key investment points:
Market Review: the index rose first and then declined, with continuous net inflow of funds from the North
In terms of the market, the Wande all a index rebounded in the past five trading days, with a cumulative increase of 1.27%. The turnover hovered at the level of trillion yuan, with a total net inflow of 14.67 billion yuan this week. In the past five trading days, social services, national defense and military industry, comprehensive, light industry manufacturing, household appliances and other sectors led the increase; Food and beverage, coal, public utilities, automobiles, banks and other sectors led the decline.
RCEP officially takes effect, or it will accelerate the upgrading of China’s foreign trade
On January 1, 2022, RCEP (regional comprehensive economic partnership agreement) will officially enter into force, marking the official landing of the free trade area with the largest population, the largest economic and trade scale and the most development potential in the world. The first batch of countries to take effect include six ASEAN countries and four non ASEAN countries such as China, Japan, New Zealand and Australia.
we believe that the good development opportunities brought by RCEP may provide some support for China’s export in 2022, especially for the export of Electromechanical, equipment, chemical and other industries, but it is difficult to change the downward trend of export. At the same time, the gradual deepening of regional economic development pattern may drive China to accelerate the upgrading of foreign trade industry. first, RCEP’s zero tariff, facilitation, cumulative rules of origin and other agreements can effectively reduce the cost of export system and boost China’s exports. Second, China and Japan have reached a free trade arrangement for the first time. The two sides have significantly reduced tariffs in many fields such as mechanical equipment, electronic information, chemical industry, light industry and textile. With the accelerated recovery of Japan’s economy in 2022, it is expected to form an effective pull on the export of relevant industries in China. Third, under the background of global economic slowdown, the Federal Reserve started tightening based on inflation pressure or suppressed external demand, superimposed on the return of export share and the high base in the same period, the downward pressure on China’s exports is still great. Fourth, from a more macro and long-term perspective, the entry into force of RCEP reminds the market to pay attention to the reconstruction of global supply chain. After the epidemic of anti globalization and trade protectionism, regional economic integration may replace economic globalization as a more prominent feature in the future global economic development pattern, Regional industrial chain coordination and reengineering may be an important direction, and China is expected to accelerate the shift to the high-quality development stage of foreign trade and move some low-value industrial chains out in this trend opportunity. Fifth, under the background of frequent global climate problems, emerging countries and developing countries in key areas of raw material supply and processing upstream of the supply chain are facing greater pressure of “carbon reduction”. Based on China’s industrial and technological advantages, regional economic deepening may bring better development opportunities for the export of goods and services in the fields of green infrastructure and green technological innovation.
The profits of industrial enterprises fell in November, but the differentiation between upstream and downstream slowed down
According to the National Bureau of statistics on December 27, in November, the profits of Industrial Enterprises above designated size increased by 9.0% year-on-year, down 15.6 percentage points from the previous month, with an average growth of 12.2% in two years. From January to November, the profits of Industrial Enterprises above designated size increased by 38.0% year-on-year, with an average increase of 18.9% in two years, and the growth rate continued to maintain a high level. Among the 41 major industrial industries, 26 industries had a year-on-year increase in profits, an increase of 3 over the previous month, and the growth area was expanded; The profit situation of 22 industries improved over the previous month, of which the middle and downstream industries accounted for more than 80%.
We believe that the profit data of industrial enterprises in November on the one hand reflects the obvious decline of profit level under the economic downward trend, on the other hand, it also shows that the profit differentiation and convergence of upstream and downstream industries under the regulation of “ensuring supply and stabilizing price” gradually tend to equilibrium. among them, the profit of the mining industry increased by 248.4% year-on-year, which continues to be an important driving factor for the upward profit of industrial enterprises year-on-year. However, the increase narrowed, and the decline in the price of major raw materials under the regulation of “ensuring supply and stabilizing price” may drive the profit space of upstream enterprises to continue to return to a reasonable level, but the tight energy supply pattern may be difficult to change in the short term. At the same time, the profit growth of consumer goods manufacturing industry has widened, the profits of clothing and food consumer goods manufacturing industry have improved, and the profit level of downstream industries is expected to continue to improve under the logic of cost decline and price adjustment.
