Wang Junhui, chief investment officer of China Life Insurance Company Limited(601628) insurance (Group) Company: equity assets highlight the long-term allocation value
In 2021, China’s economy achieved rapid growth and achieved new results in high-quality development. The 14th five year plan started well and continued to lead the world’s major economies. However, it also faces the triple pressure of shrinking demand, supply shock and weakening expectation. Looking forward to this year, economic work will be stable and seek progress while maintaining stability. With the active introduction of a series of policies conducive to economic stability, macroeconomic operation will maintain steady development. The favorable factors are that the government has introduced “steady growth” measures in fiscal, monetary and industrial fields, some policies with contraction effect will be more cautious, the impact of the epidemic on the global economy will further subside, the International China industrial chain will be further repaired, and China’s resilience as a super large economy. The adverse factors are that the growth rate of real estate sales and investment has fallen, the high probability of returning to the normal level after high export growth, and the long tail exit of the epidemic continues to inhibit the service industry and consumption. According to comprehensive research and judgment, this year’s economic growth is expected to reach about 5.5%.
for the capital market, this year we focus on three areas of opportunities:
the combination of steady growth and high-quality development. over the past period, China’s infrastructure real estate investment has continued to grow rapidly, and the traditional stable growth space is gradually saturated. In the future, stable growth needs to be strengthened and expanded in many ways. We are more optimistic about the combination of steady growth and high-quality development, including new infrastructure, green investment, electric vehicles, technological transformation and upgrading of manufacturing industry, etc.
industrial upgrading, high-end and international fields. After long-term efforts, China has become a “world factory” with complete industrial chain, and many excellent enterprises have begun to occupy both ends of the industrial “smile curve”. In recent years, the high-end process of China’s manufacturing industry has been significantly accelerated. Strong industrial chains and complementary chains have been strongly supported by policies. A number of excellent enterprises have come to the fore and become leaders of emerging industries. With the effective control of China’s epidemic situation, China’s industrial chain system has shown strong resilience to the world, consolidated the foundation for substantial export growth, and Chinese products have gained more market share and international recognition. It has greater advantages to further expand international space in the future. In this process, the roe of Listed Companies in relevant fields will be further improved and the return on investment will be maintained at a high level.
the withdrawal of the epidemic and common prosperity boosted the consumption field. although the Omicron variant virus brings uncertainty to the epidemic prevention and control, with the continuous acceleration of vaccine and specific drug research and development, it is reasonable to remain generally optimistic about the evolution of the epidemic in the future. It is expected that China’s consumption is expected to be further repaired this year. At the same time, it is conducive to the central government’s strategic deployment of increasing the level of affluence and education, and reducing the residents’ common willingness to save and provide for the aged in the future.
Zhongtai Securities Co.Ltd(600918) chief economist Li Xunlei: global supply chain repair is still uncertain
At the beginning of the epidemic, major economies have released water to deal with it, which is useful in the short term, but the side effects of water release are gradually emerging. Take the United States as an example. In the process of economic recovery, the problems of high inflation and declining labor participation rate have led to the widening of income gap, indicating that water can not solve the structural problems of the economy.
Looking forward to 2022, the Federal Reserve is expected to raise interest rates twice and tighten monetary policy in an all-round way. The United States is facing great downward pressure on the economy, because the income growth of residents from the water released by the Federal Reserve and the Ministry of finance is only temporary and will not continue, which is not a good thing for the U.S. economy driven by consumption. At the same time, under inflationary pressure and the expectation of raising interest rates, the US economy can no longer achieve sustained recovery by continuing to release water. Today, the UK has taken the lead in raising interest rates, but the global epidemic is still repeated, far exceeding expectations. There is still uncertainty about whether the global supply chain can be repaired and whether inflation can fall as scheduled in 2022. If developed countries generally raise interest rates, there will be a net outflow of foreign capital from emerging economies, which can be said to be even worse. It is estimated that the global GDP growth rate in 2022 will drop to about 4% from 5.9% in 2021.
