'New energy' breathes life into A shares

The dark clouds that appeared to be surrounding A shares for almost two months have a silver lining now, in the form of stocks of new energy-related companies that are beginning to make a difference, market mavens said on Friday.

The benchmark Shanghai Composite Index, which has been largely flat for weeks, received a tiny push upward on Friday, closing 0.18 percent higher at 3539.1 points. The Shenzhen Component Index edged up 0.04 percent to 14705.37 points.

However marginal the rises may be, trading volumes at both Shanghai and Shenzhen bourses topped 1.1 trillion yuan ($172 billion) on Friday－the 16th consecutive trading day that the combined trading volume exceeded 1 trillion yuan.

The photovoltaic sector was a major contributor to Friday's rally. Stocks of at least 10 photovoltaic companies touched the daily upper limit of 10 percent. Jiangsu Zhongli Group reported 10 percent increase for two consecutive days.

The solar energy industry's stellar performance is closely related to US officials' decision not to launch an investigation into Asian solar manufacturers.

The automotive sector reported an increase of 2.64 percent on Friday, with 12 companies seeing their share prices soar by 10 percent. With a positive outlook on the rising demand for new energy vehicles in China, analysts from Everbright Securities estimated that about 3.5 million NEVs will be sold by the end of this year.

Companies with signature NEV models, rising market penetration rate or those specializing in smart NEVs will generate the most opportunities for investors.

Stocks of A-share agriculture companies also rose an average 0.55 percent, led by the 10 percent increase of Shandong Denghai Seeds Co Ltd. Analysts from Huaxi Securities wrote in a note that the central regulators have increased their support to the seed industry and an action plan to revive the industry is likely to be released in the near future. More supportive policies for the agricultural industry will be announced in the fourth quarter, which will boost the sector's performance, Huaxi said in its note.

Securities firms may also be worth a closer look as the highly anticipated Beijing Stock Exchange is expected to start operations on Monday. TF Securities estimated that the launch of the BSE will generate 18.8 billion yuan of income in brokerage fees, financing and initial public offering business.

New York-headquartered index provider MSCI announced on Friday its 2021 semi-annual review. In all, 111 stocks will be added to its flagship MSCI ACWI Index, including 58 Chinese stocks.

The MSCI China A Onshore Index and MSCI China All Shares Index have seen some adjustments made to them. But less overseas capital has been chasing the above two indexes, which indicates less likelihood of capital fluctuation due to the latest adjustments.

As of Thursday, northbound capital－the overseas capital buying into the A-share market via the stock connect programs between Shanghai, Shenzhen and Hong Kong－has registered a net inflow of nearly 323 billion yuan, nearing the historic high recorded in 2019.

Analysts from Citic Securities said net inflows of northbound capital will reach 350 billion yuan this year. The figure will further climb to 400 billion yuan later, given the lower overseas equity allocation to the A-share market and the stable renminbi exchange rate, they said.