core view
1. We remain optimistic about the market after the festival. Similar to 2016, the pit filling market will be gradually deduced, dominated by changes in liquidity and policies, with a more balanced style. There are opportunities in the price rise chain in the traditional economic cycle and the digital economy and new energy fields in the science and technology industry cycle.
2. In January this year, A-Shares continued to fall, and the valuation adjustment was the main reason for the market correction. The valuation was affected by liquidity and risk appetite. The US bond interest rate rose rapidly driven by the real interest rate. The continuous strengthening of the tightening expectation of the Federal Reserve was the core factor to suppress the valuation of a shares; Risk appetite is mainly affected by the path and sustainability of China's wide credit and the overseas geopolitical situation.
3. Like the performance in January this year, the market fell sharply in January 2016, and then the pit filling market was opened throughout the year. In 2016, driven by the real estate chain, the economy stabilized and rebounded, driving the reversal of all a performance in the second half of the year, which is the main driving force of the pit filling market. In 2016, China's liquidity environment had limited support for the pit filling market, and the current policy environment is more friendly than that in 2016. This year's pit filling market is worth looking forward to. Valuation is the main driving force, and the style of the market will be more balanced.
4. At present, the economy has run near the bottom of the current downward cycle. With the gradual appearance of the effect of the steady growth policy, Q2 is expected to be gradually confirmed; China's liquidity and policies are favorable to equity assets. Looking forward to the national two sessions from the local two sessions, it has become a consensus to promote steady economic growth, and infrastructure and consumption will be the main focus; Overseas, the market is gradually taking into account the worst expectations. It is expected that the fermentation stage is often the most pessimistic moment in a round of tightening cycle. It is expected that the pressure on the rapid rise of US bond interest rates will be relieved after April. The current round of valuation adjustment has come to an end. With the upcoming national two sessions and the landing of the boots superimposed on the first interest rate increase by the Federal Reserve, the market risk appetite will be warmed up, and A-Shares are expected to usher in a round of valuation repair.
5. In terms of configuration, it is suggested to lay out the varieties of post cycle and counter cycle in the traditional economic cycle and the fields of digital economy and new energy in the cycle of science and technology industry. In February, the preferred industries are petroleum and petrochemical, computer and power equipment.
summary
1. The clouds are open and the moon is bright. we remain optimistic about the market after the festival. Similar to 2016, the pit filling market will be gradually deduced, dominated by changes in liquidity and policies, with a more balanced style. There are opportunities in the price rise chain in the traditional economic cycle and the digital economy and new energy fields in the science and technology industry cycle. In January this year, A-Shares continued to fall, and the valuation adjustment was the main reason for the market correction. The valuation was affected by liquidity and risk appetite. The US bond interest rate rose rapidly driven by the real interest rate. The continuous strengthening of the tightening expectation of the Federal Reserve was the core factor to suppress the valuation of a shares; Risk appetite is mainly affected by the path and sustainability of China's wide credit and the overseas geopolitical situation. Like the performance in January this year, the market fell sharply in January 2016, and then the pit filling market was opened throughout the year. In 2016, driven by the real estate chain, the economy stabilized and rebounded, driving the reversal of all a performance in the second half of the year, which is the main driving force of the pit filling market. In 2016, China's liquidity environment had limited support for the pit filling market, and the current policy environment is more friendly than that in 2016. This year's pit filling market is worth looking forward to. Valuation is the main driving force, and the style of the market will be more balanced. At present, the economy has been running near the bottom of this round of downward cycle. With the gradual appearance of the effect of steady growth policy, Q2 is expected to be gradually confirmed; China's liquidity and policies are favorable to equity assets. Looking forward to the national two sessions from the local two sessions, it has become a consensus to promote steady economic growth, and infrastructure and consumption will be the main focus; Overseas, the market is gradually taking into account the worst expectations. It is expected that the fermentation stage is often the most pessimistic moment in a round of tightening cycle. It is expected that the pressure on the rapid rise of US bond interest rates will be relieved after April. The current round of valuation adjustment has come to an end. With the upcoming national two sessions and the landing of the boots superimposed on the first interest rate increase by the Federal Reserve, the market risk appetite will be warmed up, and A-Shares are expected to usher in a round of valuation repair. In terms of configuration, it is suggested to arrange the varieties of post cycle and reverse cycle in the traditional economic cycle and the fields of digital economy and new energy in the cycle of science and technology industry. In February, the preferred industries are petroleum and petrochemical, computer and power equipment.