For China, the biggest pressure in 2022 comes from the weakness of real estate. Because real estate is an industry on which China’s economy has been highly dependent for many years, under the continuous effect of the aging population, the decline in the growth rate of urbanization and adhering to the policy of “no speculation in housing”, the growth rate of real estate sales and development investment in 2022 is expected to decline significantly. This needs to be compensated by the increase in the growth rate of infrastructure investment. In fact, it depends on the further enthusiasm of fiscal policy. China’s full caliber fiscal budget revenue is greater than expenditure in 2021, which provides a source for the expansion of fiscal expenditure in 2022.
In addition, PPI is expected to decline significantly in 2022, core CPI is at a low level, and there is room for interest rate reduction. Therefore, the dual support of fiscal and monetary policies will provide guarantee for the realization of the goal of stable growth in 2022.
The Fifth Plenary Session of the 19th CPC Central Committee proposed to form a “new development pattern” in which China’s international double cycle promotes each other. At present, China’s exports have exceeded expectations for two consecutive years, indicating that in addition to some western countries blocking and restricting the export of high-tech products and core technologies to China, the external cycle is generally smooth. The problem seems to lie in the internal circulation. For example, the consumption growth rate is low, the proportion of Finance and real estate in GDP is too high, the development pressure of small and medium-sized enterprises is high and the phenomenon of “lying flat” is prominent. This is the root cause of the poor internal circulation and the obstacle that can not be bypassed by reform. Therefore, it is expected that in 2022, corresponding measures will be taken to promote the reform of income distribution system, support the development of private enterprises and small and medium-sized enterprises, protect employment and expand consumption. In 2022, the annual GDP growth rate will be about 5.5%, which will achieve the goal of steady growth.
Shao Yu, Orient Securities Company Limited(600958) assistant to the president and chief economist: China’s economy presents two “mirror images”
The elasticity of the economy and the persistence of global inflation in the post epidemic era have exceeded expectations. Authoritative institutions such as the IMF have never adjusted the economic outlook data so frequently, and there have never been such great differences in forecasts between different institutions. Our benchmark hypothesis is that the breakthrough of Omicron mutant in the vaccine guarantee system is limited. Even if there is a significant breakthrough, the medical community can develop and issue an equally effective vaccine in a short time, so it will not constitute a new round of impact on the operation of the global economy of the same magnitude as that in early 2020.
looking forward to 2022, globally, the supply side is still the main aspect of the contradiction, and its impact on downstream production and end consumption will gradually appear, but the demand side will also face pressure with the withdrawal of policies. It is embodied in the following three aspects:
First, 2022 is still a year of recovery, but the speed will slow down. Considering the persistence of the shortage economy and the uncertainty of the epidemic situation, as well as the side effects of the accelerated withdrawal of the Federal Reserve’s monetary policy, we tend to believe that the probability of downward correction of the economy in 2022 is higher;
Second, it is difficult to make a substantive change in the situation that manufacturing production is restricted by value chain trade, especially in the first half of the year. Of course, the degree of interference will vary in different countries, such as Germany than the United States;
Third, in terms of inflation, in the short term, the global inflation pressure in 2022 will be less than that in 2021, but the shortage of energy supply, low inventory of goods, rising wage level, recovery of service demand and expansion of capital expenditure are still the four important factors supporting prices. In the medium and long term, taking the “secular stagnation” before the epidemic as the conceptual framework, after the covid-19 era, not only the power of “stagnation” has increased, but also the pressure of “inflation” has increased.
compared with the past two years, China’s economy as a whole shows two “mirror” relationships, specifically:
(1) The mirror image of China’s external economic cycle — from internal rise and external fall to internal fall and external rise. With the gradual withdrawal of overseas super large-scale macro policies, the extraordinary growth of external demand and its driving effect on domestic demand will tend to converge, and may even be compressed beyond expectations. The reason lies in the radical inventory replenishment behavior of enterprises;
(2) As a response, the mirror image of the domestic and foreign policy cycle — from internal and external collection to internal and external release and external collection, China has accumulated a lot and made little progress, but it is difficult to sustain abroad.
