Zhou Du’s view: how to view the investment guidelines under the “timely RRR reduction”?
Recently, the expected disturbance of covid-19 mutant strain Omicron on economic recovery and liquidity has continuously impacted the global capital market, while the A-share market shows a phased “independent market”. The essence behind the performance of this capital market is still that after the global “K-type recovery” under the impact of the epidemic in 2020, the new mutant virus once again exposed the differences in the performance of epidemic prevention effectiveness among countries. Under the advantages of China’s system, the prevention and control measures are relatively effective, taking the lead in recovering from the impact of the epidemic, and the monetary policy has the toughness of “focusing on me”. Therefore, when the global stock market returns to the “memory” of the impact of the epidemic again, the performance of the A-share market is also relatively dominant.
We suggested last week that, unlike QE in response to the first covid-19 virus mutation impact, it is difficult for the Federal Reserve to make a loose statement in this round of covid-19 virus mutation impact, despite the “loose continuation” expected by the market’s inertial thinking. The real driving reason behind this lies in the disorder of market investors’ expectations of the Fed’s monetary policy under the expectation of global high inflation. Meanwhile, if the covid-19 mutant strain Omicron does not cause a “jump” in the mortality of confirmed cases, its impact on the global economic recovery and market is relatively limited. The determination of Biden cabinet government to control high inflation may be the real main line affecting the global asset price.
From the perspective of global liquidity expectations, we believe that the Fed’s subsequent hawkish remarks will continue to disturb the market. The impact of Omicron virus on hospitalization rate and mortality can only be determined after observation for about two weeks. Its impact on the market still depends on whether major economies increase border blockade and travel restrictions. In particular, under the background of the strong performance of the US dollar index, this difference in the response attitude of all parties to the covid-19 mutant strain will also increase the differentiation and fluctuation of the short-term global stock market.
As for the A-share market, we are not pessimistic about the market performance under the loose expectation of “stabilizing the economy”, but we should pay attention to the rhythm of subsequent market interpretation:
1) In the short term, the statement on “formulating policies around the needs of market subjects and reducing the reserve requirement in time” was issued on Friday to increase the market’s expectation of reducing the reserve requirement. However, from the pulse law of A-Shares disturbed by the event, the current market expectation of real estate relaxation is too high, and the more vigorous real estate policy of real estate development loan and multi sectoral coordination has not been launched. Timely RRR reduction or comprehensive relaxation does not mean. The upward impetus to the market from the “timely reduction of reserve requirements” to the “implementation of reduction of reserve requirements” is expected to decline marginally; In fact, the focus of this round of stabilizing the economy may not be in real estate. We should pay more attention to the structural investment opportunities bred in the transformation of the traditional economic growth model towards high-quality development. In the current rotation of market style, we should still pay attention to the short-term risks of high-level plates and the allocation opportunities of low-level high-performance plates. In terms of allocation suggestions, it is recommended to make balanced allocation and optimize the midstream manufacturing and consumption segments with stable profit margin and stable downstream orders.
2) In the medium term, with Evergrande’s first US dollar debt default and the drag of the real estate downturn on the investment side, the strength of stabilizing the economy in the first quarter of next year is relatively certain. The main focus of stabilizing the economy may still be: loose monetary policy (including directional wide credit) + further tax reduction and fee reduction of small and medium-sized enterprises and structural wide credit under the force of the central government, and the “14th five year plan” The implementation of major investment projects, etc. the main line of the medium-term market is still new infrastructure and new energy. We still suggest that we should pay attention to the opportunities of bargain hunting in the four main sectors next year: new energy, military industry / semiconductor, planting, wealth management and securities companies. The optimal allocation strategy at the current time point lies in the sufficient adjustment in the early stage: new infrastructure (power grid) + required consumption (planting, etc.).
Risk tip: the transmission rate and mortality of the new mutant strain Omicron are higher than expected, the implementation of relevant reform policies in the field of common prosperity is lower than expected, and the public data used in the research report may lag behind or not be updated in time.