2. Main ideas of industry allocation: looking forward to February, we believe that the market has a layout opportunity under the background of the end of China's policy and the approaching end of the economy. After the mitigation of external risk factors, we will meet better investment opportunities in the future. Based on the "dual cycle" configuration framework, it is suggested to give priority to the post cycle and counter cycle varieties in the traditional economic cycle and the digital economy and new energy fields in the science and technology industry cycle in advance, including: 1) post cycle varieties whose prices lag the changes of the economic cycle and can reflect inflation, such as the petroleum and petrochemical chain priced overseas and the coal and other energy chains priced in China, At the same time, pay attention to the counter cyclical industries under the idea of steady growth, such as construction materials in the infrastructure real estate chain; 2) Considering the cost-effective hard technology industry in the field of digital economy, according to the consistent prediction of Wande in this year and next year, there is still room for improvement in the growth rate of hard technology industries such as computer and military industry, with a high margin of safety; 3) Stick to the new energy field with high prosperity, the global economy continues to increase the development of the new energy field, and the medium and long-term demand will continue to increase. With the gradual launch of new production capacity of upstream raw materials such as industrial silicon and silicon materials, the cost pressure continues to improve, promoting the acceleration of the energy revolution. In February, the preferred industries are petroleum and petrochemical, computer and power equipment.
risk tips: the tightening of liquidity is more than expected, the economic stall is down, the friction between China and the United States is intensified, and the epidemic situation is worse than expected.
report body
1. The sharp decline in the market in January was mainly due to the valuation adjustment
in January 2022, the risk appetite of the global equity market decreased, the A-share market continued to decline, and the valuation adjustment was the main reason for the market correction. since 2022, with the continuous strengthening of the tightening expectation of the Federal Reserve, the volatility of global risky assets has increased. In terms of overseas markets, most of the world's major stock indexes fell in January 2022, among which the correction range of US stocks and Asia Pacific markets was large, and the Korean composite stock price 200 index and Nasdaq index fell by 9.19% and 8.98% respectively; Hong Kong stocks and European markets performed relatively well, with the Hang Seng Index and the UK FTSE index achieving positive returns of 1.73% and 1.08% respectively. In the Chinese market, the A-share market has continued to decline since 2022. The wandequan a index fell by 9.46% in January as a whole. The gem index with strong growth attribute in the broad-based index and the Kechuang 50 Index retreated significantly, falling by 12.45% and 12.08% respectively, while the Shanghai Stock Exchange 50 and Shanghai and Shenzhen 300 indexes representing blue chips in the market were relatively resistant to decline, and the market performance was relatively dominant. From the perspective of style, in January, the A-share market as a whole showed the characteristics that the large market was better than the small market, and the undervalued value was better than the overvalued value. The financial sector with low valuation had a significant comparative advantage, while the growth sector led by the rise in the early stage experienced a large correction, with strong risk aversion in the market. It is worth noting that the decline of A-share market in January 2022 was mainly caused by valuation adjustment. The price earnings ratio (TTM) of wandequan a, Kechuang 50 and gem fell by - 9.42%, - 12.08% and - 12.50% respectively. The change rate of valuation was basically the same as that of stock index.
On the whole, in January 2022, under the influence of the tightening expectation of the Federal Reserve, the risk appetite of the global equity market decreased, the A-share market continued to decline, and the valuation adjustment was the main reason for the market correction.
Since the beginning of the year, the US bond interest rate has risen rapidly driven by the real interest rate. The continuous strengthening of the tightening expectation of the Federal Reserve is one of the core factors to suppress the valuation of a shares. since January 2022, the U.S. Treasury bond yield has gradually priced the expectations of the Federal Reserve raising interest rates and opening the table contraction for many times this year. The 10-year U.S. Treasury bond yield has risen by more than 30bp. Under the background of the turning of the liquidity environment, the real interest rate has increased significantly. Specifically, with the reference to the discussion of table contraction and early interest rate hike in the minutes of the December meeting of the Federal Reserve, the market's concern about too fast policy tightening intensified, and the real interest rate increased by more than 30bp in two weeks. Subsequently, at the FOMC meeting in January, the Federal Reserve once again released a hawkish signal that exceeded expectations. It was a foregone conclusion that the interest rate hike and table contraction came in parallel during the year, and gave a clear hint of the interest rate hike in March. Under this influence, the global equity market corrected again. Looking ahead, at this stage, the U.S. economic operation trend is better and the U.S. non farm employment data in January is much higher than expected. The tightening of the Fed's policy may continue to strengthen. Before the official implementation of the Fed's first interest rate increase in March this year, it is not ruled out that the real interest rate may still rise further. However, the implementation of the policy often indicates the emergence of the downward inflection point of interest rate. It is expected that the pressure of the rapid upward rise of US bond interest rate will be relieved after March. From the perspective of historical experience, the rapid rise of the real interest rate of US bonds will significantly suppress the global overvalued assets. This phenomenon is reflected in the fourth quarter of 2018, March 2020, February 2021 and the market since this year. On the whole, the withdrawal of overseas unconventional monetary policy will become a key factor restricting global liquidity this year. Although China's liquidity environment remains loose at this stage, the continuous strengthening of the tightening expectation of the Federal Reserve will still negatively suppress the valuation of A-Shares in the short term.
