The “three consecutive positive” market of Shanghai stock index has swept away the decline of the market in the late year of the ox and continued to fulfill the law of high probability reversal of A-Shares around the Spring Festival.
In early December 2021, the people’s Bank of China lowered the reserve requirement, and then the Bank of England raised interest rates sharply. Then overseas central banks entered the process of raising interest rates. The cross-year market was promoted when the central banks at home and abroad ran counter to each other. The style of A-share market switched from track growth stocks to valuation repair, and value stocks outperformed growth stocks in the cross-year market.
The adjustment of growth stocks in the past two months is mainly due to the contraction of overseas liquidity, and the suppression impact on high valuation sectors has been transmitted to China. It is expected that this situation will continue in the future. Some institutional funds have also switched from clustered growth stocks to undervalued “steady growth” related sectors such as finance, real estate and infrastructure.
Looking forward to the future, some optimistic market participants believe that the cross year market is often value first and growth keeps up. It is expected that with the promotion of the market in the next spring, investors can be more balanced in allocation, growth stocks will usher in a certain rebound, and the sector rotation is expected to be fully opened.
cross year market background: the policy of central banks at home and abroad is “retrograde”
The “retrograde” trend of China US monetary policy of “tightening in the United States and loosening in China” is the macro background affecting the cross-year market.
Since the central bank officially announced the RRR reduction on December 6, 2021, it has been accompanied by the “Hawk” interest rate increase of overseas central banks. The valuation restoration represented by the real estate industry chain and financial stocks dominated the cross-year market of a shares, while the growth stocks represented by new energy made an adjustment for more than two months, changing the strong pattern of growth stocks in the past three years.
After the release of the “timely RRR reduction” signal on December 3, 2021, the central bank announced on December 6 that it decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15. Subsequently, the interest rate also started the downward mode: on January 17, 2022, the central bank announced that the bid winning interest rates of medium-term lending facility (MLF) and open market reverse repo decreased by 10 basis points. On January 20, the national interbank lending center announced the LPR one-year interest rate of 3.70% and the five-year interest rate of 4.60%, down 10bp and 5bp respectively.
Correspondingly, overseas central banks are another scene. The latest US interest rate resolution states that the Fed plans to raise interest rates as early as March, and says there is a lot of room to raise interest rates. The current economic situation means that the Fed will act faster than last time. It is not ruled out that every meeting after March may announce an interest rate increase. On February 3, the Bank of England raised the benchmark interest rate by 25 basis points to 0.5%, and announced the start of the “table contraction” process. The European central bank stressed that inflation lasted longer than expected, and its statement was more “Eagle” than market expectations.
Mou Yiling, a strategic analyst at Minsheng securities, said that at present, there is still a large price difference between energy and carbon prices outside China, and China’s CPI is also low. The difference in inflation level allows Chinese policies to give priority to the recovery space of demand, that is, they have greater ability and power to stabilize economic growth until the inflation level outside China further converges.
Li Lifeng, a strategic analyst, said that the shift of overseas monetary policy will not restrict China’s monetary policy orientation. In the next quarter or two, China will still be in a “wide currency” window; At present, the self purchase tide of public funds has been opened, and the purchase restrictions of popular fund products have been gradually liberalized, which is conducive to the inflow of incremental funds into A-Shares and build a “market bottom”.
overseas liquidity inflection point suppresses overvalued value
How does the switching of global value style affect the trend of a shares?
Over the past two months, growth stocks have significantly adjusted, and value stocks have performed better under the policy tone of “stable growth”. They have also led the rise in the “three consecutive positive” during the opening of the year of the tiger, and there has been an obvious style switching in the market. In the afternoon of February 8, the market rebounded, led by bank stocks. On February 9, China Mobile (600941. SH) rose the limit, but the single day turnover was only 931.78 billion yuan, which still did not break the trillion mark.
Referring to the recent decline of growth stocks in new energy and other sectors, Lin Jiayi, CEO of Xuanjia finance, told the first financial reporter that the Federal Reserve will drive the world into the interest rate increase cycle in 2022, suppress high valuation assets and amplify bad news more frequently, resulting in capital flight and negative feedback.
From the perspective of Hong Kong stocks and other overseas markets in 2022, the performance of bank stocks benefiting from the interest rate increase in the UK and other places is particularly ideal. Investors look forward to the bank income benefiting from the rapid interest rate increase. Among them, HSBC Holdings (00005. HK) and Standard Chartered group (02888. HK) have rebounded for more than two months, with an increase of about 40% so far.
Mou Yiling said that global inflation is becoming the reason for interest rate adjustment, and the switching of value style began to actually affect a shares: since December 2021, the purchase of growth sector in public offering heavy positions by northbound allocation market has gradually leveled off, and began to sell significantly since January 2022, and began to significantly increase the allocation of value sector.
According to the strategy research report, in the week from January 24 to 28, the net outflow of funds from northbound was 26.1 billion yuan, compared with 29.2 billion yuan in the previous week. In the last week of January, the top five net inflow industries were public utilities, banks, agriculture, forestry, animal husbandry and fishery, media, national defense and military industry, and the top five net outflow industries were non bank finance, medicine and biology, power equipment, food and beverage and electronics.