in December, the manufacturing PMI rebounded again, and the pressure of upstream prices on the production side was further relaxed
In December, the manufacturing purchasing managers’ index and non manufacturing business activity index were 50.3% and 52.7% respectively, an increase of 0.2 and 0.4 percentage points over the previous month; The comprehensive PMI output index was 52.2%, unchanged from the previous month, and the three indexes were in the expansion range. It shows that China’s economy has maintained a recovery trend and the prosperity level has rebounded steadily.
we believe that the regulation of “ensuring supply and stabilizing price” continued in December, which further relaxed the repression of upstream raw material prices on manufacturing production, led to the continued recovery of manufacturing momentum, and the production end of the national economy continued to improve. first, the purchase price index and ex factory price index of main raw materials are below the critical value, and they are down again compared with the previous value, reflecting that the control policy of “ensuring supply and stabilizing price” drives the price of industrial raw materials to continue to fall. The manufacturing industry frustrated in the previous “dual control of energy consumption” and “power and production restriction” continues to repair smoothly, the cost pressure is reduced, and the profit repair can be expected. Second, the production and operation willingness of enterprises has improved, and the purchase volume index and raw material inventory index have rebounded significantly compared with the previous value, reflecting strong willingness to replenish inventory and production. Third, the prosperity of the upstream has declined, the pace of production has slowed down, the landscape of the middle and lower reaches has rebounded sharply, and the PMI of high-tech manufacturing, equipment manufacturing and consumer manufacturing are above the critical value, reflecting the accelerated recovery.
weekly view: focus on the pharmaceutical sector
At the macro-economic level, in the last week of 2021, various departments have successively introduced measures to “stabilize the economy”. On the one hand, the formulation of “stabilize foreign trade” is becoming stronger and stronger, and the layout is made in advance to cope with the downward trend of exports; On the other hand, the expression of monetary policy is positive, “increasing cross cycle regulation” and “more active and promising” all release positive easing signals. We believe that the export of small and medium-sized enterprises is expected to receive key policy support. Under the upward background of overseas economic uncertainty, export credit insurance may play an important role in supporting China’s export next year. At the same time, under the influence of maritime transportation, the layout of overseas warehouse and other export infrastructure is expected to accelerate. The downward trend of export remains unchanged, but the probability of “stall” is small, The risk is basically controllable. Meanwhile, in the first quarter of 2022, it is expected to reduce the reserve requirement again, and the probability of structural interest rate reduction also increases.
In the market, the index experienced a deep correction this week and then pulled up. The market sentiment became colder in the first half of the week and slightly warmer on Thursday and Friday. The epidemic situation outside China has not improved significantly, driving the continued strength of covid-19 pneumonia detection, vaccine and other concept sectors; Lithium carbonate prices rose again this week, driving the lithium sector to make a big counterattack this week, leading the increase; The home appliance sector and the pharmaceutical sector also performed better. Meanwhile, the Baijiu plate did not respond to the favorable effects of the company’s price increase. During the week, the liquor industry experienced a deep callback, and the coal mining sector declined. The industry’s performance is basically in line with our previous configuration recommendations.
At present, the volume of the A-share market is lower than the high point in mid December. The centralized release of long and short information at the end of the previous year has gradually ended, and the market expectations are basically consistent, cooling the restlessness. In 2022, we believe that in the macro environment of economic downturn and relatively abundant macro liquidity, A-Shares lack the internal power of overall trend upward, and the probability of systemic risk is also low. The structural market will still be deeply interpreted, and the style may gradually switch from small and medium-sized market to market value and market growth. first, the performance of small and medium-sized stocks may have been released intensively this year. Under the downward overall profit expectation and high base effect, the callback risk is relatively large. Second, the market growth is expected to maintain a high boom driven by industrial logic. It is suggested to pay attention to the coverage targets such as entrepreneurship 50 and entrepreneurship blue chip. Third, the market value has a strong risk aversion attribute, or can obtain excess benefits under the economic downward trend.
