The stock index fell 4% this week. How will A-Shares run next week? We have summarized the latest investment strategies of major institutions for investors’ reference.
Xingzheng strategy: the most panic time has passed, and the market will usher in a phased repair window in the next month
1) although the negotiations between Russia and Ukraine have not made substantial progress, the attitudes and sanctions of all parties have been basically clear since the interpretation of the conflict between Russia and Ukraine, and the possibility of further unexpected impact is reduced. Moreover, from the performance of overseas markets this week, the panic over the conflict between Russia and Ukraine has been significantly released, and the overseas equity market has also changed from unilateral decline to two-way fluctuation. 2) In February, the total amount and structure of social finance in China were significantly lower than market expectations. It indicates that the current downward pressure on the economy is still large, and it also means that the follow-up “steady growth” policy will be further strengthened. In February, the new social finance scale was 1.19 trillion yuan, lower than the expected 2.2 trillion yuan. The stock of social finance increased by 10.2% year-on-year, lower than 10.5% of the previous value. Structurally, the medium and long-term loans of enterprises and residents are weak, and the issuance of government bonds has become the main support. However, the “steady growth” policy has been actively introduced recently. The two sessions defined the annual GDP growth target of 5.5%, and required to “expand the scale of new loans” and “reduce the comprehensive financing cost”. Provinces have also successively announced major project investment plans, with a significant increase over last year. At the same time, many places have introduced loose policies for house purchase. “Wide currency” and “wide credit” have been increasing, and further RRR and interest rate cuts can be expected in the future. 3) The Federal Reserve’s plan to raise interest rates and even shrink the table is imminent. On March 16, the Federal Reserve will hold an interest rate meeting in March. The interest rate increase of 25bp is basically “a certainty”, and there is a high probability of announcing the schedule reduction plan. At the same time, the market’s long-standing concerns about interest rate increase will also fall to the ground. If the market is impacted again, it may be another opportunity to participate in the deep rebound. The next month, after the continuous adjustment since the beginning of the year and the most panic point gradually passed, the market is expected to usher in a wave of repair window.
CITIC strategy: the bottom of the A-share market has been confirmed for the second time, and it is about to usher in a resonant upward trend of value and growth
Recently, due to the superposition of internal and external risks, A-Shares have had a serious emotional catharsis, and there have been three serious deviations. At the same time, with the arrival of the three critical points, the market bottom has been confirmed twice, and A-Shares are about to usher in the resonance upward of value and growth. On the one hand, the recent ultra stable growth policy of A-Shares deviates from that of China; Investor sentiment is seriously deviated from China’s sound economic fundamentals; The current valuation level of A-Shares is seriously deviated from the historical and global comparable valuation level. On the other hand, it is expected that the expectation of the conflict situation between Russia and Ukraine will gradually enter the critical point of improvement; After the “two sessions”, the steady growth policy has entered the critical point of renewed force; Investors’ serious emotional venting and position reduction are also gradually entering the critical point. The “market bottom” of A-Shares has been confirmed for the second time, and will usher in the resonance upward of value and growth with the repair of the three deviations. On the allocation, we should insist on the balanced distribution of style and industry, adhere to the main line of steady growth, continue to focus on the “Two Lows”, and focus on the future of lithium, photovoltaic, semiconductor, Baijiu, medicine and construction.
West China strategy: rebound to catch up? How to interpret the follow-up market?
Investment strategy: work slowly and work carefully to defend and wait for attack. Since March, the valuation of A-Shares has been adjusted rapidly under the influence of the volatile situation in Russia and Ukraine, the surge in international oil prices, the shift of monetary policies in the United States and Europe and other factors. In the medium and long term, we are not pessimistic about the A-share market. However, due to the short-term difficulty in dispelling overseas stagflation concerns and the repeated impact of the Chinese epidemic on the pace of consumption recovery, the repair of market risk appetite will not be achieved overnight. It is expected that the A-share market will still “grind the bottom repeatedly” in the short term, and it is suggested to “defend and wait for attack”. Specific to the industry, pay attention to three main investment lines: first, underestimate the value and benefit from overseas inflation varieties, such as “banking, real estate, precious metals (gold)”; Second, the benefits of epidemic prevention and control are related, such as “medical biology”; Third, the theme of benefiting from the promotion of policies (support), “new energy (photovoltaic, energy storage), semiconductors, Eastern digital computing and Western computing, agriculture, rural areas and farmers”, etc.
Guohai strategy: how about the cost performance after market adjustment?
On the whole, after the early market adjustment, the contradiction of “expensive” in the market has been greatly alleviated. Structurally, the valuation of small and medium-sized market style is at the bottom of the historical range, which has a higher margin of safety than the large market. In addition, after preliminary adjustment, the current valuation of growing industries such as medicine and electronics has returned to a reasonable level, and the cost performance has gradually appeared. From the expected valuation level in 2022, the valuation quantile of most broad-based indexes in 2022 will fall below 25%, and the median valuation quantile of the industry will further decline to about 20%, which means that the valuation adjustment is basically in place. Under the assumption of this year’s performance, the predicted valuation in 2022 will decline further, and the valuation quantile of most broad-based indexes will fall below 30%. From the perspective of style, the quantile level of small and medium-sized market valuation will continue to remain at the historical bottom range, while the market style valuation will be adjusted to 13%, which is significantly improved compared with the current valuation level. The performance of industry style valuation was differentiated. The quantile of consumption style valuation decreased to 32%, while the quantile of growth and financial valuation fell to less than 5%, and the quantile of cyclical and stable industry valuation increased. From the perspective of industry and track level, under the assumption that the expected profit remains unchanged, the median valuation quantile of the industry as a whole in recent 10 years has dropped to 22%, and the cost performance has been further improved. The CXO and semiconductor sector valuation positions of the heavily loaded institutions dropped to about 5%, while the quantile of Baijiu and new energy vehicle sectors also dropped from the current level of 76% to 70%.