Li meicen, a strategic analyst, said that central banks around the world have raised interest rates one after another. The overseas macro environment is facing a liquidity inflection point, and there is great pressure on the overvalued sector. The market trend in recent months also shows once again that we need to pay attention to the transmission of overseas liquidity inflection point to emerging markets. The global capital market and investment framework system may need to assess the impact of rising interest rates on asset pricing. This new change may break the “old consensus” that has been adapted in the past few years, and the “new consensus” is being established.
Hu Yu, partner and research director of Shenzhen Chengnuo asset management company, told first finance that the collapse of individual stocks in emerging industries in the past two months indicates that the tide of high valuation has ebbed. The rhythm of position adjustment and stock exchange of large institutions may further strengthen this trend. In the future, the probability of further accumulation of funds in undervalued sectors will increase. At present, the Shanghai index has not accumulated large risks, More risks may come from emerging hot industries.
Mou Yiling said that for the public offering of heavy stocks, under the background of the lack of broad credit to support the expansion of residents’ balance sheet to promote new products, the public offering of heavy stocks lacked incremental funds and fell into the dilemma of shrinkage game. In addition, after the penetration rate of some emerging products reaches a certain degree, the downward trend of macro variables has a greater impact on their stock; Taking new energy vehicles as an example, car sales are related to macro variables such as residents’ income. At present, the penetration rate of new energy vehicles has exceeded 20%. Even if the penetration rate continues to increase rapidly, the stock will be more affected by economic cycle fluctuations.
The strategy researcher Jiangxi Jdl Environmental Protection Co.Ltd(688057) of the Equity Research Department of Golden Eagle Fund said that under the market environment dominated by A-share stock funds, the strengthening of the traditional upstream cycle and the main line of “stable growth” also diverted the science and technology sector from the aspect of funds. Especially during the period of institutional position adjustment at the beginning of the year, it further amplified the overall overshoot of the science and technology sector and triggered the stampede of Chinese funds.
layout spring Market: it can be balanced in value growth
Although the adjustment range was more than 20% and fell into a technical bear market, the gem rose 1.3% on February 9, and finally showed a long-awaited rebound.
Some optimistic market participants believe that the cross year market often has better performance of value stocks, but in the next spring market, investors can allocate more balanced between value stocks and growth stocks, and some growth stocks with clear policy support are expected to rebound, mainly including digital economy, new energy and so on.
Looking back on several “steady growth” cross year quotes in the past decade, after the “steady growth” market was opened in December 2012, blue chips rose sharply for two months, and the growth enterprise market still led the rise in 2013; At the end of 2014, the central bank cut the reserve requirement and interest rate, which led the rise of blue chip stocks, but the protagonist of the bull market in the first half of 2015 also returned to the gem; In January 2019, the central bank lowered the reserve requirement and doubled some blue chips in the first quarter. In the second half of the year, the science and innovation board opened, and the market gradually entered the market dominated by growth stocks.
After the sharp adjustment of the cross-year market this time, can growth stocks usher in opportunities again? Will the rotation of market sectors appear in spring?
During the early period, analysts said that the value growth of the Yugen sector was accelerated, and the value growth of the Yugen sector was generally accelerated in the late spring. In terms of future sector selection, we should balance the allocation of value and growth, and focus on large finance and hard technology (new infrastructure) benefiting from policies. New infrastructure mainly refers to hard technology industries such as new energy related sectors. At present, low-carbon economy and digital economy related fields are the focus of the “steady growth” policy.
On January 16, the national development and Reform Commission issued “vigorously promoting the healthy development of China’s digital economy”, which proposed to concentrate on tackling key core technologies and accelerate the realization of high-level self-reliance and self-improvement; Appropriately advance the deployment of new infrastructure construction and consolidate the foundation for the development of digital economy; Further promote the digital transformation of traditional industries and accelerate the deep integration of digital technology and real economy; Vigorously promote the innovative development of digital industry and build an industrial system with international competitiveness.
On January 21, the implementation plan for promoting green consumption issued by seven departments including the national development and Reform Commission and the Ministry of industry and information technology proposed to vigorously promote new energy vehicles and gradually eliminate the purchase restrictions of new energy vehicles in various regions. Strengthen the construction of supporting infrastructure such as charging and changing electricity, new energy storage and hydrogenation; Promote the pilot application of new energy vehicle power exchange mode, and orderly carry out the demonstration application of fuel cell vehicles; We will carry out in-depth activities to bring new energy vehicles to the countryside.
Jiangxi Jdl Environmental Protection Co.Ltd(688057) said that looking forward to the future industry configuration, under the balanced configuration, we can pay attention to the technology sector with cost-effective valuation. After the adjustment of the short term technology sector, in the subsequent intensive disclosure period of the quarterly report, the stocks with high performance and cost-effective performance will still be able to act as the current adjustment or is expected to provide a better opportunity for low absorption during the year.
