Main points
In 2022, China's economy will face demand side pressures such as the weakening of global economic growth momentum, weak recovery of consumption and the decline of the growth trend of traditional infrastructure. The economic cycle will change from stagflation to recession. At this stage, the downward pressure on the economy increased. In the same period, it is expected that the PPI will gradually decline and the ppi-cpi scissors gap will narrow; The demand for "stable growth" of macro policy is strong. It is expected that the fiscal policy will be overweight. There is a certain loose space for monetary policy, and the probability of reducing reserve requirements is large. Although there is space for interest rate reduction, there is great uncertainty in time and amplitude.
From the perspective of economic cycle, the economy will enter a similar recession in 2022, so it is necessary to reduce the income expectation. According to the historical law of nearly three rounds of complete investment clock, in the early stage of similar recession, the investment risk of A-share market is greater than the opportunity. In the late stage of similar recession, the stock market leads the economy to the bottom, and the bull market slowly opens. This is a good time window for A-share investment. At present, the economy is in the economic stagflation period of the investment clock cycle. It is expected to enter the quasi recession period in the first half of 2022, and the income expectation will be reduced throughout the year.
From the perspective of A-share profitability, historically, the wind all a index usually went down with the decline of roe, and rebounded before the bottom of roe. At present, the roe of all A-Shares began to decline after peaking in the second quarter of 2021. Considering the current cycle stage of the whole Chinese economy and the weak demand environment, it is expected that the roe of A-Shares will be difficult to turn up in the short term, which will also bring great pressure to A-Shares in 2022.
The central bank's monetary policy will disturb the market. Experience shows that in the early stage of economic recession, a slightly relaxed monetary policy may reduce the downward pressure on A-Shares and briefly stimulate the market to rise slightly, but it can not change the downward trend of the market. The bottom of the market often appears in the late stage of economic recession.
Overall, we believe that the risk of A-share investment in 2022 is greater than the opportunity, and suggest investors to reduce their income expectations and actively look for structural opportunities. In terms of timing, in the second half of 2022, when the external fed ends its table expansion, interest rate hike and other uncertain factors, if China's economy shows signs of improvement, A-Shares will begin to usher in a new round of medium and long-term investment opportunities.
In terms of industry allocation: the study on the inflation period of chase found that in the period of substantial upward inflation, cyclical industries and monopoly industries led the increase, finance and technology manufacturing were relatively backward, and consumption was at the bottom; During the downward period of inflation, the leading industries are more from downstream industries such as consumption and booming industries. We expect that China's PPI will gradually decline and CPI will rise moderately in 2022. Therefore, in terms of industry configuration, we recommend paying attention to weak cycle (military industry, medicine and Biology), mass consumer goods industry (food and beverage, household appliances) and booming track industry (power equipment, electronics, beauty care).
Theme Investment: we think we can focus on the two main lines of national strategic tone and future development trend, In terms of national strategic tone, we can focus on carbon peak and carbon neutralization (wind power, photovoltaic, nuclear power, environmental protection, energy storage, etc.); in terms of future development trend, we can focus on intelligent vehicles (panel, chip manufacturing, lithium battery, circuit system, electronic control, motor, cloud computing, high-precision map, etc.), metauniverse (cloud computing, artificial intelligence, chip, panel, etc.).
Risk tips: China's economy is falling faster than expected, macro policies are less than expected, overseas liquidity tightening is more than expected, China's inflation is less than expected, the spread of the epidemic is more than expected, and the profits of listed companies are lower than expected.