in terms of China's risk appetite, it is difficult to broaden the currency and credit. The path and sustainability of the subsequent credit expansion target remain to be seen. although the stock of social financing scale has established a rising trend, the credit quality is still unsatisfactory. On the one hand, under the background of the obvious backwardness of the policy in 2021, the increment of government debt financing has become the main driving factor for the year-on-year growth of the current social financing stock, while the trust loan stock is still in a sharp contraction state; On the other hand, the latest social finance and credit data show that the year-on-year increment of residents' medium and long-term loans and enterprises' medium and long-term loans both fell, indicating that the current physical demand is still poor. Looking back on the past, wide credit often started with wide money. Since December 2021, the central bank has successively implemented comprehensive reserve requirement reduction, targeted interest rate reduction and comprehensive interest rate reduction. The signal of monetary easing is clear, but the market has doubts about the expansion path and sustainability of this round of wide credit. Wide money has come and credit is difficult to be wide. Specifically, according to historical experience, it needs specific efforts to drive credit delivery through monetary easing. First, promote infrastructure investment by increasing government leverage, so as to drive the upstream and downstream industrial chains to realize credit expansion; Second, relax real estate regulatory policies to stimulate real estate demand, and drive the upstream and downstream industrial chain to realize credit expansion through real estate recovery. At present, the probability of this round of wide credit cycle will rely on the large amount of special bonds to achieve the bottom effect on the economy by stimulating infrastructure investment. However, under the background of long-term financial risk prevention and stable leverage ratio, the sustainability of credit expansion is in doubt. In addition, the recovery range of real estate financing depends on the relaxation degree of real estate policy. However, under the current general tone of "real estate is not fried", it is difficult for real estate financing to improve systematically and comprehensively, which restricts the range of this round of credit expansion. On the whole, stable growth can only be achieved through the dual cooperation of wide currency and wide credit. Under the background of wide currency first, the willingness of policy wide credit to the actual implementation is restricted by the supply and demand environment of leveraged entities, and the expectation that credit is difficult to be wide, it is still necessary to observe the path and sustainability of the objectives of subsequent credit expansion.
in terms of overseas risk appetite, the tension between Russia and Ukraine has continued to rise recently, and the geopolitical risk disturbance has intensified, further amplifying the volatility of the capital market. after Russia announced the draft security agreement between the United States and NATO in mid January, in response to the expansion of NATO forces in Ukraine, Russia significantly increased troops on the Ukrainian Russian border, and the tension between Russia and Ukraine escalated rapidly, becoming the first black swan incident in 2022. On the one hand, Russia has significantly increased its troops on the Russian Ukrainian border and plans to hold large-scale military exercises; On the other hand, by the end of January, the United States had delivered three batches of weapons and equipment to Ukraine and ordered the evacuation of some families of the Embassy in Ukraine. From the perspective of capital market performance, the friction between the United States and Russia continues to escalate, which enhances the expectation of military conflict in the market and significantly reduces risk appetite. In addition, since 2022, the capital market has been in a continuous adjustment channel under the hawkish expression of the Federal Reserve. The potential black swan event of the conflict between Russia and Ukraine has further amplified the volatility of the equity market. On January 24, under the catalysis of "100000 Russian troops gathered at the border" and "American aid arrived in Ukraine", the VIX panic index once rose beyond 30 unit points, the highest level since 2021. Major European stock indexes fell sharply, Russian stocks and bonds plummeted, and U.S. stocks also fluctuated sharply. The largest intraday declines of the Dow and Nasdaq hit 3.2% and 4.9% respectively. In the follow-up, the core of the Ukrainian crisis is the deep-seated comprehensive confrontation between Russia and the United States. According to the current development trend, there may be military confrontation on the Russian Ukrainian border in the future, but the possibility of large-scale conflict is small. The essence is that Russia and the United States exchange negotiation advantages through confrontation in local fields.
2. Compared with 2016, the pit filling market is expected to repeat
like the performance in January this year, the market fell sharply in January 2016, and then the pit filling market was opened throughout the year. over the past decade, the year of poor performance of the stock market in January was 2016, and the major broad-based indexes fell by more than 20%, but then the market rebounded. From February to November 2016, the Shanghai and Shenzhen 300 index rebounded by 20%, the Shanghai stock index was close to 19%, and the weak gem index rebounded by 9.5%. After a short period of rapid decline, the market released some risks, and the cost performance began to appear. From the perspective of economy, liquidity and policy orientation, it is comparable with 2016.
in 2016, the economy stabilized and rebounded, driving the reversal of all a performance in the second half of the year, which is the main driving force of the pit filling market. 2016 is the performance market. The growth rate of net profit in a single quarter increased significantly from - 2% and - 7% in Q1 and Q2 to 17.4% and 21.1% in Q3 and Q4. The core of the performance improvement comes from the economic recovery after Q1 2016. In addition to the lag effect of substantial easing of monetary policy in 2015, the real estate chain has benefited from the extensive implementation of shed reform monetization, obvious recovery and V-shaped reversal of real estate investment. In terms of rhythm, social finance expanded significantly at the beginning of the year. The PMI data in March was much higher than expected, and the market's expectation of economic recovery gradually increased. Then the market began to have a deeper understanding of supply side reform. At that time, deflation expectation gradually changed into inflation expectation, and the economy ushered in a situation of simultaneous rise in volume and price. In conclusion, although the economy recovered weakly in 2016, the economic recovery has a clear grasp, that is, the real estate industry chain, which has a significant driving effect on other sectors. At present, after the stabilization of social finance, the downward trend of the economy is expected to end after the second quarter of this year, but the starting point of steady growth is not clear. Subject to the constraints of debt and leverage ratio, and the impact of the epidemic, the effect is not as obvious as that in 2016. From the perspective of various economic sectors, only the global economy - external demand - export chain is stronger than that in 2016. Therefore, The transmission from economy to performance is likely to be weaker than that in 2016.
