Near the end of the month, New strain The emergence of Omicron has had a severe impact on global risk assets. Crude oil futures fell by more than 10% in a single day, setting a new high since the financial crisis and the outbreak of the epidemic in early 20. Will the new variety of the epidemic change the operating logic of the Chinese market? How should we deal with it in the future? The emergence of new strains and the amplification of global panic trading. The emergence of new virus variants in South Africa this week broke the Calm in global markets. The harmfulness of the new strain needs to be further observed, but the response of large categories of assets to this can be described as “extreme panic”. On that day, it had an impact on a shares, and the panic mood further fermented after hours. The risk assets were panic sold off, while the risk averse assets rose sharply one after another.
How did the past few epidemic cycles affect the stock market? Through the resumption of internal and external epidemic cycles, we further summarize the following regular characteristics: 1) there are great differences in small epidemic cycles outside China, and the correlation between the two is low. 2) Over the past 21 years, the epidemic cycle has mainly affected the asset price ratio and stock market style, but has a limited impact on the absolute price of assets. 3) In terms of A-share style, it is more affected by the small cycle of China’s epidemic. Each round of China’s epidemic spread is accompanied by growth – value, overestimation – underestimation, and relative outperformance; The number of confirmed cases decreased and then reversed. 4) As far as the global market is concerned, the price ratio of growth value and technology energy is also highly related to the global epidemic cycle.
Scenario analysis and response of new variants of this round of epidemic situation. We will discuss the future trend of this round of epidemic situation in three scenarios: 1. In an optimistic situation, the variation of new strains is controllable, the existing vaccines are still capable of prevention and control, the transmission channels are controlled, and the market panic will be eliminated quickly; 2. Under neutral circumstances, referring to the experience of delta virus, this new variant virus may aggravate the duration of the epidemic and the peak of new cases, resulting in the extension of the global blockade time again, and the global recovery expectation and the price of risk assets will inevitably be impacted in the short term; 3. The pessimistic situation is to reproduce the great spread of the epidemic in the first quarter of 20 years, the failure of group immunity in western countries, the suspension of the real economy and the rapid rise of financial risk aversion. It does not rule out the possibility of quasi liquidity crisis (the most pessimistic situation) after the sharp decline of risk assets.
As far as the global market is concerned, the ranking of major assets in the short term may be US bonds > stocks > industrial metals > energy products. In the short term, it is difficult to avoid the impact of risky assets, and the decline of crude oil reduces inflation expectations, depresses the yield of US bonds, and benefits us bonds, yen, Swiss franc and other safe haven assets. The spread of the epidemic may affect both the supply and demand of bulk commodities, and industrial metals may be relatively better than energy products. For the Chinese market, A-Shares will continue to “focus on me”. The emergence of new strains may cause periodic disturbance. In the short term, offline and travel economy may be impacted by emotions, and the probability of online economy, medicine and other sectors will be boosted. However, the core contradiction of A-Shares is inside but not outside. The reversal of credit and inflation structure is still the top-down focus in the medium term. At present, there is no sign of a significant spread of the epidemic in China, and the medium-term logic of A-Shares is still within. Next, on the one hand, we should attach great importance to the setting tone of the central economic work conference (focusing on economic objectives and steady growth), on the other hand, we should focus on when the m1-ppi scissors difference bottoms out and rebounds (if the inflection point is confirmed in the future, it will open up the upward space of the index).
Core conclusions and strategic suggestions: A-Shares continue to “focus on me”, and the market trend remains unchanged at the end of the year. (i) The short-term offline consumption and travel chain may be impacted by emotions, but the core contradiction of A-Shares is not outside. Under the trend of steady growth and monetary and credit stability, we will continue to be optimistic about the repair of value shares in the medium term, recommend food and beverage and consumer services for large consumption, underestimate the value, and pay attention to banks, state-owned enterprise developers and power operation; （2） The direction of new infrastructure development is to promote new energy infrastructure: scenery, energy storage and UHV; (III) upstream cost reversed auto parts, machinery and independent main line military industry.
Risk tips: 1. The epidemic situation is out of control; 2. A sharp recession; 3. The policy has changed more than expected.
