Core conclusion: after a high business cycle lasting for 2 years, most highly market-oriented industries will eliminate the mismatch between supply and demand through demand decline or capacity adjustment. The reduction of supply-demand mismatch may bring the overall roe into the annual downward trend. However, due to the low valuation, low interest rate and the increase in the proportion of institutional investors, this decline of roe will only make the stock market make drastic adjustment for 1-2 quarters, and then quickly return to the upward trend.
Profit: A-share roe will enter a downward period in 2022. Due to the downturn in real estate demand, the macro total demand is estimated to remain low. Some industries with low technical barriers and fast production capacity input cycle will focus on supply, affecting the gross profit margin of most price rising industries, especially in the second half of 2022.
Stock market funds: it is conservatively expected that the net inflow of A-share funds will account for 1.3% of the free circulation market value in 2022. Bank securities transfer, financing balance, public fund share and private fund share will also have a slight positive growth. With the adjustment of the stock market in the first half of the year, the stock market valuation will enter a reasonable area, the market entry scale of insurance funds may change from negative to positive, the net reduction scale of industrial capital may decrease by 100 billion yuan compared with this year, and the company's repurchase scale is expected to be flat or higher than that in 2021.
Exponential rhythm: it will show a V-shaped shock with great twists and turns, but the ending is OK. Due to the reasonable valuation, the proportion of institutional investors in the investor structure has increased significantly, and the proportion of consumption and growth industries has increased. This time, the roe has decreased, the stock market will only fall for 1-2 quarters, and most of the decline can be recovered by the end of the year. Similar to the performance of US stocks in the period of roe decline.
Sectors with large performance flexibility will be greatly reduced. The allocation idea in 2022 should focus on valuation and barriers. The current profits of most industries will be negatively affected. In the period of roe decline, the short-term logic is weak, and the long-term logic and valuation are more important.
Suggestions on industry configuration in 2022:
(1) Directions that can be allocated throughout the year in the next year: military industry (a few high-end manufacturing industries whose supply and demand pattern will not deteriorate in 2022), Hotel & Aviation (the longer the epidemic is suppressed, the longer the reversal will be).
(2) Over allocation of Finance in the next six months: the middle and later stages of economic downturn can be attacked and retreated, with low valuation and steady growth will be gradually strengthened in the next six months.
(3) On the left side, you can start to pay attention to computers, media, food and beverage, medicine, etc.: the valuation and institutional allocation have decreased a lot this year. Recently, they are in the process of quarterly rebound, and new big logic markets are still being explored. The opportunities for these sectors will gradually increase in 2022.
Risk factors: the decline in the prosperity of the real estate market exceeded expectations, and US stocks fluctuated sharply in stages.
