During the war between Russia and Ukraine, commodity prices soared and global risk appetite fell; China's domestic assets are less affected by geographical factors. Under the policy of tightening inside and loosening outside, the yield of government bonds rebounded against the trend, but Hong Kong stocks fell sharply, and the allocation value relative to A-Shares increased. The two sessions were held at the weekend. The GDP growth target of 5.5% exceeded market expectations. It is expected that the steady growth policy and strength will remain prominent in the first half of the year, and the certainty of maintaining economic stability will be enhanced.
Last week, the global market was still mainly affected by the situation in Russia and Ukraine, and the overall riskoff trend appeared again. Oil prices rose sharply, driving the Nanhua industrial products index to a new high. Global stock markets still fell, especially European and Hong Kong stocks. US bond yields fell by more than 20bp, and gold prices continued to rise sharply.
For the Chinese market, when commodity prices soared, stocks and bonds fell together. If compared with the time point in mid October last year, the current commodity point is similar, the currency is further loose, the economy is relatively weaker, the real estate has not improved significantly for the time being after the end of the policy, the epidemic is still intensifying, and the yield of government bonds remains at the center of about 2.8%. If the war continues, the oil price remains high and the expectation of steady growth is fermented, the Treasury bond yield may rise further. With the intensification of geopolitical game, the impact on Hong Kong stocks is more obvious than a shares. The Hang Seng Index has fallen by more than 12% in recent three weeks, and the allocation value relative to A-Shares is improving.
This year's two sessions as a whole continued the tone set by the central economic work conference at the end of last year. Under the triple pressure of "shrinking demand, supply shock and weakening expectation", they continued to emphasize maintaining stability and put stable growth in a more important position. Among them, the GDP target is set at 5.5%, which is basically at the top of the market expectation range, Therefore, the central government's confidence in economic growth in 2022 exceeds the average market expectation. According to historical experience, the economic target rate set by the central government at the beginning of the year can be achieved. Although the fiscal deficit of 2.8% is lower than the market expectation, the supplement of various fiscal policies can still maintain a positive orientation as a whole. It is expected that the steady growth policy and strength will remain prominent in the first half of the year, and the certainty of maintaining economic stability will increase.
From the medium-term perspective, we are still cautiously optimistic about the stock market, and Hong Kong stocks have greater opportunities from the index; A shares are more structural opportunities, and undervalued shares are better than overvalued shares. Treasury bond yields may pick up at the current point and remain low and volatile as a whole. In addition, we need to be vigilant against the risk of intensification of geographical conflicts between Russia and Ukraine.
Tips: the development of Russia and Ukraine is more risky than expected