Ding Anhua, chief economist of China Merchants Bank Co.Ltd(600036) : major asset allocation
Looking forward to 2022, the global economy will continue to repair under the constraints of the epidemic. The main problem facing the United States and major European countries is upward inflation. On the contrary, China’s economy will still be plagued by “stagnation” and the pressure of “inflation” will be reduced.
In this situation, the main tone of the central economic work held not long ago is to stabilize the word and take “stabilizing the economy” as the premise of “stabilizing the society” and “stabilizing politics”, which once again highlights the central position of the economy in the construction work, which needs to be deeply understood by investors. The bottom line target of economic growth in 2022 should be more than 5%. Therefore, macro policies will strengthen counter cyclical adjustment. Monetary policy will tend to relax and play the role of “precision drip irrigation” in key areas of economic development; Fiscal policy will maintain a positive attitude, cooperate with monetary policy and play a role in stabilizing the economy.
from the perspective of the capital market, combined with the economic situation and policy direction, it is suggested to adopt the strategy of both attack and defense to reduce the attack and enhance the defense.
Firstly, for overseas assets, as the United States enters the window of interest rate increase, interest rate sensitive assets tend to be weak. It is expected that the performance of overseas fixed income assets is relatively weak. Under the background of rising risk-free interest rate, the equity market needs to reduce the income expectation. At the same time, the pace of interest rate increase in the United States may be faster than that in Europe, the US dollar is expected to remain strong, and the performance of non-U.S. currencies, including RMB, is weak, Gold is easy to go down but difficult to go up.
Secondly, for domestic assets, as China mainly faces the risk of “stagnation”, the growth rate of corporate profits is down, so it is also necessary to reduce the income expectation of a shares. The aggressiveness of equity assets in the allocation of major categories is weaker than that in the past two or three years; Accordingly, under the background of “stagnation”, the defense value of fixed income assets in large category allocation has been improved.
Finally, the probability of China’s stock market in 2022 is still a structural market, and there will be no index bull market. At the same time, the market will evolve a certain style feature to the extreme, which is likely to continue to develop along the high boom track, such as new energy, carbon neutralization and hard technology under the growth style.
Lu Zhengwei, chief economist of Industrial Bank Co.Ltd(601166) and chief economist of Huafu Securities: financial force reserves sufficient “ammunition”
In 2021, China’s economy will deliver a brilliant answer with a growth rate of more than 7%. Looking forward to 2022, in the face of the triple pressure of shrinking demand, supply shock and weakening expectation, we will focus on economic construction, strive to stabilize the macro-economic market and welcome the victory of the 20th National Congress of the Communist Party of China.
epidemic prevention and control is scientific and accurate, and residents’ consumption is revitalized. the vaccination rate of covid-19 in China has exceeded 70%. There are frequent good reports of covid-19 drug research, increasingly accurate epidemic prevention and control methods, and the impact of the epidemic on Residents’ consumption behavior is gradually reduced. New energy vehicles and national tide are expected to become the main force leading consumption growth. Under the joint influence of policy guidance and overseas supply chain bottlenecks, the penetration rate of new energy vehicles will exceed 10% in 2021. According to Rogers’s “innovation diffusion curve”, after the penetration rate of new technology reaches 10% ~ 25%, it will officially enter the take-off period. At the same time, with the enhancement of China’s comprehensive national strength, the cultural self-confidence of residents is awakening, and the national tide is booming.
the pace of industrial upgrading has accelerated, and the economic momentum has changed. “those who are new day by day are also advancing day by day.” At present, the global economy has entered the end of the KangBo cycle, and the economies that can make breakthrough innovation are expected to become the leaders of the next KangBo cycle. The double carbon target and covid-19 pneumonia epidemic have accelerated the process of digitization and greening of China’s economy and stimulated the vitality of China’s independent innovation.
macro-control efforts have been strengthened and the time point of policy force has been advanced. under the idea of cross cycle adjustment, the fiscal policy maintains a moderate expenditure intensity in 2021, and the broad fiscal balance may reach 2.76 trillion, and the time point of force is later, which reserves sufficient “ammunition” for the fiscal force in 2022. Monetary aggregate policy and structural policy will work together — in order to further reduce the financing cost of the real economy, there is room for reducing reserve requirements and interest rates; Carbon emission reduction support tools will add power.
