The market, which has been in the doldrums for a long time, seems to have ushered in a turnaround.

Overnight (May 26), the Chinese concept stocks in the US stocks soared collectively, and the Futu Niu Niu popular Chinese concept stocks rose by more than 9%.

Among the constituent stocks, Alibaba and Baidu closed up more than 14%, TAL rose more than 12%, Pinduoduo and iQiyi rose more than 9%, Fogcore Technology, Bilibili, and Tencent Music rose more than 8%.

New energy vehicles rose collectively, Weilai rose by more than 9%, Ideal rose by nearly 8%, and Xiaopeng Motors rose by more than 7%.

The remnants of the carnival of Chinese concept stocks also seem to continue to this day, driving the Hong Kong stock market to open higher and move higher, and the Hang Seng Technology Index once rose by nearly 5%. As of midday, the Hang Seng Index rose 2.77%, and the Hang Seng Technology Index rose 3.73%.

Among the top stocks by turnover, Alibaba rose more than 12%, Baidu rose more than 15%, Meituan and JD.com rose more than 4%, and Tencent Holdings rose more than 2%.

Is the rate hike cycle coming to an end?

Under the Fed rate hike cycle, global markets have experienced a sharp correction. Year to date, the S&P 500 has fallen 14%, the Dow has fallen more than 10%, and the Nasdaq has plunged more than 24%.

And just when most investors believed that U.S. stocks were about to fall into “bear market territory” (down 20% from the peak), a Fed meeting minutes were released, which seemed to stop the broader market from continuing to fall.

Some analysts predict that the Fed may end the “water collection” ahead of schedule, boosting the market’s appetite for risk investment. The minutes of the May FOMC meeting showed that Fed researchers raised their inflation forecasts. They estimated the personal consumption expenditures price index (PCE) to rise by 4.3% in 2022, but lowered their forecasts for 2023 and 2024 to 2.5% and 2.1%, respectively. Many attendees expected wage pressures to remain elevated for some time. This suggests that inflation forecasts submitted by Fed officials for their quarterly economic outlook, which will be updated next month, will be revised up.

Comments believe that the above expected adjustment is of great significance. Cignarell estimates that if the aforementioned PCE forecast is accurate, it would imply that three more 50 basis-point rate hikes by the Fed would end the current tightening cycle and pave the way for a big comeback in risk assets in the second half of the year.

Better-than-expected earnings to ease market worries?

Market analysis, with the announcement of Ali, Baidu, and iQiyi’s exceeding-expected financial reports, it indicates that China’s concept stocks may be bottoming out.

Alibaba’s financial report shows that the fourth quarter ended March 31. Total revenue was 204.05 billion yuan, up 9% year-on-year, exceeding market expectations of 200.664 billion yuan; adjusted net profit was 19.799 billion yuan, down 24% year-on-year, exceeding market expectations of 18.667 billion yuan; adjusted earnings per ADS was 7.95 yuan , the same period last year was 10.32 yuan. Among them, Alibaba Cloud’s annual revenue before and after offsetting cross-segment transactions were 100.18 billion yuan and 74.568 billion yuan respectively, achieving the first annual profit in 13 years.

In addition, during the quarter ended March 31, 2022, Alibaba repurchased approximately 17.8 million ADSs for approximately $2 billion under its share repurchase program.

Baidu’s Q1 revenue was 28.411 billion yuan, an increase of 1% year-on-year, and the market estimated that it was 27.86 billion yuan; the adjusted net profit was 3.879 billion yuan, which also exceeded market expectations; the adjusted profit per ADS was 11.22 yuan. In March, the MAU of Baidu App increased by 13% year-on-year to 632 million, and the number of daily logged-in users reached 83%.

iQIYI’s first-quarter revenue was 7.3 billion yuan, of which membership service revenue was 4.5 billion yuan, a year-on-year increase of 4%; operating profit based on non-GAAP financial indicators (non-GAAP) was 330 million yuan, with a profit margin of 4%. It improved for three consecutive quarters and achieved a quarterly profit for the first time. The non-GAAP net profit attributable to iQIYI in the first quarter was 160 million yuan, compared with a net loss of 1 billion yuan in the same period last year.

