Event: the central economic work conference was held in Beijing from December 8 to 10 to summarize the economic work in 2021 and deploy the economic work in 2022.
Policy keynote: long-term reform to achieve high-quality development. In 2022, policy stability will be maintained and the 20th National Congress will be held smoothly
First, based on the new development stage, the meeting put forward the “five correct understandings and grasps” to clarify the long-term reform tasks of common prosperity, carbon neutralization, prevention and resolution of major risks. This meeting once again made it clear that common prosperity and achieving carbon peak and carbon neutralization are the general tone for long-term promotion of high-quality development in the future. At the same time, new discussions on major new theoretical and practical issues were added. The “correct understanding and grasp” of the five areas of common prosperity, capital supervision, product supply, risk resolution and double carbon goals further defined the direction and practical path of medium and long-term industrial structure transformation and upgrading.
Second, based on the judgment of the short-term internal and external environment, the meeting set the tone for the economic work in 2022 to “take the lead in stability and strive for progress in stability”. The meeting pointed out that “China’s economic development is facing triple pressures of shrinking demand, supply shock and weakening expectation”, “the external environment is becoming more complex, severe and uncertain”; In this context, the meeting reiterated that “adhering to economic construction as the center”, and the overall tone of next year’s work lies in seeking progress while maintaining stability, Maintain overall social stability (i.e. maintain a stable and healthy economic environment, a peaceful social environment for the country and the people, and a clean and positive political environment) and welcome the victory of the 20th National Congress of the party. Therefore, we believe that the focus of economic work in 2022 lies in the word “stability” and continue to do a good job in “six stabilities” and “six guarantees” The seven key tasks also focus on the implementation of sound and effective macro policies, unblocking the national economic cycle, and ensuring the bottom line of people’s livelihood. Among them, there is room for further easing of monetary policy, and credit creation pays attention to the key role of three structural support and capital market. In realizing policy cross cyclical and counter cyclical regulation, the meeting proposed that “prudent monetary policy should be flexible and appropriate, and maintain reasonable and sufficient liquidity”, which is basically consistent with the deployment of the meetings in 2019 and 2020. Further easing of monetary policy can be expected in the future. In terms of credit creation, we believe that structural support deserves more attention than total growth. 1: on the one hand, the meeting stressed “guiding financial institutions to increase support for the real economy, especially small and micro enterprises, scientific and technological innovation and green development”. In fact, the loan balance in the above fields has maintained a rapid growth of more than 20% on average in the past two years. As of 2021q3, The year-on-year growth rates of the balance of Inclusive Finance and green loans of major financial institutions were 23% and 28% respectively; On the other hand, to develop direct financing in the capital market, the meeting proposed for the first time to “fully implement the stock issuance registration system”, the enterprise financing channels will be more unblocked, and the continuous improvement of the capital market ecology will enhance the attraction of the market to domestic and foreign funds, especially long-term institutional funds.
Industrial logic: maintaining stability of real estate and infrastructure, scientific and technological innovation and green upgrading are the long-term main line
In line with the direction of long-term reform and the deployment of short-term stable growth, the industrial logic will also change marginally. Among them, the implementation of steady growth lies in maintaining the stability of real estate, appropriately carrying out infrastructure investment in advance, focusing on long-term industrial upgrading, leading the upgrading of manufacturing industry through scientific and technological innovation and orderly promoting carbon neutral and green transformation.
Real estate: the general tone of “real estate, housing and non speculation” remains unchanged, and urban policies promote a virtuous circle. On the one hand, the meeting re emphasized the positioning of “housing without speculation”, indicating that the general tone of long-term policy has not changed; On the other hand, the meeting first mentioned “strengthening expectation guidance” and “promoting a virtuous cycle of the real estate industry”, which will help to stabilize market expectations and achieve the goal of stabilizing domestic demand and steady growth. “Affordable housing construction” will become an important starting point for steady growth next year. We believe that in the short term, the early tight policy on the “financing land acquisition sales financing” cycle chain of real estate enterprises is expected to usher in marginal fine-tuning, and “urban implementation policy” will give some urban policies with great downward pressure on house prices room for marginal loosening; In the long run, the policy still lies in “trust but not action”. Optimizing the industry development model and the business model of real estate enterprises will help to realize the long-term virtuous cycle and healthy development of the real estate industry. The survival of the fittest in the industry will be accelerated, and high-quality leading real estate enterprises will benefit more from the warmth of the policy.