in 2016, China's liquidity environment had limited support for the pit filling market. on the one hand, under the background of the Fed's interest rate hike cycle, the RMB faced great depreciation pressure in 2016. Therefore, China's monetary policy was mainly quantitative tools and did not introduce any price based operation, but the continuous decline in the share of foreign exchange reduced the money supply to a certain extent. On the other hand, since the fourth quarter of 2016, the market interest rate has continued to rise, the regulatory environment has gradually become stricter, and the tightening of monetary policy under financial deleveraging has become the main theme. In late October, the central bank promoted the inclusion of off balance sheet financial management into MPa assessment, and the bond market entered a bear market. In conclusion, after the bull market in 2014-2015 and the financial deleveraging environment, the liquidity environment in 2016 has limited support for the pit filling market. At present, China's liquidity environment is better than that in 2016, and the reduction of reserve requirements and interest rates can still be expected. However, from overseas, the inflationary pressure of economies is large, and the global monetary policy is facing a shift. The frequency of interest rate hikes by the Federal Reserve this year is higher than that in 2016. Therefore, the external liquidity environment is worse than that in 2016.
the current policy environment is more friendly than in 2016. from the fusing at the beginning of 2016 to the financial deleveraging in the second half of 2016, on the whole, 2016 was in the tone of gradually tightening policy, which also led to the continuous downturn of market risk appetite and twists and turns of pit filling market. Under the guidance of the current "environment-friendly policies", the policies will be introduced in 2016, which will still have a more cautious effect on the one hand. On the other hand, the "20th National Congress" will be held this year. The signal of policy stability maintenance is strong under the new term cycle. Referring to the previous new term cycle, from the perspective of the expression of aggregate policy, the policy under the new term cycle will maintain consistency while reserving certain policy space; From the perspective of industrial policy, the policy support for the industrial field will increase under the new term cycle.
this year's pit filling market is worth looking forward to. Valuation is the main driving force, and the style of the market will be more balanced. the main driving force of pit filling market in 2016 comes from the repair of economy and performance, and the support of liquidity and policies to the market is relatively limited. The main driving forces of this year's pit filling market are different. The easing of China's liquidity, the expected easing of overseas liquidity tightening and the positive and promising Chinese policies will lead to the repair of valuation, and the improvement of performance needs to wait until the second half of this year. In this context, it is difficult for this year's market to change the style as much as in 2016, and the style of pit filling market is more balanced.
3. Market outlook in February: Yunkai Yueming
strategy: the current round of valuation adjustment has come to an end. With the upcoming two sessions of the National People's Congress and the landing of the boots superimposed on the first interest rate increase by the Federal Reserve, the market risk appetite will be warmed up, and A-Shares are expected to usher in a round of valuation repair. we remain optimistic about the market in February. After the correction in January, both the rapid rise of risk-free interest rate and the synchronous decline of risk appetite outside China have been fully priced by equity assets. The congestion of Micro Trading Structure in Pan new energy sector also eased in the early stage, and this round of valuation adjustment has come to an end. This year's market is similar to that in 2016. The full adjustment at the beginning of the year has opened up room for the subsequent market. The market characteristic of "smashing the pit first and then filling the pit" is remarkable. At present, the economy has run near the bottom of this round of downward cycle. With the gradual appearance of the effect of steady growth policy, Q2 is expected to be confirmed at the bottom. China's liquidity and policies are favorable to equity assets, and the main constraints come from overseas. It is a foregone conclusion that the Federal Reserve will raise interest rates in March and shrink the table in the middle of the year. Whether there will be more than four high-frequency interest rate increases in the whole year still needs to observe the changes of US inflation. It is expected that the fermentation stage is often the most pessimistic moment in a round of tightening cycle, but the possibility of raising interest rates by 50bp for the first time is increasing. There is still room for the US bond interest rate to rise before the Fed's interest rate hike is officially implemented, and the probability of breaking through 2% is increasing. It is expected that the pressure of the rapid rise of the US bond interest rate will be relieved after April, but we still need to be vigilant against the negative disturbance to global liquidity caused by the relay of the European Central Bank to the US Federal Reserve.
