Chinese stock market funds are switching "tracks"

In the past few months, benefiting from policy support and rising industry sentiment, new energy sector has become the most crowded "track" in A-shares. The forecast price-earnings ratio of CATL, a leader in new energy and a heavyweight on the growth Market, has exceeded 100*, doubling from the median of the past five years. In contrast, the valuations of real estate and bank stocks are near historical lows, and the fundamentals are showing marginal signs of improvement. This week, the market has shown signs of style switching.

The Bloomberg Research China Real Estate Index posted its biggest gain since last July in the first three days of the week. The index rose as much as 5.2% today, led by China Overseas Land Development and Poly Real Estate, which rose more than 8%; China Evergrande also rose after it said it was discussing the sale of some interests in cars and properties. In addition, the Shanghai and Shenzhen 300 Bank Index closed up 1%, rising for four consecutive days, with Postal Savings Bank and China Construction Bank among the top gainers. The Shenzhen ChiNext Index and the Science and Technology Innovation 50 Index, which are mostly growth stocks, both closed low.

Yesterday announced that the second-quarter net profit of commercial banks was 526.6 billion CNY. CICC said that the growth rate of net profit exceeded market expectations, which is expected to become a positive catalyst for the bank's share price. After the funds are withdrawn from bank and real estate sectors based on the downward pressure of the economy, It is expected that there will be another RRR cut in the fourth quarter, which will be beneficial.