the core change in the market this week is the strengthening of the expectation of stable policy growth , and the market performance continues to evolve around this main line. The central economic work conference continued the spirit of the previous meeting of the Political Bureau and stressed that we should continue to do a good job in the work of “six stabilities” and “six guarantees”. Next year’s economic work should be stable and seek progress while maintaining stability.
looking ahead, we believe that we still need to continue to pay attention to the “reversal” of the global economic cycle and the new changes of the epidemic. At present, China’s capital market is in a more favorable environment compared with the world. Under the expectation of “stable growth”, we should pay attention to the progress of policy countercyclical regulation in the future. In terms of style, with the possible implementation of social finance credit and financial planning and deployment, we believe that the main line of “stable growth” will continue. Since the beginning of the year, some relatively strong manufacturing growth styles may be relatively backward temporarily, and the market style may temporarily show a pattern of “big strength and small weakness”.
industry configuration suggestions: the configuration continues to tilt towards the policy expectation and the middle and downstream direction
Specifically focus on three directions: 1) areas potentially supported by marginal policy changes or efforts, including industrial chains related to stable demand for real estate (home appliances, home furnishings, building materials, real estate, etc.), potential areas of consumption support, securities companies, etc; 2) for the middle and lower reaches consumption that has been adjusted this year, the valuation is not high, and the medium and long-term prospects are still clear, choose stocks from bottom to top, including food and beverage, medicine, household appliances, light industry and home furnishings, automobiles and parts, Internet and media, agriculture, forestry, animal husbandry and fishery, etc; 3) may be restrained in the short term and focus on the manufacturing direction of high prosperity in the medium term, including new energy vehicles, new energy and scientific and technological hardware semiconductors. Stock allocation is selected according to the changes of prosperity degree of industrial chain links, with special attention to manufacturing opportunities in transmission and distribution upgrading, auto parts and other links.
Since mid September, we have continued to remind the risks of the upstream traditional cycle sector. So far, the stock price has fallen sharply and may rebound periodically in the short term. However, considering that the total demand is not strong, it may not be the main direction of allocation.
market return Gu : the index has been positive for five weeks, and the turnover has increased slightly
At the beginning of the week, the meeting of the Political Bureau and the reduction of the reserve requirement boosted the expectation of “steady growth” in the market, driving the recovery of investor sentiment. The average daily turnover of A-Shares increased slightly to around 1.2 trillion yuan, and the Shanghai stock index also reached the largest weekly index increase of 1.6% since September, closing positive for five consecutive weeks. Northbound funds recorded the largest weekly net inflow of 48.8 billion yuan since its opening, of which 21.6 billion yuan was recorded on Thursday. In terms of style, the market index CSI 100 rose 4.0%, and the growth enterprise market index fell 0.6%. At the industry level, catering tourism led the market in the context of expected changes in the epidemic situation; Under the expectation of “steady growth”, financial, real estate and other related sectors rebounded significantly, and household appliances, food and beverage all performed well; Military and coal industries performed poorly.
Market Outlook: clear policy statement, “steady growth” may drive style switching and valuation repair
The core change in the market this week is the strengthening of the expectation of stable policy growth, and the market performance continues to evolve around this main line. The central economic work conference continued the spirit of the previous meeting of the Political Bureau and stressed that we should continue to do a good job in the work of “six stabilities” and “six guarantees”. Next year’s economic work should be stable and seek progress while maintaining stability. Looking ahead, we believe that we still need to continue to pay attention to the “reversal” of the global economic cycle and new changes in the epidemic situation. At present, China’s capital market is in a more favorable environment compared with the world. Under the expectation of “steady growth”, we should pay attention to the progress of policy countercyclical adjustment in the future. In terms of style, with the possible implementation of social finance credit and financial planning and deployment, we believe that the main line of “stable growth” will continue. Since the beginning of the year, some relatively strong manufacturing growth styles may be relatively backward temporarily, and the market style may temporarily show a pattern of “big strength and small weakness”. Recent progress in the following aspects should be noted:
1) the central economic work conference continued to send the signal of “steady growth”. the central economic work conference continued the tone set by the previous Politburo meeting on economic work in 2022 and continued to emphasize “stable growth”. The meeting stressed the need to continuously improve people’s livelihood, strive to stabilize the macro-economic market, keep the economic operation within a reasonable range and maintain the overall social stability; It was stressed that all regions and departments should shoulder the responsibility of stabilizing the macro economy, all parties should actively launch policies conducive to economic stability, and the policy force should be appropriately advanced. This is more clearly expressed in terms of implementation strength and rhythm requirements, which may indicate that the steady growth policy should have strength and rhythm. Specific measures may relax monetary and fiscal policies, and specific aspects include maintaining appropriate liquidity support, tax reduction and fee reduction, appropriate advance of infrastructure construction, release of reasonable housing demand, construction of indemnificatory housing, etc. Cyclical policies focus on steady growth, while structural adjustment policies and reforms should focus on quality development. These measures at least include: a) stimulating the vitality of market players, strengthening antitrust and unfair competition, and strengthening intellectual property protection; b) Smooth the circulation of national economy; c) Science and technology policies should be solidly implemented; d) The reform and opening-up policy should activate the driving force of development, including comprehensively implementing the stock issuance registration system and completing the three-year action task of state-owned enterprise reform; e) Social policies should stick to the bottom line of people’s livelihood, and so on. In addition, the conference announcement also mentioned the strategic objectives and practical approaches of common prosperity; We should give full play to the positive role of capital as a factor of production and effectively control its negative role; We should correctly understand and grasp the supply guarantee of primary products and speed up the construction of waste recycling system; Correctly understand and grasp the prevention and resolution of major risks; Correctly understand and grasp carbon peak and carbon neutralization.