at present, the economy has run near the bottom of this round of downward cycle. With the gradual appearance of the effect of steady growth policy, Q2 is expected to be confirmed at the bottom. according to the latest PMI data, the PMI closed at 50.1 in January, falling slightly month on month, ending the slight rebound in the economy from November to December last year. From the perspective of sub indicators, both the production index representing the supply side and the new order index representing the prosperity of domestic demand declined to a certain extent in January, and only the new export order index representing external demand recovered slightly. The main reason for the slight rebound of the economy from November to December last year was the reasonable correction of the supply constraint policies in the early stage. The return of the economy to the downward channel in January showed that the lack of effective demand has replaced the supply constraint as the main constraint of the current economy. Whether the economy can realize the bottom confirmation until it stabilizes and picks up needs to observe the effectiveness of the recent steady growth policies. Generally speaking, social finance leads the economy for about half a year. From March to may 2021, the growth rate of social finance accelerated downward, with a downward range of 2.3 percentage points, which corresponds to the period when the economic decline slope was the steepest from August to October last year. From September to October last year, the growth rate of social finance maintained 10% for two consecutive months, thus establishing the bottom of a round of credit tightening cycle. According to the sequential relationship between social finance and economic growth, this round of economic downward cycle is expected to establish the bottom in Q2 this year, and gradually stabilize and recover from Q3. At present, the economy has basically run near the bottom.
China's liquidity and policies are favorable to equity assets. Looking forward to the national two sessions from the local two sessions, it has become a consensus to promote steady economic growth, and infrastructure and consumption will be the main focus. after the central economic work conference in December last year, China's liquidity environment has been fully relaxed, the policy tone is also stable, and steady growth has become the focus of all work. China's liquidity and policies are conducive to the pattern of equity assets. At present, the situation is similar to that when the China US policy cycle deviated from the end of 2014 to the end of 2015. The first quarter is still an important window period for China's policy easing. It is still necessary to hedge the negative effects of overseas tightening with China's liquidity easing. It is still expected to reduce the reserve requirement and interest rate from February to March. It is necessary to pay attention to the quality of the economic and credit data after the steady growth policy from January to February. In addition, the local two sessions came to an end in January. Looking forward to the national two sessions from the local two sessions, on the one hand, except Beijing, the economic growth targets of the other 29 provinces and cities that have held the two sessions in 2022 are all 5.5% or more. Based on this calculation, the national GDP growth target implied by the local growth target is expected to be about 5.5% this year. On the other hand, it has become a consensus to promote steady economic growth. Infrastructure construction and consumption will be the two key points for local governments to achieve steady growth. Specifically, the incentive policies related to investment and consumption are mentioned in the government work reports of various provinces and cities. The investment mainly focuses on the fields of transportation, energy, water conservancy, disaster prevention and mitigation, new infrastructure and so on. The consumption stimulus policies mainly focus on cultivating new consumption, including green consumption, retail e-commerce and so on.
it is a foregone conclusion to raise interest rates in March and shrink the table in the middle of the year. At present, the market is worried about the tightening of the Federal Reserve at two points in rhythm and amplitude. Whether there will be more than four high-frequency interest rate increases in the whole year still needs to observe the changes of US inflation. It is expected that the fermentation stage is often the most pessimistic moment in a round of tightening cycle, but the possibility of raising interest rates by 50bp for the first time is increasing. according to the FOMC meeting in January, it has basically become a market consensus to start this round of interest rate increase cycle in March and shrink the table in the middle of the year.
The market's concerns about the tightening of the Federal Reserve focus on the rhythm and range. At present, the annual interest rate increase implied by the federal interest rate futures is 5.4 times, while there is a 40% probability that the Federal Reserve will increase 50bp at one time in March After the FOMC meeting in January, Fed officials' tone of "Eagle in the middle of Dove" in public alleviated market concerns to a certain extent. Although it is difficult to determine the direction of the Fed's downward demand increase in the second quarter of this year, it is still difficult to determine the direction of the downward CPI target as the Fed's downward demand increases in the second quarter of this year. If US inflation eases significantly in the second half of the year, it is desirable to slow down the pace of interest rate hikes. In addition, the expected fermentation stage is often the most pessimistic moment in a round of tightening cycle, and the market often assumes and deduces according to the worst situation. As the expectation of interest rate increase is gradually included in the market price until the final landing, the market expectation will gradually change from pessimism to optimism. In terms of range, although the pace of the Fed's interest rate hike has been 25 BP each time since 2000, the possibility of raising the policy interest rate by 50bp for the first time in March is increasing, mainly because the US inflation will still be at an absolute high in Q1. According to the consensus expectation, the US CPI rate will further rise to 7.3% in January, In this context, it is necessary for the Federal Reserve to take more radical measures to deal with the rising inflationary pressure.