In terms of industry, (1) pay attention to the low reversal opportunity of the required consumption sector and the automobile and home appliance consumption sector expected to benefit under the expectation of loose policy. the logic of profit restoration in the field of mandatory consumption and durable goods consumption remains unchanged. First, under the tone of loose policy, low interest rates are expected to boost durable goods consumption. Second, from past experience, automobile and household appliance consumption can better respond to the policy of “expanding domestic demand” and inject strong power into consumer end restoration, Therefore, it may be an important driving point for relevant “cross cycle” adjustment policies, resulting in the improvement of profits of relevant industries. Third, in the post epidemic era, the employment and disposable income of middle and low-income people continue to improve, superimposing the overall economic downward trend and the current water level, the required consumption is expected to usher in a low reversal. It is suggested to focus on the opportunities of mass consumption. (2) the pharmaceutical sector is expected to usher in a better market. first, under the “domestic substitution”, medical equipment and consumables are expected to usher in a period of development opportunities; Second, the strong demand for downstream replenishment and the frequent positive policies are expected to drive the continuous agitation of the traditional Chinese medicine sector. It is suggested to pay attention to the head targets with strong bargaining power under the logic of “consumption upgrading”; Third, under the “normalization” prevention and control of the epidemic situation, covid-19 vaccine and testing may be more deterministic than specific drugs, so it is recommended to continue to pay attention. (3) the lithium sector may still be in the high boom track in 2022, but the valuation level and profit logic may be adjusted. on the one hand, lithium itself has the growth attribute, so it is recommended to make reasonable valuation adjustment and judgment on the targets in the sector. On the other hand, the expansion of lithium reserves and batch production capacity of enterprises may lead to the transformation of lithium sector from price dominated vector. It is recommended to comprehensively consider both volume and price and carry out medium and long-term layout according to the performance and cashing capacity of specific targets.
medium and long term strategy
In the medium and long term, we suggest investors continue to focus on three directions. Consumption sector: medicine and consumption upgrading. Long term high-quality track: carbon neutralization, scientific and technological innovation and new infrastructure. Stable bottom position variety: big finance.
risk tips
global liquidity tightened more than expected; The global epidemic situation has exceeded expectations; Macroeconomic growth fell faster than expected; The global energy crisis has further intensified; Inflation pressure continues to rise; Technological development is less than expected.
report body:
I. strategic perspective
Market Review: the index rose first and then declined, with continuous net inflow of funds from the North
In terms of the market, the Wande all a index rebounded in the past five trading days, with a cumulative increase of 1.27%. The turnover hovered at the level of trillion yuan, with a total net inflow of 14.67 billion yuan this week. In the past five trading days, social services, national defense and military industry, comprehensive, light industry manufacturing, household appliances and other sectors led the increase; Food and beverage, coal, public utilities, automobiles, banks and other sectors led the decline.
RCEP officially takes effect, or it will accelerate the upgrading of China’s foreign trade
On January 1, 2022, RCEP (regional comprehensive economic partnership agreement) will officially enter into force, marking the official landing of the free trade area with the largest population, the largest economic and trade scale and the most development potential in the world. The first batch of countries to take effect include six ASEAN countries and four non ASEAN countries such as China, Japan, New Zealand and Australia.
We believe that , the good development opportunities brought by RCEP may provide some support for China’s export in 2022, especially for the export of Electromechanical, equipment, chemical and other industries, but it is difficult to change the downward trend of export. At the same time, the gradual deepening of regional economic development pattern may drive China to accelerate the upgrading of foreign trade industry. first, RCEP’s zero tariff, facilitation, cumulative rules of origin and other agreements can effectively reduce the cost of export system and boost China’s exports. Second, China and Japan have reached a free trade arrangement for the first time. The two sides have significantly reduced tariffs in many fields such as mechanical equipment, electronic information, chemical industry, light industry and textile. With the accelerated recovery of Japan’s economy in 2022, it is expected to form an effective pull on the export of relevant industries in China. Third, under the background of global economic slowdown, the Federal Reserve started tightening based on inflation pressure or suppressed external demand, superimposed on the return of export share and the high base in the same period, the downward pressure on China’s exports is still great. Fourth, from a more macro and long-term perspective, the entry into force of RCEP reminds the market to pay attention to the reconstruction of global supply chain. After the epidemic of anti globalization and trade protectionism, regional economic integration may replace economic globalization as a more prominent feature in the future global economic development pattern, Regional industrial chain coordination and reengineering may be an important direction, and China is expected to accelerate the shift to the high-quality development stage of foreign trade and move some low-value industrial chains out in this trend opportunity. Fifth, under the background of frequent global climate problems, emerging countries and developing countries in key areas of raw material supply and processing upstream of the supply chain are facing greater pressure of “carbon reduction”. Based on China’s industrial and technological advantages, regional economic deepening may bring better development opportunities for the export of goods and services in the fields of green infrastructure and green technological innovation.
