The high point of the geo risk impact may have passed, and the risk disturbance is mainly reflected in the emotional level. March will enter the preliminary effect observation period of the steady growth policy. It is expected that the follow-up policy will continue to overweight and enter the concentrated force period, and the “three bottoms” of a shares
It has been confirmed in turn that it is recommended to maintain a high position, closely follow the main line of steady growth, adhere to the balanced allocation of two dimensions of industry and style, and focus on the layout of “two low positions”. First of all, the peak impact of geopolitical risks on the global market may have passed, the possibility of further proliferation of the conflict between Russia and Ukraine is relatively low, and the disturbance impact is expected to weaken. Secondly, the resumption of six geopolitical conflicts in history shows that the geopolitical conflict does not change the medium-term trend of China US stock market, and the conflict between Russia and Ukraine is not expected to change the medium-term trend of A-share improvement and medium-term adjustment of US stock market. Meanwhile, the Federal Reserve is expected to raise interest rates by 25bps in March, which is lower than the previous expectation. Thirdly, in March, the national “two sessions” are expected to further strengthen the expectation of stable growth policy and clarify the annual GDP growth target of 5.5%. The policy will continue to increase and enter the centralized development period.
Finally, the “three bottoms” of A-Shares have been confirmed in turn. The high point of external impact disturbance may have passed, and the internal fundamentals are expected to enter the repair channel with the support of policies.
The peak impact of geopolitical risks on the global market may have passed, and the possibility of further proliferation of the conflict between Russia and Ukraine is relatively low.
1) the conflict between Russia and Ukraine escalated, and geopolitical risks suppressed global capital risk appetite. The long-term geopolitical entanglement is the main historical reason for the Russian Ukrainian problem, and the great power struggle is the direct and realistic reason for the Russian Ukrainian problem. Several negotiations between Russia and Ukraine have failed, and the recent conflict has continued to escalate. On February 21, Russia recognized the people’s Republic of Donetsk and the people’s Republic of Lugansk. On February 24, Russian President Vladimir Putin announced a special military operation in the Donbas region. The conflict has obviously escalated and suppressed the global capital risk appetite. On the one hand, the correction of European stock markets was obvious. The Russian MOEX index fell sharply by 27.2% in the past week, and the gold price also hit a high of US $1976.5/oz on the 24th due to risk aversion. On the other hand, the intensification of the conflict between Russia and Ukraine led to market concerns that Europe and the United States may restrict the export of Russian crude oil and natural gas through sanctions, which led to a shortage of global oil and gas supply. On the 24th, the oil distribution once exceeded US $100 / barrel, a new high since September 2014. With the repair after the overshoot of stock price, gold price and oil price, we believe that the time point when the conflict between Russia and Ukraine has the greatest impact on asset prices may have passed.
2) the possibility of further escalation of conflict is relatively low, and the impact of disturbance is expected to weaken. First of all, Ukraine is not an ally of NATO. NATO and the United States have made it clear that they will not directly send troops into Ukraine. The “ceiling” of this event has made it clear that the Russian Ukrainian conflict is less likely to escalate and spread into a multinational regional war affecting several months.
Secondly, due to the dependence of the west, especially Europe, on Russian resources, almost all the 32 countries that have announced sanctions against Russia have no sanctions directly related to oil and gas export. Finally, in terms of finance, the United States, the European Union, the United Kingdom and Canada jointly announced that they would expel some Russian banks from swift, and the specific impact remains to be seen.
We believe that the likely situation of conflict evolution is that a certain scale of frontal conflict will break out in Wudong area. The whole event lasts for several weeks, and the possibility of further escalation and out of control of the conflict is low. It is estimated that the degree to which the prices of major assets are impacted by this geopolitical risk is as follows: Russian stock market ruble global commodities European stock index
US stocks.
The impact of geopolitical risks does not change the medium-term trend of A-Shares and US stocks. It is expected that the rate increase of the Federal Reserve in March is lower than the previous expectation.
1) the resumption of six geopolitical conflicts in history shows that geopolitical conflicts do not change the medium-term trend of China US stock market.
Historically, the impact of geopolitical crisis on the international capital market is mainly characterized by “emotional fluctuation, fast reflection, long duration and small subsequent impact”. As far as A-Shares and US stocks are concerned, after the resumption of trading in the past six geopolitical conflict windows, we found that the post conflict index usually corrected rapidly, followed by a wide shock pattern in the following month, and then stabilized and rebounded in the future. In terms of data, the Shanghai Composite Index / S & P 500 rose by an average of – 1.8% / 0.0% in two weeks after the outbreak of the past six geopolitical shocks, an average of – 0.5 / – 0.6% in four weeks, and an average of 3% in 60 trading days. Although geo risk shocks will increase short-term fluctuations and bring short-term adjustments, they will not change the medium-term trend of the stock market. Under the periodic dislocation of China US monetary policy, China’s policy is “dominated by me”. Recently, the central bank has significantly increased its liquidity investment, with a net investment of 760 billion yuan this week; RMB assets are resilient. With the increase of external disturbance, the RMB strengthened against the US dollar. This week, the North allocation fund still had a net inflow of 3.7 billion yuan.
