looking forward to the future, we believe that the supply risk caused by short-term geopolitical events and other factors may still continue to ferment , the probability of overseas “stagflation” increases, and we still need to closely track the progress of geopolitical situation and the risks of supply shortage and liquidity brought by these factors. The impact of these factors on market sentiment may still need to be further digested, The market turnaround may occur after the marginal easing of macro risks such as inflation and geopolitics.
in the medium term, the Chinese market may be relatively resilient : 1) China is in a relatively favorable growth and policy cycle, “steady growth” policy reserve space is relatively sufficient, and the growth may gradually improve around the second quarter; 2) The valuation of China’s market is at a relatively low historical level, which is also attractive compared with other major markets; 3) At present, as an important manufacturing country in the world, China has the largest and relatively complete industrial chain in the world. The inflation pressure may be relatively controllable, and the Chinese market may be relatively more resilient in the global supply risk structurally, the short-term undervalued “steady growth” sector may have relative benefits. After the macro risks gradually subside, the high boom growth fields and the middle and lower reaches manufacturing industry squeezed by costs may usher in a turnaround
currently focus on three directions:
1) potential support areas for policy development, including infrastructure, real estate, stable demand related industrial chains (building materials, construction, household appliances, home furnishings, etc.), brokerage finance, etc;
2) for the middle and lower reaches consumption with many adjustments, low valuation and clear medium and long-term prospects in 2021, choose stocks from bottom to top, including household appliances, light industry and household appliances, automobiles and parts, agriculture, forestry, animal husbandry and fishery, medicine, etc;
3) the manufacturing growth sector, including new energy vehicles, new energy and technology hardware semiconductors, has released some risks, and the turnaround is waiting for the marginal mitigation of overseas “inflation” risk.
market return Gu : index fluctuated sharply, and funds flowing north obviously
Affected by multiple factors such as the rising supply risk caused by the situation in Russia and Ukraine, abnormal fluctuations in the prices of bulk commodities such as crude oil and nickel, and the regulatory risk of overseas Chinese stocks, the market fluctuated widely this week, with the Shanghai index falling 4.0% and 8.4% weekly. The average daily turnover of A-Shares was enlarged to nearly 1.1 trillion yuan. The net outflow of northbound funds this week was 36.3 billion yuan, the third largest weekly net outflow since its opening. In terms of style, the market showed a general decline this week, with the CSI 300 and gem indexes falling 4.2% and 3.0% respectively. In terms of industry, the heavy positions of institutions with large adjustment range in the early stage were relatively resistant to decline, while the decline of power equipment, new energy, medicine, food and beverage was small; Consumer services, which were greatly affected by the epidemic, and household appliances, which were impacted by the rise in costs and prices, led the decline; The relatively strong non-ferrous metals and petrochemicals in the early stage also performed poorly.
Market Outlook: wait for the “bottom of the mood”, undervalued value and “steady growth” main line may have relative benefits
Recently, the market is facing multiple internal and external pressures and adjustments: 1) geopolitical risks increase the risk of global supply, and the prices of bulk commodities represented by crude oil and some metals rise. Considering that Russia and Ukraine are major countries in the world of important resource products, the supply impact is large and may be difficult to recover soon, high inflation may inhibit the total demand in the future, and the market’s concern about “stagflation” is rising. 2) China’s epidemic situation is repeated in many places, which will still drag down the total economic demand. High frequency data also show that the effect of the “steady growth” policy is not obvious; 3) The recent continuous correction may lead to stop loss or redemption of some investors. The enlarged market transaction shows that negative feedback may be part of the reason for the increased volatility last week looking ahead to the future, we believe that the supply risk caused by short-term geographical events and other factors may continue to ferment, and the probability of overseas “stagflation” increases. We still need to closely track the progress of the geographical situation and the resulting supply shortage and liquidity risks. The impact of these factors on market sentiment may still need to be further digested, The market turnaround may occur after the marginal easing of macro risks such as inflation and geopolitics. In the medium term, the Chinese market may be relatively resilient: 1) China is in a relatively favorable growth and policy cycle, and the reserve space for the “steady growth” policy is relatively sufficient. The follow-up “steady growth” policy will continue to work, and the growth may gradually improve around the second quarter; 2) The valuation of China’s market is at a relatively low historical level, which is also attractive compared with other major markets. The forward P / E ratio of about 10 times of the Shanghai and Shenzhen 300 index is significantly lower than the historical average, the equity risk premium is gradually close to the opportunity range, and the pressure of early structural overvaluation has been significantly relieved in the near future; 3) Combined with the experience of Japan in the 1970s and 1980s, we believe that China, as an important manufacturing country in the world, has the largest and relatively complete industrial chain in the world, the inflation pressure may be relatively controllable, and the Chinese market may be relatively more resilient in the global supply risk structurally, the short-term undervalued “steady growth” sector may have relative benefits. After the macro risks gradually subside, the high boom growth fields and the middle and lower reaches manufacturing industry squeezed by costs may usher in a turnaround recent progress in the following aspects:
1) financial data in February was lower than expected , supply risk has a gradual impact on prices 2 added 1.19 trillion yuan of social finance in February, significantly lower than Wande’s consensus expectation of 2.2 trillion yuan. Weak credit is the main drag. The medium and long-term loans of residents have negative growth for the first time since 2008. The medium and long-term loans of new enterprises merged from January to February have decreased by about 500 billion yuan compared with the same period in 2021, reflecting that the effect of the current real estate stabilization policy has not improved significantly, and the financing demand of enterprises is still weak. In February, PPI and CPI rose by 0.6% and 0.5% month on month respectively, which may have gradually reflected the impact of external supply shocks and bulk price increases. The economic data from January to February will be disclosed in the near future, focusing on whether the weak data will further add weight to the steady growth policy.
