Core view:
On November 27, the World Health Organization issued a statement that covid-19 virus B.1 was found in South Africa 1.529 new strain is a variant worthy of attention, and it is named Omicron (Omicron) ". The emergence of new variant strain highlights the difficulties and challenges faced by covid-19 epidemic prevention and control. Based on the characteristics of covid-19 epidemic and the epidemic prevention effect of various countries so far, we believe that covid-19 epidemic may be difficult to completely end within 1-2 years, and the epidemic may last for a long time. The reasons are as follows: firstly, covid-19 virus is a single stranded positive strand RNA virus with envelope and no segmentation. Its genome is easy to mutate through a variety of mechanisms during replication, and the resulting mutant virus may be easier to spread and more pathogenic. Based on the high variability of covid-19 virus so far, We believe that we need to be alert to the possibility of more high-risk mutant strains in the future, which may lead to repeated outbreaks in a long time; Secondly, the transmission route of covid-19 virus has the characteristics of high infectivity and high concealment, resulting in its wide transmission range and low transmission difficulty, which means that more powerful isolation measures need to be taken to block the spread of the epidemic. Because it is difficult for most countries to strictly implement the epidemic clearing strategy like China, Or it will cause the spread of the epidemic abroad to continue for a long time; Third, relevant studies show that with the passage of time and the decrease of neutralizing antibody titer, the immunity of vaccinated personnel to covid-19 virus will decline, and the weakening of protective effect may increase the probability of repeated infection with covid-19 virus. At the same time, when covid-19 virus mutates, the original vaccines and drugs may face the risk of weakening or even failure, This is also an important reason why the epidemic may continue for a long time.
If the epidemic continues to repeat in the future, western countries may need to adjust epidemic prevention strategies and pay more attention to epidemic prevention and control, rather than actively implement the full opening of the economy after the epidemic weakens. Therefore, when the epidemic may last for a long time, we think it is necessary to be vigilant that the duration of the global semi blockade is longer than expected.
Compared with the expectation that the epidemic can end within one or two years, when the epidemic lasts for a long time, it is difficult for the economy to quickly and completely return to the fully open state before the epidemic, and the disturbance to supply and demand caused by the normalization or intermittent strengthening of prevention and control measures will continue. The continued semi blockade of the world will continue to restrain overseas supply, or cause inflationary pressure to continue to highlight. At the same time, the epidemic risk faced by the economy and employment continues to exist, which may form a certain obstacle to the accelerated tightening of the Federal Reserve. It is reasonable that the market interest rate increase is expected to slow down moderately, but the direction of interest rate increase is expected to be difficult to reverse.
For China, the continued semi blockade of the world in the future will slow down the recovery of overseas supply chains, so China's supply capacity is expected to have a comparative advantage in a longer time, driving the export chain to maintain high toughness, but the tourism, retail, service and other industries with high correlation with people flow may recover slowly. This means that the situation that foreign demand is relatively stronger than domestic demand may continue, but from the perspective of policy, promoting a smooth internal circulation is an important measure to enhance China's economic stability and pressure resistance. Therefore, it is necessary to use macro-control to make up for the shortage of domestic demand. It is expected that the policy will start from promoting consumption, expanding investment, stabilizing industry and so on, We will make further efforts to promote domestic demand. Meanwhile, if the epidemic continues, it will increase the social operation cost and may depress the potential economic growth. The corresponding interest rate level should be lower than the scenario that the epidemic can completely end within 1-2 years.
In terms of capital market, the epidemic risk faced by China's economic development is lower than that overseas. At the same time, China's reforms continue to release long-term growth potential and the openness of the capital market continues to improve. The above factors help to maintain the attraction of China's capital market to foreign capital. It is expected that in the future, A-Shares will continue to maintain the trend of foreign capital inflow in the long term. Combined with the real estate tax pilot, it is expected to accelerate the inclination of Chinese residents' wealth structure to financial assets. It is expected that it will be difficult for A-Shares to rise continuously next year, but the focus of fluctuation is expected to rise. The differentiation of performance in different industries may continue, and there are structural opportunities in the market.