The bond interest rate range fluctuated, and the stock market fluctuated. in order to give consideration to steady growth and normal monetary policy space, there is little room for market interest rate to decline and rebound, and it is more likely to fluctuate with the policy interest rate as the anchor range. Under the background of the overall downward profit cycle of enterprises and the overweight of stable growth policy, the stock market may continue to deduce the structural market.
Wang Dan, chief economist of Hang Seng Bank (China) Co., Ltd.: boosting consumption can ensure growth
In the post covid-19 pneumonia era, only China and the United States among the world’s major industrial countries have achieved positive growth. The economic recovery of the two countries is mirrored – China’s recovery is mainly on the supply side, and the recovery of the United States is mainly on the demand side. Therefore, the key words of China’s economic recovery in 2021 have always been “driven by external demand” and “manufacturing first”. Exports have reached a record high in recent months, and industrial profits have maintained a double-digit growth throughout the year. The pace of foreign capital entering China is also accelerating. In 2021, nearly 1 / 4 of the world’s investment flows into China, and the opening of the capital market to foreign investors is unprecedented.
After the outbreak of the epidemic, the global dependence on Chinese production is increasing. We expect this trend to continue in 2022. The reconstruction of industrial chain in developing countries will take at least 1 ~ 2 years. Both the United States and Europe intend to localize some manufacturing industries, but it is difficult to promote them before the global economy normalizes. Because China first controlled the epidemic and took the lead in restoring production, it has become a stabilizer of the global economy. RCEP will be officially launched in 2022 to strengthen China’s position as a manufacturing center in Asia. Countries around the world are launching infrastructure investment plans to boost their economies. As a major exporter of machinery, labor protection products and industrial intermediates, China will benefit from global financial expansion.
We expect China’s GDP growth to reach 5.3% in 2022, falling within the range of potential economic growth rate. The performance of manufacturing investment will be the most outstanding. Energy transformation and industrial chain upgrading will last for several years. The next two or three years will be the stage of accelerating investment.
A major difficulty in 2022 is how to support small and medium-sized enterprises. The epidemic has lasted for two years. Liquidity problems are common in small and medium-sized enterprises, and the support provided by banks and capital markets is limited. Recent policies have been inclined to support service enterprises, including loan extension, tax reduction and fee reduction for small and micro enterprises, but the fundamental solution comes from expanding domestic demand. Consumption is the biggest bottleneck in domestic demand. The most direct way to restart consumption is to directly subsidize consumers. The central bank’s digital currency has previously been piloted in Luohu, Shenzhen and other places to issue digital red envelopes to the public. The central economic work conference held not long ago stressed that the economy in 2022 will be “stable” and that it is necessary to increase income by maintaining growth. The most effective way to boost consumption or maintain growth. Therefore, we expect the application scenario of central bank digital currency to expand this year.
Guo Lei, chief economist of Gf Securities Co.Ltd(000776) : intensive introduction of macro policies is expected
In 2022, there is still endogenous slowdown pressure on the economy. First, there is a ceiling effect on consumption after the epidemic, and the total retail sales of social consumer goods in the normalization stage of prevention and control is significantly lower than that before the epidemic; Second, under the implicit debt resolution and active real estate regulation, the impact of the decline of the construction industry chain represented by infrastructure and real estate continues to pass.
The central economic work conference has set the tone for steady growth. The meeting pointed out that all regions and departments should shoulder the responsibility of stabilizing the macro economy, all parties should actively launch policies conducive to economic stability, and the policy force should be appropriately advanced. Under this clear tone, it is expected that various macroeconomic policies will be intensively introduced in early 2022.
