Research and judgment of the general trend: pay attention to investment opportunities under valuation switching in the near future
An important meeting was held to study and judge the current economic situation - China's economic development is facing triple pressures of shrinking demand, supply shock and weakening expectations.
For the general tone of next year's policy, the steady growth of "stability first, seeking progress in stability" and paying attention to the improvement of quality at the same time. The expectation of stable growth in the future is expected to rise again. In the direction of development, fiscal tax reduction and fee reduction and moderately advanced infrastructure are the main starting points for the realization of "stable growth" in economic underpinning next year.
In terms of liquidity, the monetary policy still emphasizes maintaining a stable monetary policy, but the requirements and constraints on indicators such as money supply, social finance growth rate and macro leverage ratio are deleted. We still maintain a more positive expectation of monetary policy, and the policy strength is expected to be more active next year.
In terms of micro liquidity, market transactions continued to pick up, and funds went north to deduce the "tail raising market", with a net purchase of 48.8 billion yuan this week, a record high single week net inflow. Land stock connect has always had a "tail raising market", and the configuration of land stock connect is often the big month from the fourth quarter to the beginning of the next year. In 2017 / 2018 / 2019 / 2020 (from November of the first year to January of the next year), the proportion of net inflow to the total net inflow (rolling for 12 months) was 25.0%, 38.7%, 52.2% and 73.7% respectively. This week, the top 3 industries with net inflow were food and beverage, non bank finance and banking, with net inflow of 10.8 billion, 8.9 billion and 8.1 billion respectively. The low-end sector ushered in a make-up market.
Overseas, US inflation continues to soar. In November, CPI increased by 6.8% year-on-year, a new high in nearly 40 years, exceeding market expectations. In addition, core CPI increased by 0.5% month on month. We expect that the rising inflation data will accelerate the pace of the Federal Reserve taper, which may be completed as early as Q1 in 22, and start the interest rate increase cycle before the end of the year. China and the United States will usher in the dislocation of the financial cycle.
Looking forward to the future, the A-share market is still expected to usher in a "tail raising market" under the multiple expectations of policy + liquidity + marginal improvement of economic data. Near the end of the year, A-shares will face valuation switching. We comb from this perspective: in terms of total amount, 2022 A-share economic cycle downward (both the kichin short cycle and the zhugra medium cycle are in the second half), the profitability may be under pressure. On the one hand, it is subject to the downward pressure on the economic aggregate. On the other hand, based on the impact of the high base effect in the same period last year. Against this background, we believe that there are two investment directions in the near future: one is the opportunity brought by the improvement of performance expectations; the other is to continue to pursue high business uncertainty.
How to deduce the "tail raising market" after the valuation switch
(i) From the perspective of profit side in 2022:
1) The industries that are expected to usher in an upward turning point (net profit growth from negative to positive) at the profit side include agriculture, forestry, animal husbandry and fishery and real estate;
2) The industries whose performance is expected to improve significantly (the profit growth rate is accelerated compared with that in 2021) mainly include: public utilities, commercial retail, non bank finance, national defense and military industry and computer;
3) The industries whose expected performance can still maintain high prosperity (net profit growth maintains high growth) mainly include: computer, national defense and military industry, and power equipment;
4) The industries whose performance is expected to slow down significantly (the profit growth rate is lower than that in 2021) mainly include: transportation, social services, mining,, basic chemicals, media and non-ferrous metals;
5) The industry in which the profit side is expected to usher in a downward turning point (net profit growth from positive to negative) is steel.
The high prosperity track concerned by investors maintained rapid growth, but the internal marginal differentiation: the expected high growth of computer, national defense and military industry accelerated, the growth of power equipment slowed down slightly, while the expected growth of communication and electronics decreased significantly. In addition, the core blue chip sector is also significantly differentiated: steady growth in food and beverage + upward growth, large decline in household appliances and automobiles, and significant downward growth in the pharmaceutical, biological and mechanical equipment industries.
On the whole, from the perspective of profitability in 2022, we will pursue high prosperity computers, national defense and military industry and power equipment; Pursue agriculture, forestry, animal husbandry and fishery, real estate, public utilities, commerce and retail, and non bank finance with significantly improved performance expectations.