Guosheng strategy: waiting for confidence to reverse
Although the embarrassing situation of “the entity has not improved and the credit has suffered twists and turns” reappears, on the one hand, the recent market adjustment has reflected the re contraction of the credit end in February. On the other hand, as a small credit month, the financial data in February is generally directional. Considering that the first half of the year is a key window for policy development, the change of the credit environment in March is more important. In the next period of time, our probability is still in the combination of weak economy, wide currency and low credit. Historical experience shows that undervaluation is still the current minimum resistance direction. From the medium-term perspective, the further trend in the future needs to wait for subsequent decisions. If the characteristics of the economic bottom appear in the next 1-2 months, the style of the second quarter is expected to turn to consumption and manufacturing; On the contrary, the value dominated window will continue.
Livelihood Strategy: to rebound, we should also switch
The future fundamental path has been clear: the elasticity of inflation will be significantly greater than the elasticity of demand itself, and more global funds will flow to real assets that resist inflation. The efforts of countries to stabilize downstream prices will also make profits concentrate more from the middle and lower reaches to the upper reaches of resource products, followed by high prices, which will eventually eliminate demand and bring down prices. This means that before the final peak of bulk prices appears, the middle and lower reaches have to really experience the “darkest moment” of fundamentals. In 2021, the long-term roe and ROIC of resource industries have broken through the long-term downward trend, but investors are more pricing based on the inherent cognition formed in the downward movement of commodity price center in the past 10 years. It is noteworthy that the long-term breakeven inflation rate (inflation expectation) in the United States has reached a record high, and the downward trend of long-term prices is reversing. The upward valuation of cyclical stocks never depends on the so-called α Logic, but to confirm the upward movement of the price center in the fluctuation. The above scenario occurred in the performance of cyclical stocks in China and the United States in 1970s from 2005 to 2007. Although the trend is consistent, the real opportunity for cyclical stocks is to enter the period of shock or stabilization after correction after the rise of commodity prices.
This is not α， But the long-term profit anchored by investors calculates the upward price.
Monarch strategy: investment opportunities in stocks with low-risk characteristics
General trend study and judgment: after the storm, return to shock. After waking a sting, you still need to cover it in spring. Previously, investors mistakenly believed that the reason for the sharp decline of A-Shares since Q1 was the superposition of a series of risk events. The market consensus believed that after the calm, the market could rebound quickly and effectively. However, the Shanghai Composite Index hit a new low after a new low in recent one year. Some investors ignore the pricing status of the market, and have quickly entered the pricing “quasi stagflation” from the “inflation + green transformation” in 2021, that is, the inflation of physical assets and the expectation of corporate profits have deteriorated rapidly, and the stock has entered the stage of killing both profits and valuation. After the short-term oversold and storm mode, A-Shares are expected to enter a phased rebound. However, before the demand side policy and the path of credit easing are fully clear, we believe that the pattern of declining investor profit expectations and rising discount rate expectations is still difficult to reverse in the short term, and it will take time to rebuild market confidence and optimize the micro trading structure.
CICC strategy: the main line of undervalued A shares may have relative returns
Looking forward 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 risks of supply shortage and liquidity. 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 policy reserve space for “steady growth” 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.
Western strategy: prosperity is still the main line of market rebound
Looking forward to the future, with the implementation of the Fed’s interest rate increase, there is still room for further easing of China’s monetary policy, and the market liquidity expectation is expected to usher in a phased correction. With the annual report and the first quarterly report window approaching, the A-share market still has a meal market in the first half of the year. In such an environment, the boom track leader with large adjustment range in the early stage and high performance fulfillment will usher in a round of restorative market, which we call style correction market. From the perspective of structure, the current focus on the performance, and the prosperity track leaders such as new energy, semiconductor, medicine and military industry that can be determined to be fulfilled are expected to usher in phased repair. On the other hand, the essential consumption sectors such as agriculture, food, textile and clothing benefiting from inflation expectations are also expected to usher in a performance inflection point. At present, China’s epidemic concerns have reached a high level, and offline economic recovery related industries such as social service, retail, catering, shipping and traditional media are also ushering in the layout window period. The theme focuses on digital economy, three child concept, food security, comprehensive registration system reform, etc.
China Securities Co.Ltd(601066) strategy: grasp the market of the first quarter report
A-share twists and turns ahead, and the rebound after the festival was realized as scheduled. Under the tense international situation and high risk aversion, the prices of bulk commodities such as crude oil and base metals rose rapidly this week (and then fell back), which triggered the market’s concern that the economic recession fell into stagflation. Superimposed on the deterioration of micro liquidity in the A-share market, there was a phenomenon of capital stampede to a certain extent: private equity funds were forced to sell their equity assets, And the decline of margin purchase and the rise of margin sales further expanded the short-term decline of the market. North oriented funds, especially Allocation Oriented foreign capital, have systematically reduced their positions this week. The direction of new energy power generation and precious metals inflow of Allocation Oriented foreign capital against the market is worthy of attention. After the systemic risk of the conflict between Russia and Ukraine is eased, foreign capital is expected to return to a shares.
