A-shares have truly pushed style and rotation to the extreme, where for a period of time, only one style can prevail. Growth and dividends seem incompatible, like water and fire. In the past few months, dividend and resource stocks have been on the rise, while technology stocks have been sluggish. In the last month, dividends have been falling continuously, and technology stocks have started to strengthen. Speaking of today's market, the social financing data for May announced after the market closed last Friday fell short of expectations, leading many to be pessimistic. However, the official media had already given a heads-up, and it was within the expectations of institutions. The economic data for May were not bad, so today's A-shares only opened slightly lower and then rebounded, with the ChiNext index turning red. However, the decline in dividend stocks and heavyweight stocks such as those with "China" in their names still exerted pressure on the index, and the Shanghai Composite Index continued to fall.

Let's now look at today's significant news in detail:

Interest Rate Cut Expectations Dashed

Due to the social financing in May falling short of expectations, and rumors circulating in the market last Friday about an interest rate cut this week, there was an expectation for the MLF (Medium-term Lending Facility) renewal today. However, we believe that these expectations for a rate cut are merely the market's wishful thinking. The result of the central bank's rate cut last year was that funds were idling within the financial system, all flowing into bond investments, and failing to smoothly transmit to the real economy. This year, the central bank's goal is to revitalize existing funds. Additionally, the Financial Times, which is under the central bank's supervision, also stated that although there is room for interest rates to be lowered, there are internal and external constraints.

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According to data released by the National Bureau of Statistics: from the production side, the value added of the industrial sector above a designated size in May grew by 5.6% year-on-year, lower than the market's expected 6%; from the consumption side, the total retail sales of consumer goods in May grew by 3.7% year-on-year, higher than the market's expected 3%; from the investment side, the fixed asset investment in May grew by 3.5% year-on-year, down from the previous value of 3.6%. The urban surveyed unemployment rate in May was 5%, in line with market expectations.

After the central bank introduced three major measures to save the real estate market, new home sales did not show a significant improvement, and the market's expectations for the domestic economy remain low. Additionally, the European economy did not show significant strength after the interest rate cut, and the United States has begun to show signs of weakness. Overall, the recovery strength of the three major economies is weaker than expected, and the market has even started to trade on recession expectations. This is actually the core reason for the recent weakness in commodity prices.

Consumer Electronics Surge in Trading Limit

(The translation ends here as the original text provided was incomplete.)Last Friday, AI computing power led a surge in technology stocks, and today the "Apple supply chain" took over to continue driving the wave of technology stocks, with shares of companies like Peng Ding Holdings, Dongshan Precision, Lingyi Smart Manufacturing, and Wan Xiang Technology hitting the daily limit.

Following the Apple WWDC event last week, the stock price soared to a new high. At that time, we emphasized that AI smartphones and AIPCs are expected to drive a new round of innovation cycles in consumer electronics. The adjustment time and magnitude for the A-share semiconductor and consumer electronics sectors have been quite sufficient, and institutions have been reducing their positions, resulting in a better chip structure. Coupled with various recent policies focusing on new quality productivity, the market's shift to technology stocks is a natural progression, especially with the upcoming Third Plenum in July.

From the consumer perspective: According to the 21st Century Economic Report, TSMC experts have reported that Apple has increased orders for the A18 and A18 Pro, and the production forecast for the iPhone 16 has been revised upwards by 12 million units to 95-96 million units, reflecting Apple's positive feedback on the sales of the new model. According to the Financial Association, after TSMC raised its contract manufacturing prices, the 3nm process is expected to increase by more than 5%, and advanced packaging by 10-20%. Today, it is also reported that testing and packaging prices are starting to rise.

Digital China closed at the limit down

Today, while the Nvidia industry chain saw a significant increase, the Huawei Ascend industry chain plummeted, with Digital China closing at the limit down and Gaoxin Development falling nearly 5%.

According to the Financial Association, there are market rumors that Huawei will reclaim some of the Ascend whole machine business, and Digital China has responded, but it still closed at the limit down.Ministry of Commerce Announcement

The Ministry of Commerce has issued a notice regarding the initiation of an anti-dumping investigation on certain imported pork and pig offal products originating from the European Union. It has been decided to initiate an anti-dumping investigation on the aforementioned products from the EU starting from June 17, 2024. The dumping investigation period determined for this inquiry is from January 1, 2023, to December 31, 2023, and the industry injury investigation period spans from January 1, 2020, to December 31, 2023.

A brief overview of the market performance shows that, as of the closing bell, the Shanghai Composite Index fell by 0.55%, while the ChiNext Index rose by 0.83%. The Hang Seng Index in Hong Kong closed flat, and the Hang Seng Tech Index increased by 0.12%. The total trading volume in the two markets significantly contracted to 0.75 trillion, with more than 3,500 stocks declining.

Looking at the industry sectors, electronics, electric power equipment, automobiles, communications, and defense and military industries led the gains, while coal, steel, real estate, conglomerates, and light manufacturing industries led the losses.

From June 19 to 20 (Wednesday and Thursday), the 2024 Lujiazui Forum will be held, for which there have been prior announcements of significant policy releases. In July, there is the super heavyweight Third Plenary Session, and it is time to start speculating on policy expectations again.