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.
A shares recently suffered from serious emotional venting due to the superposition of internal and external risks, resulting in oversold
First of all, with the rise of locally confirmed cases, investors’ concerns about the impact scope and time period of this round of imported epidemic in China have increased, and further aroused concerns that short-term economic data and steady growth policies are less than expected. Secondly, since last week, the conflict between Russia and Ukraine has continued to ferment, and the market expectations are still disordered. Due to the fear that the conflict is out of control and the spread of sanctions, the global capital risk appetite continues to decline, and the global equity market resonates negatively. Thirdly, the sharp and rapid rise of commodity prices has pushed up serious inflation expectations. The prices of some varieties represented by metal nickel fluctuated abnormally, and even triggered exchange intervention, which further increased uncertainty and suppressed risk appetite. Finally, on March 10, the U.S. sec identified five listed companies in the United States as having delisting risks in accordance with the foreign company Accountability Act, which led to a sharp correction of zhonggai shares and continued to have a negative impact on investor sentiment.
A shares have three serious deviations from China’s policy environment, economic fundamentals and comparable valuation levels
1) the recent A-share overshoot is seriously deviated from the tone of China’s loose policy and steady growth at the end of last year, the central economic work conference defined the general direction of the steady growth policy. The national “two sessions” clearly defined the annual economic growth target, which was in line with the overall expectation, and it is expected that the follow-up policy will continue to increase. The government work report sets the GDP growth target of about 5.5% in 2022. At the same time, under the background that China’s macro leverage ratio drops by 8% in 2021, the policy is also conditional on stabilizing economic growth. The China Banking and Insurance Regulatory Commission and the people’s Bank of China recently jointly issued the notice on strengthening the financial services of new citizens, which also reflects that under the condition of stable leverage on the resident side for three consecutive years, there is more room for structural leverage this year. This week, the market quickly reactivated, with the defensive attribute of the CITIC stable style index rose, Baijiu, pharmaceuticals, photovoltaic and other short-term business data improvement of the sector rose, indicating that the market for steady growth policy easing efforts and effect no consensus.
2) investor sentiment is seriously deviated from China’s sound economic fundamentals on the one hand, there is downward pressure on China’s economy in the short term, but there is no risk of stall. It is expected that the economic data in the first two months will be stable as a whole and the effect of steady growth will initially appear. On the industrial and investment side, the macro group of Citic Securities Company Limited(600030) Research Department predicts that the year-on-year reading of industrial added value from January to February is about 3.5%, the growth rate of infrastructure construction is more than 8%, the good trend of manufacturing investment is more than 8%, the growth rate of real estate investment is about – 2%, and the year-on-year growth rate of fixed asset investment is 4.4%. Consumption is relatively weak under the influence of the epidemic distributed everywhere. The growth rate of total retail sales of social consumer goods is expected to be about 4.5% in the first two months of this year. However, considering more accurate epidemic prevention and control policies, the quarterly recovery of consumption can also be guaranteed. In terms of foreign trade, the export growth rate from January to February was 16.3%, which continued to exceed expectations. On the other hand, over 100 leading enterprises this week disclosed 1-2 month business data, including supply and demand of lithium, photovoltaic, semiconductor, Baijiu, medicine and other industries. The steady growth related upstream resources maintained a high profit growth rate. The construction enterprises signed new contracts generally realized two digit growth, but real estate development, breeding and retail were relatively under pressure.
3) the current valuation level of A-Shares is seriously deviated from the historical and global comparable valuation level vertical comparison: as of the closing on March 11, the dynamic valuation of SSE 50 / CSI 300 was in the 16% / 29% quantile since 2010, which was close to the level of February 2016 and December 2018. Before February 2016, A-share oversold was affected by the circuit breaker mechanism. Macroscopically, it faced the characteristics of GDP slowdown, PPI deflation and bottom profit of industrial enterprises; In December 2018, China and the United States had serious differences and the credit cycle went down under the guidance of policy deleveraging: the current China’s policy environment, credit cycle and external pressure were significantly better than these two periods. In horizontal comparison, after the resonance of the global market, the valuations of major indexes except US stocks returned to below the 50% quantile, and the UK FTSE 100 and Shanghai and Shenzhen 300 were the lowest quantile of 29%. A shares should enjoy the valuation premium under the background of China’s low inflation and economic recovery. In addition, the RMB exchange rate remains stable, and the response of the bond market and the stock market to monetary easing and fundamental trends has deviated. The bond market has been responding to the expectation of interest rate and standard reduction, and overseas funds are still steadily allocating RMB bonds for hedging through the bond link.
at the current time point, the three critical points of Russian Ukrainian conflict and renewed policy and emotional venting are approaching
1) it is expected that the expectation of the conflict situation between Russia and Ukraine will gradually enter the critical point of improvement first of all, after NATO and the United States made it clear that they would not directly send troops to Ukraine, the “ceiling” of this incident has been made clear, and the possibility of escalation of the conflict between Russia and Ukraine is small; At the same time, the war situation has gradually become clear. Ukraine’s North Road, East Road and South Road are attacked on three sides, many major cities are divided and surrounded, and the capital Kiev is also facing the pressure of being surrounded by the attack from the East and the West.