（2） From the perspective of 2022 Valuation:
1) From the perspective of PE, agriculture, forestry, animal husbandry and fishery, media, computers, social services, national defense and military industry, commerce and retail, communications, textile and clothing will usher in a significant digestion of valuation and a significant downward trend; The 22-year valuation of the steel industry still needs to be digested.
2) From the perspective of PEG, the peg of growth stocks is usually higher than 1, but it is expected that the peg of power equipment, mechanical equipment, communication, automobile and electronics will still be less than 1 in 22 years; Among the value stocks, the peg of food and beverage, medicine and biology was higher than 1.
From the perspective of valuation in 2022, it is expected that the sectors represented by agriculture, forestry, animal husbandry and fishery, commerce and retail will usher in a significant digestion of valuation with the significant improvement of performance; The performance of the computer, power equipment, national defense and military industry and mechanical equipment sectors of the high boom growth stocks is expected to reflect their cost performance in the sustained high boom.
In general: first, the sectors that have greatly digested the valuation brought by the significant improvement of performance mainly include agriculture, forestry, animal husbandry and fishery, commerce and retail, real estate, non bank finance, etc; Second, among the high boom growth stocks, the sectors with outstanding performance certainty and excellent cost performance mainly include computers, national defense and military industry, power equipment and mechanical equipment.
Central economic work conference: take the lead in stability and seek progress in stability
In the study and judgment of the economic situation, China's economic development is facing the triple pressure of shrinking demand, supply shock and weakening expectation. Under the impact of the epidemic situation in the 21st century, the changes in the past century have accelerated, and the external environment has become more complex, severe and uncertain. Policy stability is at the forefront, seeking progress while maintaining stability, and promoting the steady improvement of the quality and reasonable growth of the economy. Insist on standing first and then breaking, and fight steadily. Therefore, the keynote of next year's economic policy is to maintain the steady growth of "stability first, seeking progress in stability" under the triple pressure of the economy, and pay attention to the improvement of quality at the same time.
In terms of macro policies, it is proposed that the policy force should be appropriately advanced, and the fiscal and infrastructure policies exceed expectations. The meeting proposed that active fiscal policies should improve efficiency and pay more attention to accuracy and sustainability. We should ensure the intensity of fiscal expenditure and speed up the progress of expenditure. We will implement a new policy of tax reduction and fee reduction. We will strengthen support for small, medium-sized and micro enterprises, individual industrial and commercial households, manufacturing and risk resolution, and moderately advance infrastructure investment. We will resolutely curb new implicit debts of local governments. Therefore, under the organic combination of cross cycle and counter cycle macro-control policies, fiscal tax reduction and fee reduction and moderately advanced infrastructure construction are the main starting points for the realization of "stable growth" next year. First, compared with the "over revenue and expenditure reduction" in the past 21 years, the finance will be more active and ahead of schedule; Second, focus on major projects such as new infrastructure and the 14th five year plan.
In terms of monetary policy caliber, we still emphasize maintaining a prudent monetary policy. Although from the perspective of expression, it still emphasizes maintaining a stable monetary policy, but the requirements and constraints on indicators such as money supply, social finance growth rate and macro leverage ratio are deleted. We still maintain a more positive expectation of monetary policy, and the policy strength is expected to be more active next year, emphasizing the development of structure and guiding support for small and micro enterprises, scientific and technological innovation and green development.
Overall, next year, under the triple impact of "shrinking demand, supply impact and weakening expectation" of China's economy, the steady growth of "stability first, seeking progress in stability" and paying attention to the improvement of quality will be the main melody. In addition, fiscal tax reduction and fee reduction and moderately advanced infrastructure construction are the main starting points for achieving "stable growth" in the economic underpinning next year. In the direction of development, we pay attention to major projects such as new infrastructure and the 14th five year plan. Although the superimposed monetary policy still emphasizes maintaining stability, the requirements and constraints on indicators such as money supply, social finance growth rate and macro leverage ratio have been deleted. We still maintain positive expectations, and the policy strength is expected to be more positive next year.
Risk tips: policy implementation is less than expected, economic recovery is less than expected, and epidemic prevention and control is less than expected