Scientific and technological innovation: enhance the core competitiveness of the manufacturing industry through key technological breakthroughs and digital transformation. The meeting still emphasized “adhering to innovation driven development” and “deepening supply side structural reform”. We believe that the resulting high-end manufacturing and digital upgrading will be accelerated. Specifically, first, pay attention to the Bottleneck Breakthrough of industrial foundation. The meeting proposed to “start a number of industrial foundation reconstruction projects”. According to the layout of the 14th five year plan, industrial foundation reconstruction refers to accelerating the completion of bottleneck weaknesses such as basic parts and components, basic software, basic materials, basic technology and industrial technology foundation; At the same time, the meeting proposed that “science and technology policies should be solidly implemented” and “formulate and implement the ten-year plan for basic research”. China’s R & D investment in basic research needs to be strengthened. In 2020, China’s basic research accounted for only 6% of all R & D investment, which is lower than the average level of more than 12% in the United States, Japan and South Korea. Second, accelerate the digital transformation. On the one hand, promote the upgrading of traditional industries and build a safe and efficient logistics network with internal and external connectivity by promoting the application of digital technologies such as cloud computing, big data and the Internet of things; On the other hand, the empowerment of digital economy is inseparable from the construction of new information infrastructure. The construction of 5g network and data center is the layout direction.
Green Transformation: there is great room for growth in new energy infrastructure, transformation of traditional industries, new energy vehicles and carbon monitoring market. The meeting stressed the need to unswervingly promote carbon peak and carbon neutralization, but also proposed that “it is impossible to accomplish its work in one battle”. Considering that the green transformation involves all links of economic construction such as energy production, industrial manufacturing and living consumption, which has a far-reaching impact on the reconstruction of industrial pattern, the implementation of policies in the future will pay more attention to step-by-step and avoid the negative impact of “one size fits all”. Specific development directions include: first, new energy infrastructure such as photovoltaic, wind power and energy storage will continue to work. The meeting first mentioned that “new renewable energy and raw material energy consumption will not be included in the total energy consumption control”, which is expected to reduce the uncertainty of power and production restriction faced by upstream material manufacturers in the new energy industry chain, and alleviate the upstream price increase pressure borne by middle and downstream enterprises The profits of middle and downstream manufacturers and operators of wind power are expected to be repaired; “Increasing new energy consumption capacity” needs to accelerate the construction of energy storage infrastructure. In line with the global development trend, China’s electrochemical energy storage has great growth potential. In 2020, electrochemical energy storage accounted for nearly 75% of the global new energy storage, and the new installed capacity of electrochemical energy storage in China increased by 156% year-on-year. Second, the green transformation of traditional industries will increase the application of energy-saving equipment and clean technology. The meeting stressed the need to “pay attention to the clean and efficient utilization of coal”, “accelerate the construction of waste recycling system” and “tackle key problems of green and low-carbon technology”, and promote the comprehensive, intensive and recycling of resources in the production field. We believe that energy-saving and environmental protection materials, energy-saving equipment There is a broad space for development in the fields of waste residue recycling equipment and carbon capture technology. Third, advocate green consumption, and the penetration rate of new energy vehicles will continue to increase. The meeting proposed to enhance the people’s awareness of saving and advocate a green and low-carbon lifestyle. The market space for new energy vehicles and energy-saving household appliances is expected to continue to expand. According to the prediction of the automobile team of Ping An Securities Research Institute, the number of new energy vehicles is expected to exceed 5 million in 2022, an increase of nearly 50% year-on-year. Fourth, pay attention to the growth potential of the carbon monitoring market. The meeting proposed to “create conditions to realize the transformation from” dual control “of energy consumption to” dual control “of total carbon emission and intensity as soon as possible”, which first needs to promote the establishment and improvement of the carbon monitoring system. At present, the Ministry of ecological environment is studying and formulating the pilot work plan of carbon monitoring, and preparing to carry out emission source monitoring, key city monitoring Regional monitoring and other three pilot projects. According to the calculation of the green energy and forward-looking research team of Ping An Securities Research Institute, the market scale of carbon market service monitoring points and government monitoring points is about 7.4 billion yuan. If the needs of enterprise self inspection and data disclosure are considered, the market space of carbon monitoring is larger; At the same time, the implementation of carbon monitoring will also drive the upgrading of conventional pollutant monitoring equipment.