2 ) many listed companies disclose the operating data from January to February this week, more than 60 listed companies reported 1-2 month business data, including leading companies in semiconductor, photovoltaic, power battery and CXO industries. The profit growth of the leading companies in the industry chain is more obvious. This reflects that the industry boom is still relatively high, and the growth trend of Baijiu, chemical industry and non-ferrous metals industry is also good.
(3) the latest progress in growth policy.
this week, the central bank announced that it would turn over more than 1 trillion yuan of balance profits to the central government according to law for tax rebates and increased transfer payments to local governments. This is a coordinated easing of Finance and money. While supporting finance, it also increased the supply of basic money. This week, Zhengzhou issued the opinions on promoting the monetary resettlement of shed Reform [1], further activating the demand for house purchase and housing consumption. Combined with the large decline in real estate sales and investment from January to February, it is still worth paying attention to whether more cities will launch the policy of stabilizing real estate in the future 4) epidemic situation and progress in China this week, the number of new cases in cities such as Shanghai, Qingdao, Jilin and Dongguan increased significantly. Shenzhen has adopted policies such as suspending food in the hall and “daily inspection” in public places [2]. Under the impact of the epidemic in major cities, China’s consumption may still face a great test; The State Food and Drug Administration approved five antigen self-test products for epidemic prevention [3], which helps to improve the efficiency of epidemic prevention and pays attention to the expected impact on the performance of relevant companies.
5) overseas risk factors this week, there are still many overseas risk factors. At the beginning of this week, the United States and the United Kingdom announced sanctions on Russian crude oil, causing abnormal fluctuations in oil prices [4]. Brent crude oil futures this week exceeded US $130 / barrel at the highest; LME nickel price rose more than twice under the impact of supply risk and was suspended from trading, resulting in certain losses to the hedging positions of some raw material companies in China; The possible impact of the change of South Korean President [5] on China ROK trade relations deserves attention; This week, the SEC posted five zhonggai shares that may not meet the disclosure and audit requirements identified in the foreign company accountability law on its official website, which triggered a sharp decline in zhonggai’s share capital this week, and the CSRC also made a partial opposition to this unreasonable practice [6]. In the future, we need to focus on the relevant progress of the situation in Russia and Ukraine and the US FOMC meeting in March.
bank industry suggestions : short-term undervaluation may have relative benefits, growth and middle and downstream industries wait for macro risk resolution and turnaround
currently focus on three directions:
1) potential support areas for policy development, including infrastructure, real estate, stable demand related industrial chains (building materials, construction, household appliances, home furnishings, etc.), brokerage finance, etc;
2) for the middle and lower reaches consumption with many adjustments, low valuation and clear medium and long-term prospects in 2021, choose stocks from bottom to top, including household appliances, light industry and household appliances, automobiles and parts, agriculture, forestry, animal husbandry and fishery, medicine, etc;
3) the manufacturing growth sector, including new energy vehicles, new energy and technology hardware semiconductors, has released some risks, and the turnaround is waiting for the marginal mitigation of overseas “inflation” risk.
recent concerns: 1) the convening of the two sessions and China’s steady growth policy; 3) Epidemic situation outside China; 4) Overseas geopolitical risks; 5) US inflation and monetary policy.