there is still room for the US bond interest rate to rise before the official implementation of the Fed's interest rate increase, and the probability of breaking through 2% is increasing. It is expected that the pressure of the rapid rise of the US bond interest rate will be relieved after April. It is necessary to be vigilant against the negative disturbance to global liquidity caused by the relay of the European Central Bank to the US Federal Reserve. since January, the US bond interest rate has gradually priced the expectations of the Federal Reserve raising interest rates and opening the table contraction for many times this year, with an upward range of more than 40bp, which is basically driven by the real interest rate, while the inflation expectation is falling, indicating that the key to pushing up the nominal interest rate is the concern of too fast policy tightening. Especially after the release of non farm employment data in January, 467000 people were added, far exceeding market expectations and the previous level. Under this background, the yield of 10-year US bonds stood at 1.9% and reached 1.93% as of February 4. Looking ahead, before the official implementation of the Fed's first interest rate hike in March this year, the US bond interest rate is easy to rise and difficult to fall, and the probability of breaking through 2% is increasing. However, the implementation of the policy often indicates the emergence of the interest rate inflection point. It is expected that the pressure of the rapid rise of US bond interest rates will be relieved after April. Whether the US bond interest rate will return to the upward trend in the second half of the year needs to pay attention to the rhythm of the US Federal Reserve's interest rate hike. Under the assumption that the pressure of high inflation in the United States will gradually slow down in the second half of the year, the possibility of the US Federal Reserve's further aggressive tightening measures is decreasing, and the US bond interest rate continues to break upward without support. It is expected that the annual interest rate peak is about 2.2%, and the probability of effectively standing at 2.5% within the year is small. In addition, we need to be vigilant against the negative disturbance to global liquidity caused by the relay of the European Central Bank and the US Federal Reserve. In recent two months, the Bank of England has raised interest rates twice in a row to combat high inflation, and the European Central Bank's administrative policy stance has also been loosened. The market has gradually priced the European Central Bank's interest rate hike within the year, and the interest rates of German long-term and short-term treasury bonds have risen rapidly. In particular, the interest rate of ten-year German bonds has stood at the 0% level again. We need to pay attention to the traction of German bonds out of negative interest rates on the rise of US bonds.
this round of valuation adjustment has come to an end. With the upcoming two sessions of the National People's Congress and the landing of the boots superimposed on the first interest rate increase by the Federal Reserve, the subsequent market is expected to usher in a round of valuation repair. after the correction in January, both the rapid rise of risk-free interest rate and the synchronous decline of risk appetite outside China have been fully valued by equity assets. The congestion of Micro Trading Structure in Pan new energy sector in the early stage has also eased to a certain extent, and this round of valuation adjustment has come to an end. Specifically, before the Spring Festival, the price earnings ratio of Wande all a has dropped to 18.2 times, and the valuation percentile has dropped to the middle level of 51% in recent ten years, indicating that the overvalued situation accompanied by the bull market from 2020 to 2021 has been well digested. At present, the risk premium of A-share equity has risen to 2.8%, the highest since February last year, and the cost performance of equity asset allocation has appeared. In addition, during the Spring Festival holiday, major overseas stock indexes showed a pattern of general rise, especially Hong Kong stocks and China concept stocks with high correlation with A-Shares rebounded significantly. Looking forward to the future, with the upcoming two sessions of the National People's Congress in March, the main economic work of this year will be clarified and implemented separately. With the landing of the boots of the Federal Reserve's first interest rate increase in the same period, the market expectation will gradually change from pessimism to optimism, and the subsequent market is expected to usher in a round of valuation repair. On the whole, the characteristics of valuation driven in 2022 are significant. Since the fluctuation of valuation is more violent than the performance, under the situation of valuation driven this year, the volatility and amplitude of A-Shares will be significantly increased compared with last year.
4. Asset allocation of major categories: layout of rights and interests, cautious bond market and bullish commodities
1) the current economy has run near the bottom of the current downward cycle, and Q2 is expected to be confirmed at the bottom. in January, PMI closed at 50.1, falling slightly month on month, ending the slight rebound in the economy from November to December last year. In terms of sub items, the production index representing the supply side and the new order index representing the prosperity of domestic demand fell to a certain extent. Generally speaking, social finance leads the economy for about half a year. From March to may 2021, the growth rate of social finance accelerated downward, with a downward range of 2.3 percentage points, which corresponds to the period when the economic decline slope was the steepest from August to October last year. From September to October last year, the growth rate of social finance maintained 10% for two consecutive months, thus establishing the bottom of a round of credit tightening cycle. According to the sequential relationship between social finance and economic growth, this round of economic downward cycle is expected to establish the bottom in Q2 this year, and gradually stabilize and recover from Q3. At present, the economy has basically run near the bottom.
2) China's liquidity and policies are favorable to equity assets. It has become a consensus on policies to promote steady economic growth, and infrastructure and consumption will be the main focus. after the central economic work conference in December last year, China's liquidity environment has been fully relaxed, the policy tone is also stable, and steady growth has become the focus of all work. At present, the situation is similar to that when the China US policy cycle deviated from the end of 2014 to the end of 2015. The first quarter is still an important window period for China's policy easing. It is still necessary to hedge the negative effects of overseas tightening with China's liquidity easing. It is still expected to reduce the reserve requirement and interest rate from February to March. It is necessary to pay attention to the quality of the economic and credit data after the steady growth policy from January to February. In addition, the local two sessions came to an end in January. Looking forward to the national two sessions from the local two sessions, on the one hand, except Beijing, the economic growth targets of the other 29 provinces and cities that have held the two sessions in 2022 are all 5.5% or more. Based on this calculation, the national GDP growth target implied by the local growth target is expected to be about 5.5% this year. On the other hand, it has become a consensus to promote steady economic growth. Infrastructure construction and consumption will be the two key points for local governments to achieve steady growth.
