Despite the impact of the epidemic caused by the Omicron mutant strain, the number of new non-agricultural jobs in the United States in January was significantly higher than expected
The European Central Bank and the Bank of England released hawkish signals respectively
The national development and Reform Commission requires that infrastructure investment be carried out moderately in advance
New highlights: 1) Bank of England: on February 3, the Bank of England Monetary Policy Committee (MPC) voted 5-4 to raise the benchmark interest rate by 0.25 percentage point to 0.5%. The interest rate hike followed the interest rate hike in December last year, the first consecutive interest rate hike since 2004. Four of the nine members voted in favour of raising interest rates by 0.5 percentage points. “Further modest tightening of monetary policy may be appropriate in the coming months,” the committee said. The Bank of England also voted to start reducing its bond holdings, stop reinvesting maturing government bonds and sell corporate bonds. 2) European Central Bank: on February 3, the European Central Bank decided to stand still. European Central Bank President Lagarde refused to repeat her previous guidance that the possibility of raising interest rates this year is “very small”, mainly based on the “unanimous concern” of the European Central Bank about soaring inflation. “The inflation outlook faces upward risks, especially in the short term,” she said She also said that the European Central Bank would adhere to the announced order, that is, it would raise interest rates only after stopping net bond purchases, and the committee would “act step by step” and “will not act in a hurry”. 3) China’s macro policy: on February 6, the relevant person in charge of the national development and Reform Commission said that the current macro-control should focus on stability, moderately advance infrastructure investment, and speed up the introduction of a series of policies and measures to implement the strategy of expanding domestic demand.
Macroeconomic data: China: the PMI of Caixin service industry recorded 51.4 in January, higher than expected (December: 53.1), but the lowest since August last year. Us: 1) factory orders fell 0.4% month on month in December, in line with expectations (November: 1.8%); Factory orders (excluding transportation) increased by 0.1% month on month, less than expected (November: 0.8%). 2) In December, the job vacancy of jolts was 10.925 million, which exceeded the expectation (November: 10.775 million). 3) Non farm employment increased by 467000 in January, far exceeding expectations (December: 510000). Due to the adjustment of the annual statistics of the Bureau of labor statistics, the data in November and December were revised upward by 709000. The unemployment rate rose slightly to 4.0%, higher than expected (December: 3.9%). Average hourly salary increased by 0.7% month on month / 5.7% year on year, exceeding expectations (December: 0.5% month on month / 4.9% year on year). The labor force participation rate rose to 62.2%, exceeding expectations and reaching the highest level since March 2020 (December: 61.9%). 4) The ISM manufacturing PMI in January was 57.6, slightly higher than expected (December: 58.8); Ism services PMI was 59.9, exceeding expectations (December: 62.3).
Stock Market Overview: the Hang Seng and MSCI China indexes rose 4.3% and 4.5% respectively in the past week. MSCI China Index: the sectors of optional consumption (+ 8.3%) and communication services (+ 4.8%) outperformed the market, while the sectors of raw materials (+ 1.5%) and banks (+ 1.5%) performed poorly. The valuation of Hang Seng / MSCI China / CSI 300 index is 11.4x / 12.4x / 13.9x forward-looking P / E ratio respectively (the median level in the past three years is 11.2x / 13.2x / 13.8x). We reiterate our view that Hong Kong stocks are expected to come out of the bottom and usher in a rising market in 2022. We are optimistic about the pro cyclical sector, offline consumption targets, some real estate targets with stable balance sheets, etc. Main risks: 1) the economic recovery is weak and the policy strength is less than expected; 2) Sino US relations; 3) US stocks callback.
