PMI data in November returned to the boom and bust line, indicating economic recovery. The economy in the fourth quarter was not as weak as expected by the market. The PMI in mid November was 50.1, 0.9 percentage points higher than that in October, ending the economic performance of continuous contraction and returning to the expansion range. Among them, production and demand recovered in an all-round way. The new export order index rose sharply in November, with a new export order index of 48.5%, an increase of 1.9 percentage points over October, a new high since May this year. Adding the impact of Omicron mutant strain on industrial production in countries with weak overseas epidemic control, we believe that export will still be a driving factor for China’s economy in the next stage. In addition, due to the sharp drop in the purchase price index of raw materials, the purchase price index of raw materials in November was 52.9, down 19.2 percentage points compared with October. At the same time, the ex factory price index in November was 48.9, down 12.2 percentage points compared with October. The production cost of manufacturing enterprises decreased significantly, and the production index rebounded sharply by 3.6 percentage points to 52% in November, returning to the expansion range. With the continuous development of the policy of “ensuring supply and stabilizing price”, the industry will remain in a high boom range, which eliminates the concerns of market investors about the rapid economic downturn in the fourth quarter to a certain extent.
Lowering the expectation of reserve requirement and stabilizing the landing of credit: previously, the previous expression of “general monetary gate” was deleted in the third quarter implementation report, indicating that it is necessary to “enhance the stability of total credit growth”. Secondly, the addition of “focus on me” is to guide expectations, indicating that China’s monetary policy is independent rather than completely affected by the Federal Reserve, It also indicates the economic pressure in the fourth quarter and the first and second quarters of next year. The central banks of the two countries may have different monetary policy choices. Recently, Premier Li Keqiang mentioned “timely RRR reduction and increased support for the real economy, especially small, medium and micro enterprises”. We believe that the possibility of subsequent RRR reduction is also increasing. In combination, we believe that this means that the credit contraction rate has come to an end, gradually turning to stable credit, or even structural wide credit, and the monetary policy will remain loose. Therefore, there is no need to worry too much about the impact of the Fed’s monetary policy on China’s monetary policy and the decline in market liquidity expectations.
The regulator once again expressed its support for the rational financing of real estate enterprises and stabilized market expectations. Since November, the signal of fine-tuning the real estate policy has appeared, and the real estate leverage reduction has gradually changed to the tone of stabilizing risk. In response to the Evergrande event, the first bank and the two sessions collectively expressed their support for the rational financing of real estate enterprises. At the same time, the situation that the medium and long-term loans of residents increased slightly year-on-year in October also means the recovery of the housing loan market. On the latest December 3, Evergrande group announced in the Hong Kong stock exchange that it may not be able to perform its guarantee liability for an overseas bond. Subsequently, the bank and the two sessions stated that this is a case phenomenon in the market economy, which will not have any negative impact on the normal operation of the Bank Of China Limited(601988) insurance industry. At present, domestic real estate sales, land purchase and financing have gradually returned to normal, and some investors have begun to buy US dollar bonds of Chinese real estate enterprises. Therefore, we believe that, The spillover impact of Evergrande event on the stable operation of the capital market is controllable and will not affect the normal financing function of the medium and long-term market. However, the “Lehman moment” in the United States is essentially different from the Evergrande event in China.
Allocation ideas: 1. Look for structural opportunities (real estate and banks) under the stable risk of real estate in the short term. 2. “Double carbon wide credit” + strong theme of science and Technology (wind power, photovoltaic, new energy vehicles – parts, upstream resources of lithium battery, rare earth permanent magnet, UHV and semiconductor).
Risk tip: Sino US trade friction has intensified and the epidemic has not been effectively controlled