3) since January, the risk appetite has been relatively low. Under the background of fragmented market style, the follow-up growth stocks mainly depend on the tightening rhythm of the Federal Reserve. the market's concerns about the tightening of the Federal Reserve focus on the rhythm and amplitude. At present, the annual interest rate increase implied by the federal interest rate futures is 5.4 times, while there is a 40% probability that the Federal Reserve will increase 50bp at one time in March. The actual operation of the Federal Reserve depends on the inflation situation. Although it is difficult for the US CPI to return to the target range of 2% this year, the downward direction of the whole year is still determined with the decline of the demand side and the easing of supply constraints. In addition, the expected fermentation stage is often the most pessimistic moment in a round of tightening cycle. As the expectation of interest rate increase is gradually included in the market price until the final landing, the market expectation will gradually change from pessimism to optimism.
In terms of range, although the pace of the Fed's interest rate hike has been 25bp each time since 2000, the possibility of raising the policy interest rate by 50bp for the first time in March is increasing, mainly because the US inflation will still be at an absolute high in Q1. According to the consensus expectation, the us CPI rate will further rise to 7.3% in January, In this context, it is necessary for the Federal Reserve to take more radical measures to deal with the rising inflationary pressure.
in terms of stock market , looking forward to February, we believe that the market has a layout opportunity under the background that the end of China's policy has come and the end of the economy is approaching. After the mitigation of external risk factors, we will meet better investment opportunities in the future. Based on the "dual cycle" configuration framework, it is suggested to give priority to the post cycle and counter cycle varieties in the traditional economic cycle and the digital economy and new energy fields in the science and technology industry cycle in advance, including: 1) post cycle varieties whose prices lag the changes of the economic cycle and can reflect inflation, such as the petroleum and petrochemical chain priced overseas and the coal and other energy chains priced in China, At the same time, pay attention to the counter cyclical industries under the idea of steady growth, such as construction materials in the infrastructure real estate chain; 2) Considering the cost-effective hard technology industry in the field of digital economy, according to the consistent prediction of Wande in this year and next year, there is still room for improvement in the growth rate of hard technology industries such as computer and military industry, with a high margin of safety; 3) Stick to the new energy field with high prosperity, the global economy continues to increase the development of the new energy field, and the medium and long-term demand will continue to increase. With the gradual launch of new production capacity of upstream raw materials such as industrial silicon and silicon materials, the cost pressure continues to improve, promoting the acceleration of the energy revolution.
in the bond market , the interest rate is currently at the bottom area, and it is still in the downward channel in the short-term easing environment. Pay attention to the impact of the Fed's interest rate increase on China's monetary policy in the medium and long term. Catalyzed by the interest rate cut in January, the interest rate continued to fall from the bottom area, breaking through the bottom area of 2.70% before the holiday. The central bank continued to increase the amount of reverse repo before the holiday, with a clear care attitude. Considering the improvement of liquidity gap in February, the broad monetary idea will continue before the Federal Reserve raises interest rates in the first quarter. There is still some downward space for interest rates in the short term, but the odds are gradually reduced.
in terms of commodities , China is concerned about the recovery of demand under the background of steady growth, and overseas are concerned about the upward chain of inflation. China is mainly concerned about the demand recovery of real estate and infrastructure chains, such as coal, rebar, glass and other commodities under the background of steady growth. Overseas parties pay attention to the crude oil, precious metals and Shenzhen Agricultural Products Group Co.Ltd(000061) varieties with strong correlation with the implied inflation rate. In particular, the rise of crude oil is usually accompanied by the rise of food prices. The La Nina climate continues to affect the global Shenzhen Agricultural Products Group Co.Ltd(000061) production, and the increased expectation of production reduction brings long opportunities.
5. Industry configuration in February: Petroleum and petrochemical, computer and power equipment
Main ideas of industry allocation: looking forward to February, we believe that the market has layout opportunities under the background of China's policy end and economic end approaching. After the mitigation of external risk factors, we will welcome better investment opportunities in the future. based on the "dual cycle" configuration framework, it is suggested to give priority to the post cycle and counter cycle varieties in the traditional economic cycle and the digital economy and new energy fields in the science and technology industry cycle in advance, specifically including: 1) post cycle varieties whose prices lag the changes of the economic cycle and can reflect inflation, such as overseas priced petroleum and petrochemical chains and China priced coal and other energy chains, At the same time, pay attention to the counter cyclical industries under the idea of steady growth, such as construction materials in the infrastructure real estate chain; 2) Considering the cost-effective hard technology industry in the field of digital economy, according to the consistent prediction of Wande in this year and next year, there is still room for improvement in the growth rate of hard technology industries such as computer and military industry, with a high margin of safety; 3) Stick to the new energy field with high prosperity, the global economy continues to increase the development of the new energy field, and the medium and long-term demand will continue to increase. With the gradual launch of new production capacity of upstream raw materials such as industrial silicon and silicon materials, the cost pressure continues to improve, promoting the acceleration of the energy revolution. In February, the preferred industries are petroleum and petrochemical, computer and power equipment.
