One week market view
Last week, the global stock market ushered in a short-term comprehensive rebound. Overseas, the problems worried by the early market have eased. Recent data show that the symptoms of cases related to Omicron mutant strain are mild and the vaccine is still effective, and positive progress has been made in the issue of the U.S. debt ceiling; A-Shares benefited from the rapid landing of China’s RRR reduction and the overweight signal of stable growth policy released at the Politburo meeting, which boosted market sentiment. Among them, the performance of value blue chips was significantly better than the growth style. We believe that with the central economic work conference releasing the expectation of policy marginal warming again, the A-share market is expected to fluctuate upward. In the short term, the market style will gradually move towards the balance of value blue chip. The real estate and financial sectors will benefit from the policy marginal warming and usher in valuation repair. The consumer sectors such as food and beverage adjusted in the early stage are also expected to be boosted by the expected improvement of the industry; In the medium and long term, scientific and technological innovation and green upgrading are still the industrial development direction with high growth space.
From a fundamental point of view, China’s “inflation” risk is alleviated and “stagnation” still faces great pressure. On the one hand, the inflation data in January showed that the risk of high inflation in China began to ease. PPI fell 0.6 percentage points to 12.9% year-on-year from the high level, and CPI rose 0.8 percentage points to 2.3% year-on-year driven by “pig + oil”. However, due to the repeated impact of China’s epidemic situation, the consumer price of services fell significantly. On the other hand, social finance data show that the overall credit demand is still weak. In January, RMB loans increased by 1.27 trillion yuan, which is lower than the market expectation of 0.26 trillion yuan. Medium and long-term loans of enterprises are still the main drag, while medium and long-term loans of residents increased year-on-year for two consecutive months, indicating that the appropriate deregulation of mortgage loans may be in progress. On the whole, the weakening pressure of economic growth is still, and the easing of inflation risk will open policy space. The statement of the central economic work conference that “China’s economic development faces the triple pressure of demand contraction, supply shock and weakening expectation” is more cautious in judging the economic situation.
From the policy perspective, the two major conferences released policy warmth, the marginal easing of monetary policy is expected, and industrial development focuses on short-term stability maintenance of real estate and infrastructure, medium and long-term support for scientific and technological innovation and green transformation. Last week’s policy intensive release released positive signals: on the one hand, the monetary policy was precise and forceful. On December 6, the central bank announced a comprehensive RRR reduction of 0.5 percentage points, and on December 7, the central bank lowered the re lending rate for agriculture and small loans by 0.25 percentage points, which will support the development of the real economy and promote the steady decline of comprehensive financing costs. On the other hand, after the meeting of the Political Bureau of the CPC Central Committee on December 6 stressed the importance of steady growth, the central economic work conference held on December 8-10 once again strengthened the expectation of maintaining stability. The “prudent monetary policy should be flexible and appropriate” shows that monetary policy is expected to be marginal loose, and credit support focuses on the three areas of “small and micro enterprises, scientific and technological innovation and green development”, “Fully implement the stock issuance registration system” will vigorously develop direct financing in the capital market. In terms of industrial policies, in the short term, the implementation of steady growth lies in maintaining the stability of real estate and moderately ahead of infrastructure investment. Among them, “implementing policies for cities” and “affordable housing construction” will be an important starting point for maintaining the stability of real estate, while infrastructure will focus on new infrastructure in the green and digital fields; In the long run, industrial upgrading will still focus on scientific and technological innovation, green and low-carbon. There is great room for growth in high-end manufacturing and digital economy, new energy infrastructure, low-carbon transformation of traditional industries, new energy vehicles and carbon monitoring market.