Secondly, Russia is the second largest crude oil producer in the world and the largest source of crude oil and natural gas imports in Europe. At present, the EU sanctions against Russia do not involve oil and gas import; Moreover, it is unlikely that the sanctions against Russia will further spread to the related parties of Russian transactions. Finally, the daily war expenses of Russia and Ukraine are huge, and Russia is not willing to expand and prolong the conflict. After the third round of negotiations, Russia announced that it would cease fire in many cities in Ukraine and open humanitarian corridors for people to evacuate. Ukrainian President Zelensky also said that he has lost interest in joining NATO. We maintain our judgment that the negative impact related to the Russian Ukrainian conflict is limited, inflation expectations will fall after the peak, and the conflict itself is expected to see a turnaround in March.
2) after the “two sessions”, the steady growth policy has entered the critical point of renewed force after the national “two sessions” have ended, local policies will enter the intensive implementation stage. At the same time, the social finance data in February is lower than expected, and the necessity and urgency of policy force are increasing: the critical point of policy force is gradually approaching. First of all, the window of China’s monetary policy aggregate tool has not been closed in March, and the Fed is likely to raise interest rates by only 25bps Secondly, China’s leading infrastructure main line. At present, infrastructure projects, funds and implementation plans are ready. Thirdly, the main line of relay real estate is in the observation period of policy implementation. Due to the implementation of urban policies, the policy relaxation has spread from medium and low tier cities to high-line cities. Finally, China’s epidemic prevention and control still maintains the dynamic clearing strategy, and the application scheme for covid-19 virus antigen detection (Trial) formulated and issued by the National Health Commission decides to add antigen detection as a supplement based on nucleic acid detection, which is conducive to improving the efficiency of epidemic prevention and control and reducing the suppression of the epidemic on the expectation of service consumption. To sum up, under the influence of policy synergy, it is expected that the year-on-year growth rate of GDP in the first quarter of this year is expected to reach 5.3%.
3) investors’ serious emotional venting and position reduction are also gradually reaching the critical point compared with January, the market liquidity has tightened rapidly against the background of the cold of new public funds. Since February, the capital flow in the A-share market has not deteriorated significantly on the margin. This week, the net outflow of northward allocation funds was 13.1 billion yuan and the net outflow of transaction funds was 19.5 billion yuan, with a large outflow scale. On the whole, although there has been a certain degree of net redemption by overseas institutions recently, the capital flow of application for redemption by mainland institutions remains stable as a whole. This week, the net redemption rate of stock public offering is only – 0.1%. Therefore, there is no case that large-scale net redemption leads to forced selling and leads to negative feedback cycle, It is expected that the recent adjustment of the A-share market may still be related to the manager’s active position reduction and position adjustment when the market sentiment is weak. Without the pressure of forced selling, the current market pessimism is expected to gradually enter the critical point of repair.
the “bottom of the market” has been confirmed twice and is about to usher in a resonant upward trend of value and growth
The superposition of internal and external risk disturbances induced the venting of investors’ negative emotions, stabilized after A-share oversold, and the “market bottom” has been confirmed for the second time. At present, there are three serious deviations from China’s policy environment, economic fundamentals and comparable valuation level in the operation of a shares; With the conflict between Russia and Ukraine, the re exertion of policies and the approaching of the critical point of emotional venting, A-Shares will usher in the resonance upward of value and growth. In terms of configuration, it is suggested to stick to the main line of steady growth, continue the layout around the “two low positions”, and focus on the varieties that are expected to exceed the expectations in the first quarter in the near future. Specifically including: varieties with relatively low fundamentals expectations, focusing on the mid stream manufacturing that is being squeezed by cost issues, and focusing on the opportunities for configuration opportunities after commodity prices peak, such as 123 \ Hotel ; Among the varieties that are at relatively low valuations, it’s suggested to focus on the varieties that are at a relatively low valuation, the varieties that are at a relatively low valuation. It’s suggested to focus on the varieties that are at a relatively low valuation. It’s suggested to focus on the kind of real estate credit risk that is expected to be released after the expected release of the expected release of the credit risk of the real estate credit risk. The 456 \ , A new infrastructure field in the new infrastructure field 123 of a new infrastructure field 6 fine chemical enterprise with the ability to develop new businesses such as new materials. In the short term, from the perspective of hedging inflation expectation risk, it is also possible to appropriately trade related cycle industries, such as oil and gas equipment , aluminum , copper etc; A quarterly report that may exceed the expected variety suggests that it focuses on 1-2 months to disclose better data, such as , , semiconductor , Baijiu , medicine , building sector.
risk factors
Global epidemic recurrence; The friction between China and the United States in the field of science and technology trade has intensified; The progress of China’s economic recovery is less than expected; Macro liquidity at home and abroad has tightened more than expected; The conflict between Russia and Ukraine further escalated.
