EB SECURITIES: How long can the delayed spring market last?

EB SECURITIES released a research report stating that although this year's spring market has "tarried," based on historical patterns, it is not uncommon for the spring market to be delayed. Furthermore, a late start to the spring market does not necessarily mean it will be short-lived, nor does it guarantee a low increase. Historically, if there is a rate cut or reserve requirement ratio cut in the first quarter, the spring market of that year is usually stronger. With the upcoming Two Sessions, the increasing policy expectations are expected to support the A-share market to continue its strong performance. The market style may lean towards cyclical industries, so it is recommended to focus on industries such as petroleum and petrochemical, household appliances, transportation, electronics, coal, and basic chemicals. EB SECURITIES' main views are as follows: Core Issue One: How long can the delayed spring market last? Entering February, the A-share market has been showing signs of recovery, and this year's spring market may have gradually started. From a policy perspective, with active policy support, market risk appetite has been gradually recovering, and the basic conditions for the continued performance of the spring market are in place. From a trading signal perspective, the buying signals for this year's spring market were first triggered on February 7th, and then again on February 21st and 23rd. In addition, the current market valuation is relatively low in history, and there are no significantly unexpected risks. Even if there will be a short-term adjustment in the market, the risk of approaching the previous low point again is relatively low. Core Issue Two: What changes can be expected in the future? Looking ahead, there are a few changes worth anticipating: there is still room for policy initiatives, and the government's economic growth target for this year is worthy of attention. The window period around the Two Sessions may see the introduction of new policies. Furthermore, the quality of economic data is worth monitoring. Overall, the overall economic conditions in the first quarter may be roughly the same as the fourth quarter of last year, but there may be structural highlights in areas such as exports and consumption. Additionally, the annual reports of listed companies and the first quarter reports are worth anticipating. Core Issue Three: What other aspects are worth paying attention to besides dividends? Currently, the valuations and trading congestion of dividend-bearing assets are relatively low. The high-dividend strategy can still serve as a stable income base and is still suitable for the current market environment. In the short term, the direction of oversold rebound may still be a good choice, mainly focusing on growth sectors, where there is a higher certainty of rebound in sectors with improving performance. Additionally, with active policy initiatives, some cyclically-oriented industries are also worth continued attention. A-share Market: Spring is in the Air Although this year's spring market has "tarried," based on historical patterns, it is not uncommon for the spring market to be delayed, and a late-starting spring market may not necessarily be short-lived with a low increase. Historically, if there is a rate cut or reserve requirement ratio cut in the first quarter, the spring market of that year is usually stronger. With the upcoming Two Sessions, the increasing policy expectations are expected to support the A-share market to continue its strong performance. The market style may lean towards cyclical industries, so it is recommended to focus on industries such as petroleum and petrochemical, household appliances, transportation, electronics, coal, and basic chemicals. Hong Kong Stock Market: Focus on Scarce Varieties Since January of this year, the resilience of the Hong Kong stock market has been stronger than that of the A-share market. Currently, the U.S. bond yields have returned to previous high levels, and are expected to fall in the future, which is favorable for the sustained recovery of the Hong Kong stock market. Historically, the Hong Kong stock market also experiences a spring market, and it may follow in the footsteps of the A-share market in staging a spring market. In terms of allocation, it is recommended to focus on scarce growth varieties and high dividend assets. Risk Warning: Economic growth falling below expectations leading to poor market performance; fluctuations in US-China relations suppressing market risk appetite; escalation of geopolitical conflicts.