The profits of industrial enterprises fell in November, but the differentiation between upstream and downstream slowed down
According to the National Bureau of statistics on December 27, in November, the profits of Industrial Enterprises above designated size increased by 9.0% year-on-year, down 15.6 percentage points from the previous month, with an average growth of 12.2% in two years. From January to November, the profits of Industrial Enterprises above designated size increased by 38.0% year-on-year, with an average increase of 18.9% in two years, and the growth rate continued to maintain a high level. Among the 41 major industrial industries, 26 industries had a year-on-year increase in profits, an increase of 3 over the previous month, and the growth area was expanded; The profit situation of 22 industries improved over the previous month, of which the middle and downstream industries accounted for more than 80%.
We believe that the profit data of industrial enterprises in November, on the one hand, reflects the obvious decline of profit level under the economic downward trend, on the other hand, it also shows that the profit differentiation and convergence of upstream and downstream industries under the regulation of “ensuring supply and stabilizing price” gradually tend to be balanced. Among them, the profit of the mining industry increased by 248.4% year-on-year, which continues to be an important driving factor for the upward profit of industrial enterprises year-on-year, but the increase narrowed. The decline in the price of large raw materials under the regulation of “ensuring supply and stabilizing price” may drive the profit space of upstream enterprises to continue to return to a reasonable level, but the tight energy supply pattern may be difficult to change in the short term. At the same time, the profit growth of consumer goods manufacturing industry has widened, the profits of clothing and food consumer goods manufacturing industry have improved, and the profit level of downstream industries is expected to continue to improve under the logic of cost decline and price adjustment.
in December, the manufacturing PMI rebounded again, and the pressure of upstream prices on the production side was further relaxed
In December, the manufacturing purchasing managers’ index and non manufacturing business activity index were 50.3% and 52.7% respectively, an increase of 0.2 and 0.4 percentage points over the previous month; The comprehensive PMI output index was 52.2%, unchanged from the previous month, and the three indexes were in the expansion range. It shows that China’s economy has maintained a recovery trend and the prosperity level has rebounded steadily.
We believe that the regulation of “ensuring supply and stabilizing price” continued to exert force in December of to further relax the repression of upstream raw material prices on manufacturing production, drive the continuous recovery of manufacturing momentum, and continuously improve the production end of the national economy. first, the purchase price index and ex factory price index of main raw materials are below the critical value, and they are down again compared with the previous value, reflecting that the control policy of “ensuring supply and stabilizing price” drives the price of industrial raw materials to continue to fall. The manufacturing industry frustrated in the previous “dual control of energy consumption” and “power and production restriction” continues to repair smoothly, the cost pressure is reduced, and the profit repair can be expected. Second, the production and operation willingness of enterprises has improved, and the purchase volume index and raw material inventory index have rebounded significantly compared with the previous value, reflecting strong willingness to replenish inventory and production. Third, the prosperity of the upstream has declined, the pace of production has slowed down, the landscape of the middle and lower reaches has rebounded sharply, and the PMI of high-tech manufacturing, equipment manufacturing and consumer manufacturing are above the critical value, reflecting the accelerated recovery.
weekly view: focus on the pharmaceutical sector
At the macro-economic level, in the last week of 2021, various departments have successively introduced measures to “stabilize the economy”. On the one hand, the formulation of “stabilize foreign trade” is becoming stronger and stronger, and the layout is made in advance to cope with the downward trend of exports; On the other hand, the expression of monetary policy is positive, “increasing cross cycle regulation” and “more active and promising” all release positive easing signals. We believe that the export of small and medium-sized enterprises is expected to receive key policy support. Under the upward background of overseas economic uncertainty, export credit insurance may play an important role in supporting China’s export next year. At the same time, under the influence of maritime transportation, the layout of overseas warehouse and other export infrastructure is expected to accelerate. The downward trend of export remains unchanged, but the probability of “stall” is small, The risk is basically controllable. Meanwhile, in the first quarter of 2022, it is expected to reduce the reserve requirement again, and the probability of structural interest rate reduction also increases.
