viewpoint
2022 is a macro year. At the end of 2021, there are significant differences in the market’s expectations for China’s economic growth in 2022. We expect that the impact of macro factors on the market will increase significantly in 2022. The core contradiction of this impact lies in whether China’s macro policies can effectively hedge the downward pressure on the economy in 2022. This paper discusses three main policy lines and corresponding asset allocation logic that may run through the whole year in 2022, and then gives our forecast of China’s macro economy in 2022.
Main line 1: “real estate, infrastructure”. Taking history as a mirror and combined with the data characteristics of 2021, we expect that the cumulative year-on-year growth rate of real estate sales and new construction may reach the bottom in the first quarter of 2022, driving the rebound of credit pulse. The growth rate of 2022 is about – 5% and – 2.4% respectively. The completion and construction are not weak, supporting the growth rate of real estate investment at about 3%. The “variable” of infrastructure construction lies in the use of “idle” financial funds, We calculate capital construction from the two dimensions of budget capital and capital leverage (capital construction scale / budget capital). The growth rate of generalized capital construction may be between 5% and 8% in 2022 In this situation, the economy tends to be weak, deflationary pressure rises, and monetary policy tends to be loose. We expect CPI to rise driven by food prices, but PPI will fall and core CPI will be weak. In terms of asset performance, commodities are weak, with the largest decline in energy prices; Loose policy and strong performance of Panasonic interest rate bonds; The performance of stocks and foreign exchange depends on the expected degree of supermarket market stimulated by policies.
Main line 2: “China is loose, the United States is tight”. Combined with the only two experiences of “China easing and the United States tightening” since the 21st century, the pace of interest rate increase by the Federal Reserve in the second half of 2022 is likely to be more radical, which means that the first half of 2022 is likely to be the main window period of China’s monetary policy easing. We believe that the dominant factor in China’s bond market is still China’s economic fundamentals, so the trend of China’s treasury bond yield is unlikely to be affected by the Fed’s interest rate increase; However, there is likely to be periodic depreciation pressure on the RMB exchange rate in the second and third quarters of 2022. Due to the significant increase in the positive correlation between the RMB exchange rate and A-Shares when the Federal Reserve increases interest rates and the Central Bank of China is relaxed, we should pay attention to the impact of RMB exchange rate depreciation on a shares.
Main line 3: global trend towards “coexistence with virus”. We believe that the emergence of South African covid-19 strain Omicron will not change the pace of global “coexistence with virus” in 2022. After the Beijing Winter Olympics, with the liberalization of epidemic control in overseas economies, China’s “clearing” policy may face challenges. If the steady growth policy fails to effectively hedge the economic downturn, the possibility of loosening the epidemic prevention policy cannot be ruled out. The models of Israel, South Korea and Australia deserve comprehensive reference. The typical strategies are subregional “n-step” liberalization and “vaccine pass”. For example, Australia set the vaccination rate as the threshold and lifted the ban in batches according to the progress of vaccination in various states, which effectively alleviated the epidemic counterattack. In terms of vaccines, combined with the progress of domestic oral drugs in China, the combination certificate of “vaccination + taking oral drugs” can be used as the pass that must be presented to enter public places. Although it is unlikely that China’s policies will be fully liberalized in 2022, the border control and population flow control may be relaxed, and the isolation period may be shortened, which is good for tourism, catering, hotels and other service industries. From the perspective of financial market, China’s financial market may go through a process from riskon to riskoff and then to riskon.
Main data forecast of China in 2022: we predict that China’s GDP will grow by 5.3% in 2022, The maintenance of a high outlook for exports (10.2%), the development of infrastructure investment (6.5%), and the sustainability of manufacturing investment (7%) will offset the drag of the real estate downturn on economic growth to a certain extent, but the growth of residents’ consumption is still difficult to return to the level before the epidemic. PPI decreased quarter by quarter year on year, and the annual growth rate in 2022 was 4%. Driven by food prices, CPI increased by 2.2% year-on-year; under the stable economy, the macro leverage ratio will rise, and the social finance growth rate may reach 10.9%, and “low before high after”.
Risk tips: covid-19 virus mutation and complete failure of vaccine; The supply shortage continues; The central bank policy of major economies has tightened too fast; Increased geopolitical risks