2) the Federal Reserve is expected to raise interest rates by 25bp in March, which is lower than the previous market expectation. After the deterioration of geopolitical risks, the trend of federal fund futures on the 30th showed that the market’s expectation of interest rate hike fell to a certain extent, but it did not change the expectation of interest rate hike landing in March. As of February 25, the market’s expected probability of raising interest rates by 50bps in March fell to 24%. This year, the Fed’s interest rate hike rate is likely to be a “short sprint” rather than a “long run”. It is expected that the pace of interest rate hikes throughout the year may be urgent first and then slow down. Compared with the market’s expectation of six interest rate hikes throughout the year, we prefer to predict that the Fed will raise interest rates 3-4 times throughout the year, including 25bps in March, but the rate of contraction is expected to be more radical. Under the benchmark assumption of the Non-Proliferation of the conflict between Russia and Ukraine and the regular interest rate increase rhythm of the Federal Reserve, we believe that the overseas equity market will benefit from risk mitigation and improved investor sentiment, which began to stabilize and recover in mid and late March.
In March, the national “two sessions” are expected to strengthen the expectation of stable growth policy, and the policy will also spread and enter a period of concentrated development.
1) the national “two sessions” are expected to strengthen the policy expectation of steady growth and the GDP growth target of about 5.5%. It is expected that the tone of the national “two sessions” to be held in early March will still focus on stability, with the cooperation of money and finance. The main tone will continue the spirit of the central economic work conference. Under the “stability first”, it is expected that the annual GDP growth rate is expected to reach the target of about 5.5% to prevent the slowdown of economic growth. From the perspective of macro policy, the monetary policy is expected to be more flexible, and the broad monetary policy is expected to continue; The fiscal policy is expected to be more active. We believe that the scale of special bonds in 2022 is expected to be basically the same as that in 2021, at 3.65 trillion, and the deficit ratio may be moderately reduced to 2.8%. It is suggested to pay more attention to the implementation of physical workload. Structurally, the policy of steady growth is still expected to focus on infrastructure construction before real estate, and the scope of the policy is gradually extended to manufacturing and service industries.
2) macro data disclosure and policy public opinion will strengthen the market’s expectation of stable growth policy. Firstly, according to the prediction of the macro group of Citic Securities Company Limited(600030) research department, the year-on-year growth rate of infrastructure investment and the growth rate of fixed asset investment in manufacturing industry from January to February can achieve a high single digit positive growth of about 8%; However, the real estate investment and sales data may still be at the bottom, and the year-on-year growth rate may turn negative, while the scattered epidemic may also significantly suppress the consumption data.
Secondly, the leading capital construction main line. At present, the capital construction projects, funds and implementation plans are complete, and the meso price data related to the commencement deserve close attention in March. Thirdly, the main line of relay real estate is in the observation period of policy implementation. Due to the implementation of urban policies, the policy relaxation has spread from medium and low tier cities to high-line cities. It is expected that there is space between the demand side policy of real estate enterprises (improving sales) and the financing policy of real estate enterprises (improving financing) to prevent the risk of credit cycle collapse in the real estate industry. Finally, with the policy relay forming a joint force, it is expected that the growth rate of follow-up real estate investment and residents’ consumption will return to the normal level, and the overall economic growth is expected to be further upward. It is expected that the year-on-year growth rate of GDP in the first quarter will be about 5.3%.
The “three bottoms” of A-Shares have been confirmed in turn, closely following the main line of steady growth and adhering to balanced allocation.
1) the “three bottoms” of A-Shares have been confirmed in turn. The impact of external disturbance is limited, and the stable internal growth drives the medium-term improvement of a shares. The policy bottom, market bottom and sentiment bottom have been confirmed in turn. A shares will enter the observation period of external disturbance and internal fundamentals in March. On the one hand, the impact of external disturbance on A-Shares is mainly reflected in the emotional level. The possibility of subsequent upgrading and exceeding expectations is low, and the geo risk impact does not change the positive trend of A-Shares driven by the diffusion of stable growth policies in the medium term. On the other hand, at the transaction level, the current round of position adjustment and position reduction of Chinese institutions is coming to an end, and the configured foreign capital still maintains the inflow. The Citic Securities Company Limited(600030) channel research shows that the net redemption rate of stock public offering this week is only 0.1%, and the private placement position is also maintained at the medium and low level of 74%.
2) stick to the main line of steady growth, adhere to the balanced allocation of industry and style, and focus on the layout of “two low positions”. We still emphasize adhering to the annual blue chip style. At present, we still need to keep close to the main line of steady growth. Compared with the previous main line, this main line focuses more on traditional industries with undervalued value. After the policy diffusion, it is expected that the main line will be more diversified and the style of value and growth in the main line of steady growth will be more balanced. It is suggested to adhere to the balanced allocation of the two dimensions of industry and style, and actively layout around the “two low positions”. Specifically, it includes: 1) varieties whose fundamentals are expected to be relatively low, focusing on midstream manufacturing suppressed by cost problems in the early stage, such as automobiles and parts, photovoltaic wind power equipment, aviation and hotels whose fundamentals are expected to be still low; 2) For the varieties with relatively low valuation, it is recommended to pay attention to the high-quality developers, building materials and household enterprises after the expected mitigation of real estate credit risk, communication operators with significantly improved cash flow, smart grids and energy storage in the field of new infrastructure, data centers and cloud infrastructure benefiting from “East data and West computing”, and Internet leaders driven by the content of Hong Kong stocks after the decline of some leaders, And fine chemical enterprises with the ability to develop new businesses such as new materials.
Risk factors: repeated global epidemic; The friction between China and the United States in the field of science and technology trade has intensified; The progress of China’s economic recovery is less than expected; Macro liquidity at home and abroad has tightened more than expected; The conflict between Russia and Ukraine further escalated.