2) November economic data showed that imports and exports exceeded expectations, PPI was still sticky and credit was still weak. in November 2021, exports increased by 22% year-on-year and imports increased by 31.7% year-on-year, higher than market expectations. China’s exports may be supported by the Christmas season and the bullwhip effect under the recession of the epidemic. In November, the PPI fell from 13.5% to 12.9% year-on-year, higher than the 12.0% expected by the market, and the CPI increased from 1.5% to 2.3% year-on-year. Compared with the previous month, the decline of PPI was mainly contributed by coal mining and beneficiation, ferrous metal smelting and non-ferrous metal smelting, but the recent infrastructure is expected to rise and the steel price rebounded. In November, social finance increased by 2.6 trillion yuan; New credit of 1.3 trillion yuan was also lower than the consensus expectation of 1.6 trillion yuan; The year-on-year growth rate of social finance slightly rebounded from 10.0% in October to 10.1% in November. Against the background that the goal of steady growth has been clearly defined, the financial data in November showed that the progress of steady credit was slow, because although residents’ housing loans recovered moderately, the medium and long-term loans of enterprises were still in the doldrums; At the same time, the loan growth momentum of small and micro enterprises that have been driving credit growth in the past has been gradually slowing down, and the space for bill impulse is also gradually narrowing. We remind investors to continue to pay attention to the follow-up steady growth financial force;
3) due to the fluctuation of RMB exchange rate, the central bank raised the foreign exchange deposit reserve ratio. previously, affected by strong exports and the flood of domestic US dollar liquidity, the RMB broke the important psychological threshold of 6.35 against the US dollar for the first time this year. And then quickly went down and broke 6.34 On the evening of December 9, the people’s Bank of China decided to increase the foreign exchange reserve ratio of financial institutions by 2 percentage points from December 15, 2021, and increase the foreign exchange reserve ratio from the current 7% to 9%. This is the second time since the increase in the foreign exchange reserve ratio was announced on May 31 this year. After the central bank announced an increase in the foreign exchange reserve ratio, the offshore RMB fell below the 6.38 mark against the US dollar. We believe that the central bank’s move may be to maintain the two-way stability of the exchange rate. It is suggested to pay attention to the follow-up exchange rate trend and its possible impact on the capital market.
bank industry suggestions : configuration continues to tilt towards policy expectations and midstream and downstream
Specifically, we should focus on three directions:
1) Areas potentially supported by marginal change or development of policies, including industrial chains related to stable demand for real estate (household appliances, home furnishings, building materials, real estate, etc.), potential consumption support areas, securities companies, etc;
2) For the middle and lower reaches consumption that has been adjusted this year, the valuation is not high, and the medium – and long-term prospects are still clear, choose stocks from the bottom up, including food and beverage, medicine, household appliances, light industry and household appliances, automobiles and parts, Internet and media, agriculture, forestry, animal husbandry and fishery, etc;
3) It may be restrained in the short term and pay attention to the manufacturing direction with high prosperity in the medium term, including new energy vehicles, new energy and scientific and technological hardware semiconductors. It selects shares and configures them according to the change of prosperity degree of industrial chain links, with special attention to the manufacturing opportunities in transmission and distribution upgrading, auto parts and other links.
Since mid September, we have continued to remind the risks of the upstream traditional cycle sector. So far, the stock price has fallen sharply and may rebound periodically in the short term. However, considering that the total demand is not strong, it may not be the main direction of allocation.
The above three directions may overlap slightly, of which the first direction is more phased and needs to pay more attention to the policy rhythm.
recent concerns:
1) Specific measures of steady growth policy; 2) Details of fiscal policy; 3) Overseas market supervision; 4) Progress of local epidemic situation in China and overseas variant virus; 5) US policy exit rhythm and growth data.
(CICC strategy)
