This week (2022 / 02 / 212022 / 02 / 25), the style began to favor growth. What choice should we make. This week, the CSI 300, the Shanghai stock index, the CSI 500 and the gem index rose or fell by – 1.7%, – 1.1%, – 0.2% and 1% respectively. Since the beginning of the year, the only market value style that has maintained a positive rise has performed the worst this week, with a weekly decline of – 4.2%. From the perspective of sectors, growth industries mainly achieved growth this week: Dianxin, national defense and military industry, electronics, nonferrous metals (lithium), basic chemical industry (phosphorus chemical industry), medicine, machinery (photovoltaic, 3C, lithium battery equipment) and communication; The performance of cyclical industries that are closely related to the logic of “stable growth”, especially those that rely on strong aggregate demand, is poor. The first-order logic of the market for the switching between growth and value is “steady growth”: steady growth successfully buys value, good cash or less than expected growth. This first-order game thinking will bring periodic fluctuations in the market, and even hide the real main thread. We discussed in last week’s weekly report: as it has fallen into the historical retreat range of heavy institutional positions, the rebound opportunity of growth stocks began to be concerned by investors. However, after the full excavation from 2019 to 2021, both the scale and concentration of public fund allocation are different from that in early 2019. The valuation expansion depends more on the continuous issuance of public funds to bring incremental funds to strengthen the consensus of on-site funds. Interestingly, in fact, the issuance of equity public funds is most dependent on the expansion of social balance sheet and the improvement of income expectation brought by “stable growth”. In terms of investor behavior, the rebound after the decline of strong sectors will also promote some investors to gradually reduce their positions or redeem, and the market will fall into the dilemma of shrinking game.
Real cycle: the main logic masked by steady growth. We discussed in the “start a prairie fire” and a series of reports: “green inflation” is not a contradiction that can be solved by the “double control of energy consumption” and “ensuring supply and stabilizing price” overnight, but the efficiency reduction caused by the whole society allocating limited resources to renewable energy with lower short-term efficiency for long-term sustainable development, The imbalance of production capacity investment in the past has affected the present; The decline in the working population is not an unattainable future. The current decline in the labor participation rate, rising wages and high prices in the United States have shown the full picture of the story of “labor pushing up inflation”. When the world is facing the decline of potential output level, the real space source of the “steady growth” policy is China’s better regulation and control ability on the two major issues and the short-term low inflation level. The difference in real interest rates between China and the United States gives us more room to exchange the rise of inflation for the recovery of demand in the future, which means that the elasticity of inflation in the future may be much stronger than the economic demand itself. It should be said that the recovery of demand on the fundamentals has direction certainty, but the market may lack confidence based on the demand elasticity of “steady growth”, sell steady growth and ignore the investment opportunities of inflation elasticity.
Real cycle: the impact of credit monetary system after inflation. Investors like to attribute the epidemic and geographical conflict to a one-time supply shock, and always believe that the “most stressful moment” is over. In a short time, this cognition seems to have lasted more than a year. Historically, in the era of “big inflation” in the United States in the 1970s, people also like to attribute the rise in prices to the oil crisis, and believe that the price level will fall sharply after the conflict is over. The fact is that inflation showed signs from 1967 to 1982, during which the impact of energy supply is often alleviated, but inflation is difficult to fall back, Behind it are concerns about the value of credit money. At present, the price of gold measured in multi-national currencies has reached a high since June 2021 when the margin of monetary policy of various countries is not loose, and the price of gold denominated in yen has reached a record high. At the same time, the current real price of mainstream commodities denominated in gold is at a historical low, which implies that although the relationship between supply and demand is important, it is not the core contradiction in the next stage. The credit currency system of major countries in the world is being impacted. As the opposite of credit currency, physical assets are ushering in an important allocation moment.
Use the style to switch to inflation repeatedly: the doubts about the follow-up sustainability and elasticity of “steady growth” have not been supported by data in fact, and the two national sessions to be held next week may contribute incremental information to this. If there is an adjustment in the cycle and value sector due to the concerns of some investors about “stable growth”, this is what we think is a buying point. Recommended sectors: nonferrous metals (copper, aluminum, gold), crude oil (oil and gas exploitation, oil transportation), coal; On the path of long demand recovery, the sector recommends: banks and real estate. The theme focuses on Rural Revitalization.
Risk tip: China’s credit easing is less than expected, the economic downturn is more than expected, and the global inflation rate is less than expected.
