Review of A-share market in 2021: in 2021, the A-share market showed an overall shock trend, with accelerated industry rotation and intensified structural differentiation, Small and medium-sized stocks have outstanding characteristics (affected by the change of investor structure, the increase of abundant market liquidity, capital game, investor learning effect and other factors). As of December 17, 2021, the Shanghai stock index and gem index were 4.6% and 15.8% respectively. In terms of industry, the prosperity of the new energy industry chain continued to be high throughout the year, and the upstream resource products sector benefited from the price increase of upstream products brought by the tight energy balance in the first three quarters , the overall annual growth performance is outstanding, and the overall performance of the downstream consumer goods sector is poor.
General trend study and judgment: “n” type shock. In terms of rising time, the market structure characteristics of slow bull are gradually taking shape – improved investor structure, closer industry structure to U.S. stocks, abundant liquidity support, overseas capital inflow, inhibition of the real estate industry and accelerated allocation of resident funds to A-Shares bring liquidity to a shares, which helps to prolong the bull market time. In terms of rising space, the market probability remains volatile, showing an “n” trend, making it more difficult to make money, and the market style will be more balanced in 2022. In the first quarter, the policy was optimistic, the logic of some industries was difficult to verify in the short term, and the strength of RMB was conducive to the rebound of core assets. There may be some risks in the market in the second and third quarters, mainly due to the tightening of overseas monetary policy, the increase of the Federal Reserve’s expectation of raising interest rates in mid-2022, the congestion of transactions in some tracks, the decline of profitability in some industries, etc. Most investment opportunities are concentrated in the first half of 2022, while the second half will be relatively flat.
Market style: the style of large and small discs is more balanced and pays more attention to certainty. In 2022, the market value of large and medium capitalization companies will tend to be balanced. On the one hand, opportunities for small and medium cap stocks are still in existence. Special new small and medium-sized enterprises will receive more policy support. On the other hand, the risk of related stocks in the large cap and share market has been released in 2021, and the bubble has been squeezed. Its valuation has declined, and there will be room for improvement next year. In the stage of overall market shock or continuous decline, the correlation between stock price and profit is significantly enhanced. At this time, investors’ risk preference tends to decline, speculative demand weakens, and their attention to fundamentals increases. High quality stocks with deterministic performance and good growth momentum are more likely to be favored by investors. Therefore, more attention is paid to certainty in 2022. There will be significantly more event driven opportunities in 2022 than in 2021.
Configuration mainline in 2022:
Main line 1: high prosperity + high-end manufacturing sectors that continue to benefit from policies, such as military industry, new energy, green power, etc. The industry boom is high and the logic is smooth, and the structural differentiation of the new energy industry chain will be greater in 2022.
Main line two: the consumption cycle of upward cyclical and rebound opportunities, such as Baijiu, medical services, agriculture, forestry, animal husbandry and fishery, etc., are suitable for buying at bargain prices.
Main line 3: the industry cycle is upward + the technology sector with great impact on market sentiment, such as computers, media, semiconductors, etc., have rebound power, and attention should be paid to the investment rhythm.
Main line 4: undervalued + offensive and defensive financial sector.
Risk tip: the risk of significant policy tightening and the risk of economic downturn exceeding expectations.