Other areas: implement “common prosperity”, promote the implementation of Fertility Policies and the normalization of Internet antitrust. From the perspective of key tasks for next year, the meeting proposed to “strengthen antitrust and unfair competition”, and Internet antitrust supervision will become the norm; “Promoting the implementation of New Fertility Policies to achieve results” has become an important starting point for actively coping with population aging. A series of supporting policies around three children will be implemented one after another. From the perspective of long-term reform, income regulation around “common prosperity”, guiding charity and providing accurate basic public services such as education / medical care / pension / housing will be the direction of long-term policy deployment; In financial supervision, the meeting first mentioned “setting a ‘traffic light’ for capital” and “preventing capital from savage growth”. We believe that in the future, we will guide capital to support real economic growth and industrial structure transformation and upgrading for a long time, and regulate and restrict its disorderly and savage expansion affecting national information security, data security and people’s livelihood stability.
Market impact: focus on the repair of value blue chips in the short term, and scientific and technological innovation and green upgrading are still the medium and long-term layout direction
On the whole, the central economic work conference released the signal of adding weight to the steady growth policy, which is conducive to boosting market sentiment, and the A-share market is expected to fluctuate upward. In terms of industry allocation, it is suggested to pay attention to the repair opportunities of short-term value blue chips and the direction of scientific and technological innovation and green upgrading of medium and long-term high prosperity. Of course, some high prosperity fields may objectively have the risk of increasing the fluctuation of overvalued value due to the excessive increase of early accumulation.
In the short term, the steady growth policy is conducive to the repair of real estate, finance, consumption and other sectors. The recent central economic work conference and the meeting of the Political Bureau of the CPC Central Committee both released the signal of increasing the importance of steady growth. The marginal easing of real estate restraint policy and the marginal easing of monetary policy are expected to bring opportunities for the valuation repair of relevant value sectors such as real estate, banking and non bank finance. As of December 10, the Pb valuation of the above industries was below 3% in recent ten years; Under the background of implementing the strategy of expanding domestic demand, we can pay attention to the repair opportunities of consumption, infrastructure and other sectors that have been partially adjusted in the early stage, but the inflection point of industry fundamentals still needs to observe the improvement of the epidemic situation and the progress of economic repair.
In the long run, scientific and technological innovation and green upgrading are still the direction with high growth space. This meeting once again made it clear that “we must adhere to high-quality development”, and “scientific and technological innovation” and “carbon peaking and carbon neutralization” are the directions that we should unswervingly promote in realizing high-quality development. On the one hand, innovation is the first driving force leading development. It is suggested to pay attention to relevant opportunities of science and technology industry, including high-end manufacturing, digital economy industry, quantum information, gene technology and other future industries; As of December 10, according to the classification of Shenwan industry, the PE valuation of national defense industry and semiconductor industry was about 55% and 20% respectively in recent ten years. On the other hand, pay attention to the diffusion of investment opportunities in industries related to green upgrading, and there is broad long-term growth space for industrial chains such as photovoltaic / wind power / energy storage and other new energy infrastructure, new energy vehicles, energy-saving equipment / cleaning equipment / carbon monitoring equipment; Of course, some popular carbon neutralization industries face short-term constraints of overvaluation. As of December 10, PE valuations of new energy vehicle industry chain, UHV, energy Internet, photovoltaic and other concepts were at a historical quantile of more than 90%, while PE valuations of wind power, green buildings, degradable plastics and other concept indexes were relatively low, at a historical quantile of less than 50%.
Risk tips: 1) policy promotion is not as expected; 2) The increase of overseas uncertainty has a great impact on the Chinese market; 3) Macroeconomic recovery was less than expected.
