Event:
On March 16, the financial stability and Development Commission of the State Council held a special meeting to study the current economic situation and capital market problems.
Comments:
1. The financial Commission released a strong signal to maintain stability, and A-Shares and Hong Kong shares rebounded strongly.
On March 16, the financial stability and Development Commission of the State Council held a special meeting, which gave a strong shot to the market. The meeting of the Finance Committee focused on “macroeconomic operation”, “real estate enterprises”, “zhonggai shares” and “stability of Hong Kong’s financial market”, which are all hot concerns in the current capital market. Subsequently, the central bank and the China Banking and Insurance Regulatory Commission also timely conveyed and studied the spirit of the special meeting of the financial commission of the State Council, and made arrangements and arrangements.
In terms of macroeconomic operation, the meeting of the finance committee pointed out that “we should effectively revitalize the economy in the first quarter, take the initiative to respond to monetary policy, and maintain a moderate growth in new loans”. The subsequent easing policies such as interest rate and reserve requirement reduction are still expected, which is expected to achieve the goal of stabilizing the capital market. The financial credit data from January to February released last week was significantly lower than expected, while the expectation of interest rate cut on March 15 failed, and the market shock intensified. At the meeting of the central bank’s communication and learning finance committee, the central bank said that it strongly supports small, medium-sized and micro enterprises, firmly supports the development of the real economy and keeps the economy running within a reasonable range. We expect that interest rate and reserve requirement reduction measures are expected to be introduced to promote steady economic development.
In terms of real estate, the meeting clearly proposed to timely study and put forward effective risk prevention and resolution solutions, and put forward supporting measures for the transformation to a new development model. Since the beginning of this year, some high-quality real estate enterprises have been under pressure in debt payment. Recently, there have been signs of moderate easing of real estate regulation in some regions, and the setting of the financial committee meeting means paying high attention to the risks of the real estate market and hoping to have a new development model to promote the transformation of the real estate market. Subsequently, the central bank said that it would prevent and resolve the risks in the real estate market. The CBRC proposed to encourage institutions to carry out M & A loans in a stable and orderly manner, focus on supporting high-quality real estate enterprises to merge and acquire high-quality projects of difficult real estate enterprises, and promote the virtuous circle and healthy development of the real estate industry, which also means that the follow-up risk resolution plan for the real estate industry is expected to be issued to promote the benign operation of the real estate industry.
In the face of the recent sharp decline in China concept shares, the meeting said that at present, the regulatory authorities of China and the United States have maintained good communication, have made positive progress, are committed to forming specific cooperation plans, and the Chinese government continues to support all kinds of enterprises to list abroad. Previously, there was a sharp correction in the concept shares affected by negative concerns, and the tone of this meeting means that the follow-up will strengthen the communication between China and the United States, which is obviously good for the concept shares market and continue to pay attention to the follow-up progress. On the stability of Hong Kong’s financial market, the meeting proposed that the mainland and Hong Kong regulators should strengthen communication and cooperation, which is expected to boost market confidence. It is expected that Hong Kong will introduce corresponding measures to stabilize Hong Kong’s financial market.
At the end of the meeting, it was proposed that relevant departments should earnestly take responsibility, actively introduce policies beneficial to the market, carefully introduce contraction policies, and respond to hot issues concerned by the market in a timely manner. All policies that have a significant impact on the capital market should be coordinated in advance to maintain the stability and consistency of policy expectations. In addition, the meeting also proposed to welcome long-term institutional investors to increase their shareholding ratio. We expect the central bank, China Securities Regulatory Commission and other financial management departments to introduce policies conducive to the market in the near future and continue to release stability maintenance signals.
It can be seen that the meeting of the financial committee responded to the previous concerns of the market, clarified the positive attitude of the management in the aspects of macro-economy, real estate, China concept stocks and policy introduction, released obvious stability maintenance signals, and also greatly boosted the market. On the afternoon of the 16th, A-Shares and Hong Kong stocks rebounded strongly. Finally, the Shanghai index rose by more than 3%, the Shanghai and Shenzhen 300 index rose by 4.32%, and the gem index rose by 5.2%. At the same time, the Hang Seng Index and the Hang Seng technology index rose 9.09% and 22.19% respectively, reversing the recent weak pattern in one fell swoop.
2. The medium and long-term layout may be gradually opened, focusing on the opportunities of finance, real estate, TMT and other industries. Since March, the A-share market has been in a shock correction trend. Especially on March 15, the decline of the Shanghai index and the Shenzhen composite index exceeded 4%. The Shanghai index lost two integer levels of 3200 and 3100 points in a day, and the individual stock sector generally fell. The market volatility was exacerbated by the aggregation of internal and external risk factors such as geopolitical events in Russia and Ukraine, inflation expectations, the upcoming implementation of overseas policies, institutional position adjustment and capital fluctuation.
The special meeting of the financial stability and Development Committee once again clarified the policy tone of “stable growth”, actively responded to market concerns and gave policy directions, which greatly boosted market confidence and actively reversed the recent weak market pattern.
Our “release of short-term selling pressure, medium and long-term layout or gradual opening – Comments on A-share temporary strategy” released on March 9 clearly pointed out that the market correction belongs to the emotional release under the impact of short-term multiple factors. In terms of capital, there is no “money shortage” in the market, but more short-term internal capital flow; From the technical point of view, the short-term adjustment is relatively sufficient, and the probability of panic selling pressure continuing is small. At present, the P / E ratio of Shanghai and Shenzhen 300 is about 12 times, which has fallen to near the opportunity value of nearly five years, and is close to the historical bottom area in early 2019. Under the influence of positive factors such as the sustained force of the steady growth policy, the relatively stable performance of capital and the continuous promotion of subsequent monetary policies, there are technical repair opportunities in the market. In the medium and long term, with the gradual easing of external risk factors, the market will gradually stabilize and the market will enter the window period of layout.
Although the recent market volatility is still large, the impact of sentiment is more obvious, which has not changed our previous strategic logic. Under the circumstances of China’s stable fundamentals, moderate force of stable growth policy and current reasonable valuation, the meeting of the financial committee has made clear the positive policy direction, which will gradually enter the medium and long-term layout stage, and the market is expected to usher in the opportunity of gradual stabilization.
In terms of operation, it is recommended to pay attention to the investment opportunities brought by the key policy directions of the financial commission, such as the opportunities in the financial and real estate sectors brought by the active monetary policy and the fine-tuning of real estate regulation. In addition, it is recommended to pay attention to the oversold rebound opportunities in the science and technology sector brought by the focus on China concept stocks. In addition, in the medium and long term, we can continue to pay attention to the steel, building materials, architectural decoration and other sectors with the main line of steady growth; And food and beverage, electrical equipment, household appliances and other sectors with reasonable valuation and sufficient adjustment.
Risk tips
Deterioration of overseas epidemic situation; Sudden changes in the external environment.
