining, Luoyang Molybdenum and Aluminum Corporation of China all weakened again after lunch, and even turned green at one point, which was puzzling.
The ups and downs of the Shanghai Composite Index these days, especially the trend of breaking through 3,000 points and then quickly pulling back, have completely confused Xiao Bo.
He looked at his holdings and felt happy, worried, and confused.
"Li Feng, what do you think will happen to the nonferrous metals sector in the future?" Xiao Bo turned around and asked Li Feng.
These days, due to the surge in the prices of gold, copper, aluminum and other stocks, Xiao Bo has become quite restless. He wants to sell, but is afraid of selling too much. If he doesn't sell, he is afraid of a pullback.
Li Feng looked at the board and said slowly:
"It's already April, and the market is focusing on the first-quarter reports."
"Objectively speaking, the research capabilities and resources of institutions far exceed those of retail investors. Many stocks that have seen astonishing gains have reported substantial year-on-year growth in their first-quarter earnings."
"After the first quarter report is released, it will be May. At that time, the market direction, especially the direction of the game in the strong cyclical sectors, will be based on the timing of the Fed's interest rate cut."
"One thing leads to another."
"So, on the current market, gold and copper are taking a break, coal is starting to adjust significantly, but the focus is spreading to some minor metals and the chemical sector..."
Hearing this, Xiao Bo suddenly had an idea and blurted out, "Will it be the same as 2021? Will the next step be hype about the periodic table?"
Xiao Bo clearly remembers that in the decisive battle of the periodic table in 2021, many stocks doubled and doubled again in just a few months.
The market is booming.
The stock investors made a lot of money.
If this kind of market situation happens again, wouldn’t it be another opportunity to make a fortune?
His eyes were bright and full of hope as he looked at Li Feng, hoping that he would give a positive answer.
Li Feng seemed to have sensed something and turned his head slightly. He happened to see the greed and fanaticism in Xiao Bo's eyes and couldn't help but sigh: "No one knows what the future will be like."
"But we must ensure that when the stocks we hold surge dramatically, we don't become complacent, but remain calm, listen more to bad news and less to good news, and especially focus on predicting the future performance of the stocks we hold..."
After a pause, Li Feng looked out the window and said slowly, "I can say with certainty that the bull market has arrived... How much money can be made in the future and how far we can go depends on what point the market can break through..."
“Only when the market is high enough… can it continuously attract moths to the flame… can it continuously rise… can it rise just for the sake of rising… can it have the charm of individual stocks… can it have a bull market supplied by leeks…”
"Historically, every bull stock and every sector riot has been based on a bull market... If the market improves in the future and breaks through 4,000 points, then the upward space for the entire non-ferrous metals sector will be opened up..."
"Everything now is just beginning..."
"Of course, if the index only seesaws in the future, then the space for the entire nonferrous metals sector will be suppressed... In the stock market, there will only be a sickle cutting each other... It will be difficult for a big bull stock to emerge..."
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