What is the basis for steady growth in 2022? Judging from the measures taken by various ministries, commissions and local governments to implement the central economic conference at the end of the year, stabilizing investment is undoubtedly the main starting point for stable growth in the short term. Among them, it is most urgent to start infrastructure investment as soon as possible. The introduction of documents in this regard since mid December alone has set a record. So, under such urgent requirements, can infrastructure stocks usher in a strong performance in the first quarter of 2022?
We resumed the trend of infrastructure stocks relative to the market in history. As shown in Figure 1, the period when infrastructure stocks continue to outperform the market is rare in history. The only three periods are April 2008 November 2008, August 2014 September 2015 and may 2016 April 2017. It shows the specific characteristics of the trend of infrastructure stocks and the market in these three periods. It can be seen that the first round of A-Shares coincided with a bear market, and the infrastructure stocks can outperform the market thanks to their small decline; In the latter two periods, infrastructure stocks outperformed the market in the rising process of a shares, so it has more reference significance in the resumption of trading.
Infrastructure stocks outperformed the market during the rising period of a shares, not by profit improvement, but by valuation repair. In the two periods from August 2014 to September 2015 and from May 2016 to April 2017, the profitability of infrastructure stocks relative to the market did not increase significantly. On the contrary, the profitability fell in the latter period; However, during these two periods, the P / E ratio of infrastructure stocks relative to the market has increased faster, leaping over the average p / E ratio of the market, that is, they realize their excess return completely by valuation repair.
What factors prompted the valuation repair of infrastructure in the above two periods?
First, infrastructure investment has made efforts to hedge the decline of real estate investment. This is the background that infrastructure stocks outperformed the market from August 2014 to September 2015. As shown in, real estate investment has stepped into a rapid downward track since the second half of 2014. In the same period, benefiting from the development of traditional infrastructure represented by railway infrastructure, the cumulative year-on-year growth rate of infrastructure investment has continued to be around 20%, thus replacing real estate and becoming the main starting point of steady growth in 2014-2015. Therefore, the upward boom of traditional infrastructure in the period of economic downturn has contributed to the valuation repair of infrastructure stocks.
Second, the approval of major infrastructure investment projects by the central government has been accelerated. As shown in, during the above two periods when infrastructure stocks outperformed the market, the amount of fixed asset investment projects approved by the national development and Reform Commission increased significantly. As these projects belong to the central government's expenditure projects at the same level, and the major projects of the central government will not have money and other projects, once approved, accelerating the development of infrastructure investment has a clear signal significance.
Third, the credit expansion of shadow banks. As shown in, infrastructure stocks outperformed the market from May 2016 to April 2017, coincided with a round of rapid recovery of shadow bank financing, and maintained the rapid growth of infrastructure investment through the public-private partnership (PPP). In particular, PPP ushered in a period of rapid development from 2016 to 2017, the landing rate of PPP projects increased month by month, and the total investment doubled in more than a year.
Based on the above resumption, we believe that the performance of infrastructure stocks in the first quarter of 2022 is worth looking forward to. As mentioned above, with the recent intensive deployment of various ministries and local governments, the strength of infrastructure investment in the first quarter of 2022 is expected to hedge the decline of real estate to a certain extent; At the same time; The amount of fixed asset investment projects newly approved by the national development and Reform Commission also rebounded significantly in November. The only uncertainty is whether the financing volume of shadow banks can recover. However, from the latest trend, Some local governments are re encouraging the private sector to participate in PPP infrastructure projects (such as the notice on accelerating the high-quality development of the cooperation mode between government and social capital issued by Hainan Province on December 22). Therefore, under these favorable conditions, the infrastructure stocks with a historical position in PE relative to the market are expected to receive valuation repair in the first quarter of 2022.
Risk tip: the epidemic spread exceeded expectations, and the policy hedging economic downturn was less than expected