petroleum and petrochemical
one of the supporting factors: the crude oil price has opened a new round of rising cycle, and the upward trend is clear. in early December last year, due to the geopolitical impact of the conflict between Russia and Ukraine, the global crude oil supply is expected to decrease significantly, catalyzing a sustained short-term rise. In addition, U.S. crude oil inventories continued to decline. Data released by the U.S. Energy Information Administration (EIA) on Wednesday on February 2 showed that as of the week of January 28, U.S. crude oil inventories fell 1 million barrels to 415.4 million barrels, far less than market expectations, further boosting oil prices.
the second supporting factor: "OPEC +" idle capacity is reduced, the increase in production is limited, and the medium and long-term oil price is still supported. from the perspective of the whole year of 2021, the average difference between OPEC + and the production target last year was 800000 barrels / day, reflecting that the production capacity has been insufficient to meet the market expectation, the idle capacity continues to decrease, and the continuous supply bottleneck has become the medium and long-term supporting factor for the formation of oil prices.
the third supporting factor: the global economy, trade and tourism continue to recover, and the demand for crude oil further recovers. previously, the market's expectation of Omicron's impact on oil demand was falsified. The current round of epidemic has not affected the upgrading of blockade measures in major economies. With the normalization and mild of the global epidemic and the invention of oral specific drugs, the current round of Omicron epidemic may peak, and the demand for oil products will continue to be repaired.
subject matter: Petrochina Company Limited(601857) , China Petroleum & Chemical Corporation(600028) , China Oilfield Services Limited(601808) , Hengli Petrochemical Co.Ltd(600346) etc.
computer
one of the supporting factors: the industrial planning policies of digital economy have been issued one after another, and the industrial development objectives have been further clarified. in January, the State Council issued the "14th five year plan" for the development of digital economy, which defined the development objectives of digital economy and proposed that by 2025, the digital economy will move towards a comprehensive expansion period, and the added value of core industries of digital economy will account for 10% of GDP.
supporting factor 2: the central bank promoted the pilot of digital currency for the Winter Olympic Games, and the hardware industry chain fully benefited. the people's Bank of China effectively promoted the financial service guarantee of the Winter Olympic Games. All the digital RMB scenes in the Winter Olympic Organizing Committee Park and the red line were implemented, the seven scenes outside the red line were fully covered, and the construction of digital RMB acceptance environment for contracted hotels and designated hospitals was completed. With the subsequent comprehensive promotion of digital RMB, there is a demand for hardware machines and tools. Manufacturers such as computers and POS machines will take the lead in benefiting.
the third supporting factor: Beidou system will increase the application and promotion of terminals, and the relevant terminal industry chains are expected to benefit. in January, the Ministry of industry and information technology issued several opinions on the promotion and application of Beidou in the field of mass consumption. The overall requirements are to break through a number of key technologies and products at the end of the 14th five year plan, and improve the Beidou industrial ecology covering upstream and downstream links such as chips, modules, terminals, software and applications, Cultivate more than 20 specialized and new "little giant" enterprises and several single champion enterprises in manufacturing industry.
subject matter: Venustech Group Inc(002439) , Xgd Inc(300130) , Lakala Payment Co.Ltd(300773) , Grg Banking Equipment Co.Ltd(002152) etc.
power equipment
One of the supporting factors of : the household installed capacity data in 2021 exceeded expectations, and the proportion of newly added distributed photovoltaic is bright.
on January 20, the National Energy Administration announced that the newly added grid connected installed capacity of photovoltaic power generation in 2021 was about 53gw, ranking first in the world for nine consecutive years. Among the new installed capacity in 2021, the distributed photovoltaic is about 29gw, accounting for about 55% of the total new installed capacity, exceeding 50% for the first time in history; The newly installed capacity of household photovoltaic reached about 21.5gw, with a year-on-year increase of 112%. The development trend of centralized and distributed photovoltaic power generation is obvious.
supporting factor 2: more local government incentive policies are about to be implemented to support the continuous and large-scale sales of new energy vehicles. under the carbon neutral n system, local governments have gradually relaxed the purchase conditions. For example, on November 9 last year, the Guangdong provincial government proposed to gradually relax the restrictions on the licensing indicators of new energy vehicles in Guangzhou and Shenzhen, and more local policies will follow up. Drive the continuous improvement of power equipment demand.
supporting factor 3: the work reports of many governments regard the development of clean energy as the core task of practicing the "double carbon" goal in 2022. the "expansion" of clean energy has become the direction of local energy reform. The work report of Anhui provincial government pointed out that the installed capacity of new renewable energy power generation was more than 3.5 million KW; Hebei pointed out that the new installed capacity of renewable energy is 8 million kilowatts; Shandong Province proposes that the installed capacity of photovoltaic power generation will reach 57 million KW by 2025. Hubei Province has promoted the construction of pumped storage power stations and thermal power stations as energy projects; Guangdong, Guangxi and other places mentioned plans such as "building a new power system with new energy as the main body".
subject matter: Contemporary Amperex Technology Co.Limited(300750) , Longi Green Energy Technology Co.Ltd(601012) , Tongwei Co.Ltd(600438) , Xinjiang Goldwind Science And Technology Co.Ltd(002202) , Sungrow Power Supply Co.Ltd(300274) etc.
