The global asset management giant expressed its optimistic attitude towards A-Shares for the first time after the boots of policies to stabilize the economy were put on the ground.
In its latest 2022 outlook focus report, the think tank under BlackRock, the world's largest asset management, pointed out that the policy is expected to be loose, the supervision will continue, but it will not increase its weight, and it is moderately bullish on Chinese stocks.
stocks rose and bonds fell to the new normal
don't worry about the Fed accelerating water collection
A major premise for the proposed allocation of A-Shares is that the giant with a management scale of nearly $10 trillion believes that it is still worth over allocating shares next year. This judgment is quite different from the view of many institutions that the trend of global stock markets will begin to decline with the explosion of inflation and the acceleration of water collection by the Federal Reserve.
According to the report released by BlackRock think tank on December 13, it is still recommended to over allocate shares in 2022. 2022 will usher in a new normal, with global stock markets rising for the second consecutive year and bonds falling for the second consecutive year - the first time in about half a century. Since 1977, there have been few positive stock returns and negative bonds in the world
Recently, as the market's concerns about the new variant of covid-19 Omicron dissipated, the global stock market rebounded to near an all-time high, and the bond yield also increased. The focus of the market began to shift to the possible water collection by the central bank and the tightening measures taken by the Federal Reserve. However, BlackRock think tank believes that with the gradual restart of the economy, central banks around the world will maintain a more tolerant attitude towards inflation.
The information management giant pointed out that the global return on investment is rarely positive in stocks and negative in bonds in any year, let alone two consecutive years. Why did it happen in 2021? The strong restart of economic activity has led to serious inflationary pressure and supply bottlenecks. And most central banks in developing countries did not respond, which is very different from the pre emptive tightening policies usually adopted by emerging markets in the past.
This is the ongoing "new normal", marking the beginning of the transfer of asset pricing paradigm. The nominal yield of government bonds rose slightly and the price fell, but the real yield remained at an all-time low due to rising inflation and the support of the stock market. With the economic restart, corporate profits soared, which will continue to drive the stock market up sharply.
BlackRock think tank has seen that the inflation level has soared above the trend before the covid-19 epidemic, and the global economy will coexist with inflation in the future. Therefore, stocks are more favored in large categories of assets than fixed income products. However, in view of the various scenarios that may occur in 2022, the risk exposure level has been reduced. Whether short-term or medium and long-term, the giant is bullish on stocks and bearish on bonds
policy force
relaxed prediction verified
Focusing on Chinese stocks, the asset management giant has expressed its preference for Chinese stock assets in the past two months since it took the lead in expressing its bullish view and proposed to increase its holdings of Chinese stocks in early October. Opinions on the allocation of Chinese stocks and bonds
After the central economic work conference set the economic direction in 2022, BlackRock think tank maintained a moderate bullish view on Chinese stocks and believed that the policy had changed to slightly loose.
In the latest statement, the change of policy expectation is a major indicator. BlackRock think tank pointed out that the market may have misread China's regulatory policy. China's emphasis on social goals and growth quality rather than quantity in regulation has disturbed some investors. However, policymakers can no longer ignore the slowdown in growth, so China will gradually relax its monetary, fiscal and regulatory policies.
On October 4, this institution stated for the first time that it would increase its holdings of a shares. At that time, BlackRock think tank saw the potential signal of policy relaxation and believed that the economic growth slowdown had reached a level that policymakers could no longer ignore, because it was expected to see a gradual policy relaxation. On October 4, BlackRock first proposed to allocate additional Chinese stocks
In subsequent reports, BlackRock think tank predicted that with the slowdown of the economic cycle, China's monetary and fiscal policies will be moderately relaxed and regulatory policies will not be overweight.
China's asset prospects are bright
valuation attractive
From the perspective of longer-term strategic asset allocation, the institution pointed out that considering the small benchmark weight of Chinese assets and the low typical allocation of Chinese assets by customers, the allocation of large asset institutions should be increased several times before betting on China, and the allocation of government bonds should be even higher.
BlackRock's 2022 annual global economic outlook report points out that China's overall policy position has changed significantly in 2021, moving towards greater state intervention and social goals even at the expense of economic growth. Various regulatory actions and stricter policy positions have worried some investors, but they clearly show this change.
Against this background, BlackRock pointed out that the low starting point of global investors' asset allocation to China is inconsistent with the growing weight of China's economy in the world. According to its estimates, the current allocation in the global portfolio shows that it is too pessimistic about China's economic prospects in the next few years - for example, there will be a long-term stagnation similar to Japan in the 1990s.
Compared with the low global allocation, BlackRock maintains its long-term overweight in Chinese assets. At the same time, the current valuation of Chinese stocks provides sufficient compensation for qualified investors. In the near future, BlackRock believes that the prospect of Chinese assets is relatively bright and maintains a small tactical increase in Chinese stock market. Comparison of stock risk premium between China and the United States (based on MSCI China and US indexes)
In addition, BlackRock also likes Chinese government bonds and believes that in addition to high yields, Chinese bonds are relatively stable in a fixed income environment with scarce yields, and the possible loose monetary policy, stable interest rate policy and potential bond returns all increase the attraction of Chinese bonds.
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(China Fund News)
