Weakness In A Shares Is Only Temporary. The Shanghai Composite Index Is Likely To Welcome The "Golden Rooster" Market.

The Shanghai Composite Index, which has entered the bull market in the "double 11" singles day, seems to have stopped the pace of progress, and has made the most of the last two months' gains.

However, in the eyes of Morgan Stanley and Credit Suisse, the weakness of A shares is only temporary.

In 2017, the Shanghai Composite Index will usher in the "golden rooster" market, the second largest gain in seven years, and surpass the Hong Kong stock market separated by a river.

A questionnaire survey and research report collection were carried out on 21 organizations. 12 of them gave the end point prediction of the Shanghai Composite Index in 2017, and 9 gave the prediction of the Hang Seng Index, all of which were bullish.

The median forecast of the analysts shows that the Shanghai Composite Index will explore 3800 points before the end of 2017, which is 21% higher than that of the 21 day, and the Hongkong Hang Seng index will have a median forecast of 25000 at the end of next year, 15% higher than yesterday's close.

Most of the companies, including Goldman Sachs and Credit Suisse, listed China's economic stabilization and corporate earnings improvement as one of the main reasons why they were optimistic about the mainland and Hong Kong stock markets in 2017.

The National Bureau of Statistics announced last week that both the industrial added value and retail sales growth in November exceeded expectations, indicating that the economy continued to rise steadily.

In an interview with Credit Suisse analyst Chen Lizai, the three quarter report in 2016 showed that the profits of A share companies were rising rapidly, which is "better than everyone forecasts".

Among the many agencies, the most optimistic Morgan Stanley sees more stock index to 4400 points, which means that the market will have an upswing of 40%.

"Earnings per share growth, capital flows from the property market to the stock market, the domestic monetary environment is loose, and the strengthening of foreign exchange control is pushing A shares into a bull market," the bank said in its 12 day report.

"Compared with the last bull market, this bull market will be more durable and mild."

In addition to profitability, supply side reform accelerated, A shares included in MSCI

The expectation of the index is also the two main factor for A shares.

Based on the median forecast by the agency, the Shanghai Composite Index will rise by 21% next year, the second largest gain in 2010, after 53% in 2014.

In a lot of noise, there are also institutions that are not optimistic about the outlook for A shares.

Cui Wei, a strategist at the Bank of America and Merrill Lynch, said in a 13 day report that "A shares will continue to be avoided as a whole, especially small cap stocks with high price earnings ratio."

He believes that the most worrying thing about A shares is that the leverage ratio has risen sharply since the middle of 2015, and is still expensive.

According to Bloomberg data, "we think that the rise of A shares will come entirely from profit growth. Next year, the net profit of all listed companies on A shares will grow by 20%," Chen Li said.

In its December 19th report, Credit Suisse pointed out: "China's industrial activities have improved significantly in the past few months, and the recovery of industrial profits will improve the profitability of the" old economy "sector.

Compared with Hong Kong stocks, we will still be more optimistic about A shares next year.

Compared with the new economy, we prefer the old economic stocks.

The composite index has a forecast earnings ratio of 15 times in 2016, 12 times higher than the Hang Seng Index and 13 times higher than the MSCI China Index.

Bank of America Merrill Lynch did not give specific stock index forecasts.

In January this year, the fusing mechanism, which was born on the four day, was triggered by the collapse of A shares. The Shanghai stock index has not recovered all the land lost at the beginning of the year.

The Shanghai composite index ranked 11.4% in Asia's main stock market this year, falling by second.

In November 11th, the stock index rebounded from the low of January to over 20%, once entering the technical nature.

However, at the end of the year, with the tightening of liquidity, the China Insurance Regulatory Commission (IPO) strictly controlled the issuance of insurance funds and speed up the issuance of IPO, which inhibited the rebound of the shares.

So far, the Shanghai stock index has fallen 3.5% this month, the biggest monthly decline since January.

In its report last month, Citi pointed out that next year, A shares will go up in the rough and face many uncertainties, such as Sino US trade relations, real estate investment downturn and European election year.

Chen Li of Credit Suisse listed inflation as the main risk.

He said: "inflation may force monetary policy to tighten, and if credit is forced to tighten, the overall liquidity will be tightened, which is not conducive to the stock market."

In its report last month, UBS predicted that mainland funds would account for next year.

The proportion of trading volume will increase from 12-13% this year to about 20%, bringing about a net inflow of RMB 200 billion yuan.

UBS said: "mainland investors have become a major player in the Hongkong market."

However, compared with the relatively closed A share market, the uncertainties of the international situation are more likely to impact Hong Kong stocks.

Sun Yu, head of HSBC's China stock strategy, said in an interview last month that the relationship between A shares and the international market is smaller than that of Hong Kong stocks. Trump's election has brought uncertainty to the international situation, and A shares are less affected.

Last week, the Fed predicted that interest rates would rise three times next year, two times more than market speculation.

On the same day, Hang Seng Index fell 1.8%, Hang Seng real estate index fell 2.6%, stock index fell 0.7%.

"Raising interest rates in the US and Hongkong and the strength of the US dollar will raise doubts about the sustainability of Hong Kong listed companies's earnings growth. Interest rates will increase the valuation of many assets in Hongkong," Jian Yin International said in its 1 day report.

The stock market capital flows that had surged southward because of worries about the depreciation of the renminbi have also changed recently. The Shenzhen Hong Kong Tong just opened, showing the trend of "North hot, South cold".

Since its opening in December 5th, the total net purchase amount of Shenzhen Stock Exchange has reached 14 billion 600 million yuan, far exceeding the net purchase amount of HK $5 billion 400 million RMB.

Shanghai and Hong Kong through the mechanism of capital "northward" activity is also improving, in November, Shanghai Stock Exchange recorded a net inflow of 6 billion 430 million yuan of funds, three consecutive months of increase.

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