Looking back on the past 2021, the overall fluctuation of the index hit a record low, but the rotation of the main line accelerated and the market value style significantly sank. The small market value outperformed the large market value by nearly 30 points in the whole year. Towards 2022, can xiaopiao continue to maintain its strength since 2021? How should the spring market layout after the new year?
The sinking of market value is the core feature of A-Shares in 2021. In the report “year-end market of A-Shares in 2021” before New Year’s day, we put forward seven highlights that we must know about A-Shares in 2021. Among them, the sinking of market value is the core feature of A-Shares in 2021. Although there was a turnaround around the fourth quarter, the small market value factor outperformed the large market value by nearly 30 points throughout the year. Near the end of the year, the relative growth of value continues to pick up, and the style of large and small discs also tends to be balanced. Towards 22 years, how will the style of large and small discs be interpreted?
Who decides the excess return of small ticket? On the style of large and small plates, after combining the historical experience at home and abroad, we can generally draw several conclusions: (I) the strength of prosperity is the fundamental variable that determines the style of large and small plates. In the final analysis, enterprise value is determined by performance growth. Behind the strength of the trend of large and small markets in the past, it is the result of the action of fundamental trends. From the experience of US stocks, this conclusion is also true. The relative trend of EPS determines the interpretation of the style of large and small US stocks. （2） The allocation cost performance of the large market is an important variable affecting the excess return of the small market. Especially in the valuation cycle of large cap stocks, the excess return of small cap stocks is particularly obvious (except for 18 years). The continuous killing of core assets since 2021 is also an important reason for the small cap to win. （3） The type of incremental funds also determines the strength of large and small markets to some extent. Since 2021, the capital game pattern has changed from “lying win” to “inside roll”, and the demand for small ticket mining has been significantly enhanced, which has directly driven the sinking of market value style since 2021.
The next half year is the balance period of style, and the market is expected to return. First of all, in the next six months, whether it is the top-down estimation or the correction based on the individual stock profit expectation, A-Shares are in the profit downward cycle from 2021q4 to 2022q2, and the marginal change of performance tends to the market. Secondly, since 2021, institutional conglomerates have continued to kill the valuation, and now it has fallen back to five years. From the perspective of the relationship between valuation and profit, the valuation of traditional core assets (excluding institutional group stocks of new energy and semiconductor) deviates from the profit expectation, and has medium-term allocation value at this stage. Third, as the main incremental force in 2021, the probability of public offering and private placement continuing to exceed expectations in 2022 is decreasing. On the contrary, allocated funds (venture capital) may have a marginal positive contribution in 2022.
In conclusion, the significant excess return of small ticket in 21 years is driven by variables such as profit cycle, market price performance ratio and incremental funds, and these conditional variables are reversing in the medium term in the future. Therefore, perhaps from the dimension of longer cycle, small ticket can still continue to create excess; However, in the next six months, it should be the balance period of size and style, and we should pay more attention to the return of the market.
Core conclusions and strategic suggestions: reiterate that weakening restless expectations, returning to fundamental pricing and steady growth are the core beta of the spring market. At the beginning of the year, the probability of “a good start” of incremental funds exceeding expectations is decreasing. In the past, there was agitation in spring, and the logic of pure risk preference improvement is weakening. The credit conditions are about to stabilize in a real sense. The m1-ppi scissors gap will be repaired upward, and continue to be optimistic about the spring market of 22 years, and steady growth is the largest beta main line in the next quarter. (i) Continue to be optimistic about the repair of value stocks in the medium term, and recommend food and beverage, high-quality developers, banks and power operations; （2） New and old infrastructure development direction, the first is: construction / building materials, UHV, communication; （3） Upstream cost reversal machinery, small household appliances, and independent main line military industry.
Risk tips: 1. The epidemic situation is out of control; 2. A sharp recession; 3. The policy has changed more than expected.
