Market review: the index remained volatile, and the real estate cycle sector performed strongly
Today, the two cities maintained a volatile trend. As of the close, the Shanghai index rose 0.16% to 3595.09 and the Shenzhen index fell 0.38% to 14697.17. In terms of sectors, building materials, household appliances and building decoration led the increase, while national defense and military industry, non-ferrous metals and power equipment led the decline. The turnover of the two cities was 119974 billion yuan, a slight contraction of 0.32% over the previous trading day and an increase of 2.36% over the average of the previous five days. The net purchase of Shanghai Stock connect was 6.317 billion yuan, the net purchase of Shenzhen Stock connect was 1.633 billion yuan, and the net purchase of northbound funds throughout the day was 7.949 billion yuan.
Market focus:
The people’s Bank of China announced on the 6th, It is decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15, 2021 (excluding financial institutions that have implemented the deposit reserve ratio of 5%). The RRR reduction is a comprehensive RRR reduction, releasing a total of about 1.2 trillion yuan of long-term funds. After the reduction, the weighted average deposit reserve ratio of financial institutions is 8.4%. After that, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the economic work in 2022, emphasizing that the economic work next year should be stable and seek progress while maintaining stability.
Strategy suggestion: pay attention to the valuation and repair opportunities of counter cyclical plates
Today, A-Shares remained slightly volatile as a whole, and the real estate cycle sectors such as home appliances and building materials and large financial sectors continued to be strong, or mainly boosted by the expected landing of RRR reduction and the expected strengthening of stable growth in policy. After hours yesterday, the central bank officially announced that it would start the RRR reduction on the 15th of this month. We believe that the main purpose of this comprehensive RRR reduction may be two points: first, replace some expired mlfs, reduce the capital cost of financial institutions, relieve the financing constraints of the real economy, and promote the effective investment in 2022; Second, protect market sentiment, stabilize market expectations and hedge the credit default risk of individual real estate enterprises.
Combined with the statements made at the Politburo meeting since then, we believe that the following signals have been released: first, the regulation policy with the word “stability” as the head is gradually being implemented. “Six guarantees” and “six stabilities” reappeared and replaced the reference to “cross cycle regulation”, or reflected in the greater downward pressure on the economy and the strengthening of efforts to ensure stable macroeconomic growth. After the RRR reduction, more active fiscal policy and structural monetary policy may be introduced one after another to start a new round of easing cycle. Whether to cut interest rates or not, we must pay more attention to the signal release of the subsequent economic work conference and the changes of macro policies at home and abroad. After all, the global macro-economic uncertainty will continue to rise in 2022, The “flexibility and moderation” of monetary policy may be intended to focus on changes in the macro situation at home and abroad. At the same time, under the enhanced expectation of steady growth, it is recommended to pay attention to the counter cyclical sector, especially the pharmaceutical and consumer sectors whose previous valuation remained low, or welcome the better market. Second, the real estate market control may be from tight to stable, and the relaxation range is relatively limited. This meeting did not see the reference of “no speculation in housing and housing”, but put meeting the reasonable housing demand and promoting the construction of indemnificatory housing in a more important position. We believe that the policy direction of the real estate industry is becoming clearer and clearer. The focus is still on “stable and healthy development” rather than substantial relaxation. On the one hand, we should avoid “over correcting” to exacerbate the pessimistic expectations and systemic risks of the real estate market. On the other hand, we should solve key livelihood problems and stabilize real estate investment by accelerating the construction of affordable housing in key cities. Therefore, under the condition that the bad situation is basically exhausted, the leading central enterprises of real estate are expected to repair the valuation. It is recommended to pay attention to it. Third, the “strategy of expanding domestic demand” reappeared. China’s consumption, which has been slowly repaired after the epidemic, is expected to receive a policy oriented boost and get out of the trend market in the restlessness of spring. It is suggested to focus on it. Fourth, although the keywords such as “new energy”, “carbon neutrality” and “digital economy” have not been mentioned, the trend is still strong, or the key development pattern may be continued. Under the guidance of “stabilizing the macro-economic market”, there is a high probability of deepening and consolidating the results of this year’s economic structure adjustment, the range of direction adjustment at the industrial level is limited, and the market risk appetite is expected to be further improved. It is suggested to continue to pay attention to the allocation opportunities of relevant sectors.
Risk tip: the macro-economy is less than expected, the national epidemic situation is more than expected, and the geopolitical risk is intensified.