Fiscal policy will play an important role. From the experience in recent years, when the growth rate of fixed asset investment is significantly lower than the growth rate of real GDP, the economy has the characteristics of varying degrees of imbalance, such as 2018, 2019 and 2021; In the years when the growth rate of fixed asset investment is higher than that of real GDP, such as 2016, 2017 and 2020, the macroeconomic stability is relatively stronger. The central economic work conference put forward “ensuring the intensity of fiscal expenditure” and “moderately ahead of infrastructure investment” to seize the “seven inches” of steady growth.
Monetary policy also has some linkage space. The demand for physical financing is still poor, and it is still necessary to increase the strength of the credit stabilization policy. The external environment will be more complex in the second half of 2022, and the first half of the first quarter and the second quarter will be the most appropriate time for further efforts of this round of monetary policy.
The sign of the effectiveness of this round of steady growth is “consolidating the capital and strengthening the yuan”: first, the investment rate of traditional sectors should return to equilibrium, and second, the investment and financing framework of emerging sectors should be formed. The former represents the economic stock, that is, the short-term re stabilization of Finance (public sector), employment (resident sector) and credit (enterprise sector); The latter represents economic increment, that is, carbon emission (environmental cost), factor matching (resource cost) and long-term return on assets (capital cost) are further optimized in the medium term.
Last year, the overall style of the stock market was stable, and the asset performance was roughly consistent with the changes in corporate profits. In the first three quarters, the profits of Industrial Enterprises above designated size increased by 18.8% on average in two years, and Wande a increased by 18.3% on average in two years, basically in the same order of magnitude. Effective steady growth will bring the stabilization expectation of economic and corporate profits, so as to promote the “investment clock” to the next stage.
Yang Changcheng, chief economist of Shenwan Hongyuan Group Co.Ltd(000166) Securities Research Institute: promote the reform of market investment side
2021 is the year of convergence between China’s two centennial development goals. We have ushered in the centennial of the founding of the party with our remarkable achievements in winning the battle against poverty and building a well-off society in an all-round way. As the opening year of the 14th five year plan, China issued the 14th five year plan for national economic and social development and the outline of long-term goals for 2035, leading five-year development with long-term goals.
in 2022, China will usher in the smooth convening of the 20th National Congress of the Communist Party of China. Under the new development stage, China’s economic and social transformation and development put forward higher requirements for the capital market. The capital market will strengthen its service ability to the national strategy with the help of continuous reform and innovation.
Taking the comprehensive registration system reform as an opportunity and the expansion and development of the Beijing stock exchange as a starting point, the capital market will accelerate the systematic reform, improve the multi-level capital market system, and provide services for more specialized, special and innovative small and medium-sized enterprises.
Driven by innovation, the capital market will continue to promote the differentiated development among the science and innovation board, the gem and the Beijing stock exchange, provide differentiated investment and financing services for different types of scientific and technological innovation enterprises, guide more capital to invest in small, new, early and science and technology, promote more short-term funds to be transformed into long-term innovation capital, and help form a virtuous circle of science and technology, industry and capital.
Focusing on the consumption led domestic demand structure, the capital market will start from the new relationship between supply and demand, guide capital to create demand in an orderly manner, guide and support the development of new consumption formats by setting up a “traffic light” system for capital, and prevent the disorderly expansion of capital.
Focusing on the industrial changes brought about by science and technology and digitization, the capital market should take the market-oriented reform of capital factors as an opportunity to promote the capitalization of innovation factors such as science and technology and data, improve the allocation efficiency of innovation factors, and promote the development of industrial digitization and industrial modernization.
Focusing on the dual carbon strategy, the capital market should play a role in resource allocation, innovate more green financial service tools, guide more capital to green industries, and support the green transformation and development of economy and society. Focusing on the construction of common prosperity, the capital market should strengthen the market investment function with the help of investment side reform, guide residents to obtain relatively stable investment income with the help of long-term equity and debt investment, and improve residents’ property income.
“all the past is a prelude”. Standing at a new starting point, the capital market will also be stable and far-reaching in reform and innovation in 2022 and usher in new development.
(Securities Times)
