The central economic work conference held in the early stage released a more positive policy attitude, and the recent measures such as the central bank’s LPR reduction also sent a relatively clear easing signal. Combined with the above environment, we believe that although the recent performance of the market is slightly depressed, there is no need to be too pessimistic. from historical experience, the market tends to gradually turn positive in the period of more clear policy implementation or significant improvement of forward-looking indicators. We believe that the short-term “steady growth” policy is expected to be implemented gradually in the future. In the medium term, the cycle of growth and policies at home and abroad will be reversed again in 2022, and structural trends such as valuation and liquidity support, industrial upgrading and so on are expected to support market performance.
In terms of style, we estimate that the short-term performance of track growth stocks may be restrained due to large gains, high valuations and expectations and heavy overall institutional positions, while the fields related to the “stable growth” policy may continue to show relative toughness , and the market is still expected to show the style characteristics of “big strength and small weakness”; After the growth expectation gradually stabilizes and the “steady growth” transaction cools down, the market may return to the growth style. We roughly estimate that the time point is 3-6 months later.
industry configuration suggestions: the configuration continues to tilt towards the policy expectation and the middle and downstream direction
1) Areas potentially supported by marginal change or development of policies, including industrial chains related to stable demand for infrastructure and real estate (construction, building materials, household appliances, home furnishings, 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.
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.
market review : the market made a slight correction, and the “steady growth” plate showed toughness
At the beginning of this week, the one-year LPR was lowered by 5 basis points, which was relatively flat in the stock market. In the following trading days, under the comprehensive influence of the liquidity environment near the end of the year, new changes in the epidemic situation outside China and the event factors of the new energy vehicle industry chain, the overall market performance was relatively depressed, and the Shanghai Composite Index fell by 0.4% weekly, The market continued to trade at trillion yuan per day, but the daily average level fell below 1.1 trillion yuan, and the northward capital turned into a net outflow of 1.22 billion yuan. In terms of style, the blue chip sector showed resilience, and the partial growth style was significantly corrected. The CSI 300 fell by 0.7%, and the gem index and Kechuang 50 fell by 4.0% and 2.9% respectively this week. At the industry level, consumer led the rise as a whole, with fundamentals expected to recover or better agriculture, forestry, animal husbandry, fishery, food and beverage leading the rise; Building materials related to steady growth also performed well; The new energy automobile industry chain was significantly affected by multiple factors, and the power equipment, new energy and non-ferrous metals decreased significantly.
Market Outlook: don’t be pessimistic, “steady growth” continues to work, and pay attention to the main line of “steady growth”.
In the “steady growth” will become a new market main line “released on December 7, we suggested that” the end of the year to the beginning of next year is an important window period for policy steady growth, “steady growth” is expected to become a new main line of trading in the next 3-6 months, while the growth style of A-Shares with large early growth may be temporarily restrained “, and the market may show a pattern of” great strength and small weakness “. The prominent change in the market this week is that the relevant sectors of “steady growth” performed well, and the growth style led by the strong new energy vehicle industry chain this year was significantly weakened. In the near future, the market is still facing some uncertainty: in China, there is still pressure on growth, and the pressure on real estate and debt has not been completely relieved; Overseas, the Omicron epidemic is still spreading rapidly, U.S. inflation is still rising higher than expected, and the Federal Reserve has clearly tightened monetary policy. Under the interference of China US relations, some industries often encounter unexpected disturbances. in this environment, the central economic work conference held in the early stage released a more positive policy attitude, and the recent measures such as the central bank’s LPR reduction also sent a relatively clear easing signal. Combined with the above environment, we believe that although the recent performance of the market is slightly depressed, it does not need to be too pessimistic. From historical experience, the market tends to gradually turn positive in the period of more clear policy implementation or significant improvement of forward-looking indicators. we believe that the short-term “steady growth” policy is expected to be gradually implemented in the future. Recently, there have been more active policies in the real estate market in some regions, and the decline in transactions has converged. The regular monetary policy meeting of the central bank in the fourth quarter also added new expressions such as “give full play to the dual functions of the aggregate and structure of monetary policy tools, be more proactive and promising, and increase support for the real economy”, The follow-up needs to pay close attention to the progress in bank credit, total social financing, project approval of the national development and Reform Commission, potential adjustment of financial loans and real estate supply and demand policies, indemnificatory housing, etc; In the medium term, the cycle of growth and policy at home and abroad will be reversed again in 2022, the Chinese market is in a favorable position, the overall valuation of the Chinese market is not high, there is still support for loose liquidity, and structural trends such as industrial upgrading and consumption upgrading continue, which are expected to support market performance. In terms of style, we estimate that the short-term performance of track growth stocks may be restrained due to large gains, high valuations and expectations and heavy overall institutional positions, while the fields related to the “stable growth” policy may continue to show relative toughness , and the market is still expected to show the style characteristics of “big strength and small weakness”; After the growth expectation gradually stabilizes and the “steady growth” transaction cools down, the market may return to the growth style. We roughly estimate that the time point is 3-6 months later. pay attention to the following recent progress:
1) the central bank lowered LPR . This week, the central bank announced that the one-year LPR was cut by 5bp to 3.80%. This LPR interest rate cut is the space left for a series of debt cost savings due to the two RRR cuts, one structural interest rate cut and the decline of interbank certificate of deposit interest rate since June. Considering that the bank loan interest rate is close to marketization and the average loan interest rate has decreased significantly, the easing signal significance of LPR may be greater than the practical significance, The deposit reserve ratio and interest rate may be further lowered in the future;
2) marginal repair of the real estate market. recently, some regions have successively issued documents to encourage stable real estate. For example, Jilin Province has stated that it will guide cities and counties to carry out house purchase subsidies and loan interest discounts, and support farmers to buy houses in cities [1]; Wande high frequency data show that second-hand housing transactions in first tier cities such as Beijing have stabilized slightly;
3 ) new regulations on overseas listing. the CSRC solicited public opinions on the relevant systems and rules of overseas listing, made it clear that vie structure enterprises that meet the compliance requirements can be listed overseas after filing, and made it clear that under the circumstances of equity incentive, overseas direct issuance and listing can be issued to specific domestic entities; Further relax the currency restrictions on overseas fund-raising and dividend distribution to meet the needs of enterprises to raise RMB abroad. In addition, the Shanghai Shenzhen Hong Kong Stock Exchange announced the expansion of the interconnection target to the listed ETF, and the preparation period may take about six months. These developments have made clear China’s firm determination to promote the expansion and opening of the capital market, and also helped ease the recent market concerns about the tightening of overseas listing supervision.
4) overseas : the core PCE of the United States in November was 4.7% year-on-year, higher than the market expectation and hit a new high in recent 30 years; The spread of Omicron virus overseas has accelerated, and the number of new cases in Britain has reached a new high. Early research data in some countries show that the risk of hospitalization is lower than that of delta virus strain [2]. At the same time, covid-19 oral specific drug is accelerating its approval; The US $1.75 trillion fiscal expenditure bill was blocked [3], including $550 billion in investment in clean energy and climate change, which became part of the reason for the correction of the new energy vehicle sector this week.
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 infrastructure and real estate (construction, building materials, household appliances, home furnishings, 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.
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 and details of fiscal policy; 2) Overseas market supervision; 3) Progress of local epidemic situation in China and overseas variant virus; 4) US policy exit rhythm and inflation data.
(CICC strategy)