In the market, the index experienced a deep correction this week and then pulled up. The market sentiment became colder in the first half of the week and slightly warmer on Thursday and Friday. The epidemic situation outside China has not improved significantly, driving the continued strength of covid-19 pneumonia detection, vaccine and other concept sectors; Lithium carbonate prices rose again this week, driving the lithium sector to make a big counterattack this week, leading the increase; The home appliance sector and the pharmaceutical sector also performed better. Meanwhile, the Baijiu plate did not respond to the favorable effects of the company’s price increase. During the week, the liquor industry experienced a deep callback, and the coal mining sector declined. The industry’s performance is basically in line with our previous configuration recommendations.
At present, the volume of the A-share market is lower than the high point in mid December. The centralized release of long and short information at the end of the previous year has gradually ended, and the market expectations are basically consistent, cooling the restlessness. In 2022, we believe that in the macro environment of economic downturn and relatively abundant macro liquidity, A-Shares lack the internal power of overall trend upward, and the probability of systemic risk is also low. The structural market will still be deeply interpreted, and the style may gradually switch from small and medium-sized market to market value and market growth. first, the performance of small and medium-sized stocks may have been released intensively this year. Under the downward overall profit expectation and high base effect, the callback risk is relatively large. Second, the market growth is expected to maintain a high boom driven by industrial logic. It is suggested to pay attention to the coverage targets such as entrepreneurship 50 and entrepreneurship blue chip. Third, the market value has a strong risk aversion attribute, or can obtain excess benefits under the economic downward trend.
In terms of industry, (1) pay attention to the low reversal opportunity of the required consumption sector and the automobile and home appliance consumption sector expected to benefit under the expectation of loose policy. the logic of profit restoration in the field of mandatory consumption and durable goods consumption remains unchanged. First, under the tone of loose policy, low interest rates are expected to boost durable goods consumption. Second, from past experience, automobile and household appliance consumption can better respond to the policy of “expanding domestic demand” and inject strong power into consumer end restoration, Therefore, it may be an important driving point for relevant “cross cycle” adjustment policies, resulting in the improvement of profits of relevant industries. Third, in the post epidemic era, the employment and disposable income of middle and low-income people continue to improve, superimposing the overall economic downward trend and the current water level, the required consumption is expected to usher in a low reversal. It is suggested to focus on the opportunities of mass consumption. (2) the pharmaceutical sector is expected to usher in a better market. first, under the “domestic substitution”, medical equipment and consumables are expected to usher in a period of development opportunities; Second, the strong demand for downstream replenishment and the frequent positive policies are expected to drive the continuous agitation of the traditional Chinese medicine sector. It is suggested to pay attention to the head targets with strong bargaining power under the logic of “consumption upgrading”; Third, under the “normalization” prevention and control of the epidemic situation, covid-19 vaccine and testing may be more deterministic than specific drugs, so it is recommended to continue to pay attention. (3) the lithium sector may still be in the high boom track in 2022, but the valuation level and profit logic may be adjusted. on the one hand, lithium itself has the growth attribute, so it is recommended to make reasonable valuation adjustment and judgment on the targets in the sector. On the other hand, the expansion of lithium reserves and batch production capacity of enterprises may lead to the transformation of lithium sector from price dominated vector. It is recommended to comprehensively consider both volume and price and carry out medium and long-term layout according to the performance and cashing capacity of specific targets.
medium and long term strategy
In the medium and long term, we suggest investors continue to focus on three directions. Consumption sector: medicine and consumption upgrading. Long term high-quality track: carbon neutralization, scientific and technological innovation and new infrastructure. Stable bottom position variety: big finance.
II. Performance of major categories of assets in recent five trading days
III. macro liquidity
1。 Interest rate
2。 Central bank liquidity investment
IV. market sentiment
1。 Liangrong
V. fund tracking
1。 Foreign capital
Vi. lifting the ban and issuing new shares
1。 Lifting the ban
2。 Equity financing
VII. Risk tips
1。 Global liquidity tightened more than expected;
2。 Macroeconomic growth fell faster than expected;
3。 The global energy crisis has further intensified;
4。 Inflation pressure continues to rise;
5。 Technological development is less than expected.
( Shanxi Securities Co.Ltd(002500) Institute)
