Last week, the volatility of overseas markets intensified, and the market panic caused by the new covid-19 virus in South Africa led to a sharp retreat of overseas stock indexes, including US stocks, on Friday. The important indexes of the A-share market were significantly differentiated. The gem index rose sharply by 1.46%, while the Shanghai Composite Index rose slightly by 0.10%, and the Shanghai and Shenzhen 300 and Shanghai 50 fell by 0.61% and 0.80% respectively. In terms of transaction volume, the daily average transaction volume exceeded trillion yuan, with a turnover of 5.90 trillion yuan throughout the week, an increase of 354.2 billion yuan month on month; Among them, the net inflow of funds from northbound continued to be 5.711 billion yuan. In terms of industries, Shenwan level industries rose more or fell less, among which non-ferrous metals, steel, food and beverage and biomedical industries led the increase, while leisure services, agriculture, forestry, animal husbandry and fishery, national defense and military industry fell sharply.
In terms of data, from January to October, the profits of Industrial Enterprises above designated size increased by 42.2% year-on-year, 43.2% compared with the same period in 2019, and an average increase of 19.7% over the two years, indicating that the operation of industrial enterprises has improved. On the one hand, due to the acceleration of industrial production in October, the prices of some industrial products continued to rise, and the revenue growth of industrial enterprises improved significantly; On the other hand, with the measures taken by the management to reduce taxes and fees, ensure supply and stabilize prices, the profit margin of enterprise revenue has also improved, resulting in the improvement of the benefit data of industrial enterprises in October. From the operation of different types of enterprises, although the operation of private enterprises is still significantly weaker than that of state-owned enterprises, the pace of decline in the net profit growth of private enterprises has further slowed down, and the effectiveness of the policy of helping enterprises to rescue has been shown. Looking forward to the future, although the operation of industrial enterprises has improved, structural problems still exist, and the profit squeeze in the middle and lower reaches is still obvious. In the next stage, it will also face new downward pressure on the economy. The pressure on the demand side of industrial enterprises will gradually appear, and the business pressure still exists.
In terms of policies, on the 22nd, the State Council issued the notice on Further Strengthening the rescue and assistance to small and medium-sized enterprises, including nine measures, such as increasing the rescue fund support, further reducing taxes and fees, and increasing the supply of credit loans. Since the epidemic, small and medium-sized enterprises have been greatly impacted and will face downward pressure on the economy. At this time, the introduction of care policies is expected to alleviate the operating pressure of small and medium-sized enterprises and stabilize the basic employment market. In terms of fiscal policy, on the 24th, the national Standing Committee deployed to improve the management of local government special bonds, required to speed up the issuance of special bonds and the commencement of projects, and studied the early issuance of the quota next year. Under the downward pressure of the “new” economy, the demand for steady growth has been strengthened. This year’s fiscal excess and fiscal backwardness are expected to provide ammunition for fiscal development next year.
Investment strategy last week, affected by the passage of the Biden stimulus bill by the house of Representatives on the 19th, the new energy sector received funds on the first trading day, driving the index to close at Changyang, and then continued to fluctuate. During the fund assessment period, the sectors with large cumulative gains were difficult to perform, and the market was still in the shock market of rapid rotation of various sectors. In terms of short-term market conditions, the emergence of the new covid-19 virus has once again obscured the global recovery expectations, exacerbated the fluctuations in the peripheral markets, and also increased the risk of fluctuations in the sentiment of the A-share market. However, considering that the current market has little understanding of new viruses, and the effectiveness of response methods such as vaccines and specific drugs on new viruses has yet to be verified, the short-term market is not easy to panic excessively. Even if the new virus brings a new round of overseas epidemic outbreak, considering that China adheres to the net zero policy on epidemic prevention, the impact of the new virus on China will be generally controllable. We believe that A-share investors do not have to worry too much. If the market falls unexpectedly, it is an opportunity for investors to bargain hunting. In terms of style, considering the relative dominance of small and medium-sized market valuation and performance, the trend may not be over yet; At the same time, based on factors such as “the opening of the capital market will be upgraded again” and the continuous improvement of risk hedging tools, overseas funds may continue to flow in, and large cap stocks are expected to obtain incremental funds. Generally speaking, investors can make balanced allocation at the style level. In terms of industry allocation, investors can tap the opportunities of “scenery storage” plate brought by the policy promotion under the background of economic downward pressure raising the necessity of infrastructure support and the construction of new power system; At the same time, from the perspective of medium and long term, the individual stocks whose valuations return to a reasonable range in the consumption sector can be arranged on the left; In addition, we can also pay attention to the problem of core shortage and alleviate the automobile sector under the logic of superimposing year-end impulse and replenishment of inventory.
Risk tip: the real estate downturn exceeded expectations, and the global epidemic development exceeded expectations.