Due to concerns about the uncertain policy environment, increasing downward pressure on the economy, and the risk of pre-delisting in overseas markets, Chinese concept stocks generally encountered excessive selling in the early stage, and their stock prices experienced a sharp correction. After this irrational adjustment, the strong financial reports of the above companies have sent a positive signal, which has attracted the attention of the bottom-hunting funds. Previously, a number of mainstream foreign institutions have expressed that they continue to be optimistic about the long-term investment value of the Chinese market.

Active domestic policies and steady progress in resumption of work and production

In a series of meetings and speeches this month, positive policy trends have been released. On May 13, the General Office of the State Council issued a document stating that “red lights” and “green lights” should be set up to promote the healthy development of the platform economy and drive more employment.

The Party Committee of the China Banking and Insurance Regulatory Commission wrote an article in “Seeking Truth” on the 16th, pointing out that the combination of preventing the savage growth of capital and promoting the orderly development of capital should set up “traffic lights” for capital in the financial field; complete the special rectification of the platform economy, implement normalized supervision, and promote The platform economy develops healthily.

Later, at the special consultation meeting of the National Committee of the Chinese People’s Political Consultative Conference on “Promoting the Sustainable and Healthy Development of the Digital Economy”, Liu He delivered a heavy speech, expressing his support for the sustainable and healthy development of the private economy of the platform economy and the listing of digital companies in the domestic and foreign capital markets. That day also led to the rise of Chinese stocks in the U.S. stock market.

Compared with the intensive and penetrating supervision in the platform economy field in 2021, this year, normalized supervision has been emphasized, requiring standardization, transparency, predictability, and healthy development as the main line. This also means a more stable regulatory attitude, which is conducive to boosting market confidence.

SPDB International said that the rectification of the platform economy has come to an end in stages, and the implementation of normalized supervision will further reduce uncertainty. “Promoting the healthy development of the platform economy” reflects the characterization of the regulators. Considering the current market environment of stabilizing the economy and employment, it is particularly important to promote the healthy development of the platform economy, which is expected to dispel market doubts, help stabilize market expectations, and then promote the repair of sector valuations.

In addition, with the improvement of the epidemic prevention and control situation, the resumption of work and production of enterprises is also progressing steadily. Official news shows that Shanghai is promoting the resumption of work and production in different categories and stages. According to the traffic recovery situation in the city, the staff who have resumed work and production can already commute by public transportation. The Shanghai Health and Health Commission also stated that after June 1, adjustments will be made according to the situation in Shanghai.

The situation of resumption of work and production is improving, and accelerating the pace of economic recovery will help ensure the fundamentals of the economy in the second half of the year, and will certainly inject confidence into the stock market.

US Secretary of State Blinken: The US is determined to avoid a ‘new Cold War’ with China

At 10 am local time on May 26, US Secretary of State Blinken delivered a speech on China policy at George Washington University. According to the World Wide Web report, Blinken said in his speech that the United States is determined to avoid a “new cold war” with China.

The speech was originally scheduled for May 5, but had to be postponed because of Blinken’s Covid-19 infection. Bloomberg previously reported that the speech, which was supposed to pave the way for Biden’s trip to Asia, is now in line after Biden finishes his visit to South Korea and Japan. Regarding the speech, AFP quoted Blinken’s aides as saying on the 24th that it will be the most comprehensive statement of the US government’s policy on China, a rising Asian power, so far.

“We do not seek to prevent China from functioning as a great power, nor do we prevent China – or any country – from developing its economy or advancing the interests of its people,” he said.

However, Blinken also claimed that the United States will defend the so-called “global order, including international law and agreements”, “enable all countries – including the United States and China – to coexist and cooperate”.

In addition, Blinken announced that the U.S. State Department will establish a “China House” to coordinate U.S. policy toward China.

Amid the downturn in the market, a series of “bullish” news continued to emerge

Is this round of market rebound or reversal?

Has market sentiment been repaired?

You are welcome to express your opinions in the comments section

This article is reprinted from: https://news.futunn.com/post/15932756?src=3&report_type=market&report_id=206756&futusource=news_headline_list
This site is for inclusion only, and the copyright belongs to the original author.