Key to Reversing Market Downtrend
Today, November 25th, the overall market is unremarkable. For the market to rebound, it still needs to wait for further improvements in macroeconomics and policy. The US Dollar Index is also a key factor. After the US Dollar Index challenged the high of 108, it retreated in the short term, possibly due to encountering resistance near the platform at 107.4, leading to a one-day decline. This does not confirm the end of the dollar's strength; it could still continue to rise and force short covering. I believe the US Dollar Index's upward trend will not last long, but I cannot make laws with words. It takes time for the dollar to reverse its upward momentum.
As we discussed in our live broadcast, the adjustment of A-shares since October 8th should be the second wave, a quarterly-level adjustment, and it will take a long time to reach new highs again. What concerns me most about A-shares is the trading volume. Today's transaction amount was less than 1.5 trillion, indicating that investors' enthusiasm is gradually weakening. Policy benefits cannot stop; otherwise, the market will always repeatedly erode investors' patience. Technical indicators have ended the support of the triangle consolidation, and it has not recovered today, indicating the emergence of second wave C. The decline may not be significant, but the volatile market is very wearing. The next support for the Shanghai Composite Index is at the 60-day line.
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Here is the same saying: whether it is a long-term or short-term investment, we welcome it. Do not try to select A-share investors. In a long-term bull market, short-term investments become long-term. In a long-term bear market, long-term investments become short-term. It is important to understand that different market mechanisms cultivate different investors. If everyone participates in speculation rather than investment, there is likely a problem with the market mechanism that needs to be improved.
I have discussed the future of China's globalization, which is, in simple terms, to find new economic allies and then see China making multiple moves. I am pleased to see the news broadcast reporting that at the APEC Economic Leaders' Meeting, Latin American countries actively interacted with China, and then China unilaterally granted visa-free policies to many countries. Now, China and Europe are negotiating around the EU's previous policies on batteries, new energy vehicles, and photovoltaic tariffs. There is news that an agreement is close, and you may have heard the news by the time you read this article.
In summary, you will see that China is stabilizing foreign trade expectations through global alliances. After all, the United States has only more than 300 million people, while the world has 8 billion people. There is business to be done; if the United States does not want it, there are many others who do.
In the short term, it is difficult for China's economy to get rid of the support of foreign trade, an important economic pillar. After all, domestic consumption and investment are at a bottleneck due to housing issues. Therefore, a more pragmatic approach is to develop new export product destinations. Nowadays, China is making more and more moves in this direction, allowing investors to see a new dawn for China's economic development.
I have also proposed some solutions before. Trade is trade when there is give and take. We must abandon the traditional business mindset of only exporting and not importing. For example, the EU, as long as it improves the treatment of EU companies in China and reduces barriers, the EU will accept it. After all, the EU's manufacturing industry still has a foundation, and mutual benefit and win-win for both parties are the main direction. For southern countries in Asia, Africa, and Latin America, infrastructure must be implemented first, such as exporting new energy vehicles, you have to think about charging piles and power systems for charging. Many southern countries do not have power facilities, so it is necessary to first export power equipment, including renewable photovoltaics, wind energy, hydropower, and even thermal power facilities. Then consider the export of Chinese new energy vehicles.
In terms of sectors, the overall market is weak, and attention can be paid to innovative pharmaceutical companies in the pharmaceutical field. Medical insurance negotiations were held at the end of October, and the specific results will be announced at the end of November, just in the next few days. New medical insurance drugs for innovative pharmaceutical companies are a new performance growth point, including both foreign agency and self-research by innovative pharmaceutical companies. It's the same, whether it's a white cat or a black cat, as long as it can catch mice, it's a good cat.
In addition, the rules for the tenth batch of centralized procurement, which will be opened on December 12th, have changed. For example, the practice of being eligible with a 50% price reduction has been canceled, and it is now within 1.8 times the lowest price. For example, the difficulty for Class B companies to be eligible has increased. Class B companies are those that do not produce themselves but find pharmaceutical manufacturing companies for OEM. The policy wants companies to develop and produce on their own.
There are two problems with generic drugs from Class B companies: one problem is that the centralized procurement of eligible drugs is just a change of packaging, possibly produced by the same pharmaceutical company with different labels; the other problem is that it is difficult to distinguish the responsible person when there is a problem with the drug. R&D says it's the fault of manufacturing, manufacturing says it's the fault of sales, and Class A companies cannot avoid responsibility.
There is no need to say much about pharmaceutical stocks. The trend is very clear. Generic drugs participating in centralized procurement, no matter how the policy is adjusted, are not valuable. In the end, it still depends on innovative drugs negotiated by medical insurance as a growth point. In addition, I would like to talk about the feeling that the degree of internal competition in the field of innovative drugs has been significantly increasing in recent years.
My view is that it is still necessary to start from the rule of law. Once the red lines are clear and the penalties are in place, the platforms will not dare to act rashly, and the effect of intermittent blowing is limited. Of course, I am not qualified to say much about this. From an investment perspective, be careful about the expected fluctuations of internet platform stocks in the near future. Of course, most platform stocks are in the US and Hong Kong stocks.