Summary of views
In 2022, the European and American economies recovered further, but the pace of recovery slowed down. Inflation remained high but the year-on-year growth rate decreased slightly. The central bank’s monetary policy tightened marginally, but the tightening pace lagged behind the situation. As a result, the European and American economies continued to be in a quasi stagflation pattern and the stagflation process was further deepened. With the support of more coordinated supply side reform policies and structural credit easing policies, we expect that in 2022, the endogenous power of China’s economy will increase, the weakening of the pulling effect of net exports on the economy will be moderately supplemented by domestic demand, the gap between PPI and CPI will narrow, and CPI will rise moderately. However, we should beware of the risk of sharp short-term CPI rise due to weather conditions, Monetary policy will probably maintain a stable tone, but there may be structural easing in the first half of the year. On the other hand, we should also pay attention to the possibility of deterioration of Sino US geopolitical risks in the second half of 2022.
Looking forward to 2022, a more certain macro scenario is the convergence of macro environment at home and abroad. With the continuous promotion of covid-19 vaccination and the approaching time point of global mass immunization, international opening will also be put on the agenda. The prospect of influenza of covid-19 epidemic will force major countries in the world to adopt more consistent internationally recognized epidemic prevention and treatment standards, and the development of epidemic situations at home and abroad will gradually return to the same track from the current great differentiation, although this process may take several years to complete. The pace of economic recovery and economic policy support in Europe and the United States will be reduced, while China’s economic policy environment will moderately change to the direction of wide credit and stable growth. Therefore, there is a process of convergence of economic growth and policies at home and abroad. Accordingly, the differentiation of asset price performance at home and abroad will also be reduced, and the difficulty of macro hedging will increase.
We believe that in 2022, more emphasis should be placed on balanced allocation and tactical adjustment of major categories of assets. The situation that all four categories of assets have achieved positive returns from 2019 to 2021 may not continue until 2022. In 2022, the most likely ranking of the performance of major categories of assets is commodities > stocks > currencies > bonds, but stock returns may fall behind currencies or even bonds, depending on the size of potential negative shocks. In view of the implementation of the credit easing policy and the general rise of consumer prices, we will adjust the risk averse assets from bonds to precious metals, the trend of small and medium-sized stocks in stocks will still be better than large cap stocks, and energy and chemical industry will lead the rise of bulk commodities. In terms of macro hedging, it is suggested to buy CSI 500, sell CSI 300, buy Chinese 10-year Treasury bonds, sell us 10-year Treasury bonds, buy 2-year treasury bonds, sell 10-year Treasury bonds, buy crude oil, sell soybean oil and buy Canadian dollars.
