Under the escalation of the situation in Russia and Ukraine, has the A-share market environment changed qualitatively? Recent market fluctuations and changes in the situation in Russia and Ukraine are basically linked. During the talks between the foreign ministers of the two countries, the global market risk appetite picked up. The results of the talks were not satisfactory, and the risk appetite fell again. As we said in our weekly report last week, if the situation in Russia and Ukraine leads to qualitative changes in the peripheral environment of the A-share market, the probability is reflected in the three aspects of “global stagflation, China EU relations and China US relations”.
The market returns to 2008 and 2018? At present, China’s environment is obviously more friendly. Recently, the global market suffered a huge earthquake, and the market sentiment fell into obvious pessimism. Some investors even believe that the current market may show a unilateral downward trend in 2008 and 2018. The global financial crisis in 2008 and the Sino US trade war in 2018 are the obvious peripheral environmental impact faced by the A-share market. Whether the conflict between Russia and Ukraine will have a sustained and substantial impact on the peripheral environment of A-share remains to be further observed. However, it is certain that China’s current economic and policy environment is very different from that in 2008 and 2018. In 2008, China’s economy continued to decline under the impact of the global economic crisis. In 2018, China’s credit continued to tighten under the initiative of deleveraging. At present, China’s economy is at the bottom stage, and monetary and credit policies are loose.
When will the market bottom out? From the perspective of “policy bottom – market bottom”, the market bottom appeared around February after the policy end in 2015 and 2018. Specifically: 1) in the stage of stock disaster in 2015, the national team entered the market on July 6, and the CSRC announced that the central bank would provide unlimited liquidity to the securities companies. At that time, the market was basically at the end of the policy. Until mid August, the Shanghai Stock Index fluctuated at 34004000 points. But the market really bottomed out at the end of August 26, and the low point of the index was 2850; 2) At the end of October 2018, the central government held a symposium on private enterprises. At that time, the market was at the bottom of the policy. Until mid December, the Shanghai Stock Index fluctuated at 25 Xinjiang Haoyuan Natural Gas Co.Ltd(002700) points. However, the market really bottomed out. In early January 2019, the Shanghai Composite Index reached 2441 points.
Market view: the bottom of the market is approaching. What is Peugeot at the end of this market policy? We believe that the interest rate cut in late January is a clear signal of the end of the policy. However, due to the recent conflict between Russia and Ukraine, the market volatility has increased after the end of the policy. However, based on the experience of about two months from the end of the previous two policies to the end of the market, we believe that when the conflict between Russia and Ukraine gradually enters the negotiation stage, the current A-share market is close to the end of the market. It is preferred to underestimate the value under the defensive idea, but when A-Shares change from defensive to offensive, A-Shares may usher in a small and medium-sized growth moment. At present, the core difference for new energy and other tracks lies in whether the performance is at an inflection point. In the track investment, the research and judgment of the inflection point of the growth curve is the most critical. For example, apple mobile phone shipments ushered in a downward inflection point in 2017, and the relevant sectors have obviously continued to adjust. Take new energy vehicles as an example. Since 2019, the continuous excess return of the sector has been accompanied by the continuous improvement of the penetration rate of new energy vehicles. The inflection point of the growth curve of the new energy sector is still difficult to see in the short term, and the medium and long-term logic is difficult to prove. The sector continues to adjust under the current negative capital feedback, and may usher in a deterministic recovery after the landing of performance uncertainty.
Industry configuration: the stabilization and recovery of the new energy sector, the layout of TMT hard technology on the left, pay attention to the short-term and fast opportunities of securities companies, and gradually pay attention to the poor business consumption expectations after the epidemic eased.
1) at present, there is no significant change in the fundamentals and policies of heavy positions of new energy and other institutions, which has stabilized and rebounded or is an event with high probability. According to the recently disclosed annual report forecast, companies in the sector have generally achieved high growth. Although some investors are worried that the market has too high expectations for the performance growth of the new energy sector, there is a potential risk that the performance is lower than expected. But at present, the probability of smoothly passing the performance test is high.
2) TMT is the sector with large expectation difference, especially the sector in TMT that is biased towards hard technology, such as communication, computer and some semiconductors. First, the industry boom remained stable and upward; Secondly, the valuation of the sector is basically at the bottom of history; In addition, policies such as new infrastructure may become market catalytic factors. It is suggested to actively layout the core industrial chain: automobile intelligent industrial chain, 5gtob end application, industrial digitization, Huawei industrial chain, etc.
Risk tips: the economic recovery is not as expected, the macro liquidity contraction risk, and the overseas black swan event
