Daily theme strategy discussion, summarize the views of the eight securities companies, reveal the current situation of the industry, observe the market trend, and feel the pulse of A-Shares for you in advance.
Ping An Securities: three factors bring great uncertainty! The grinding time of this wheel may be affected and further lengthened
The core focus of the market has returned to epidemic control, less than expected liquidity easing and overseas military turmoil (resulting in a sharp rise in global commodity prices). While the three major factors have brought great uncertainty, some relatively optimistic economic fundamentals expectations since the beginning of the year also need to be adjusted. At the macroeconomic level, the probability of consumption and investment in the first half of the year is lower than expected, and the pressure on overseas Chinese stocks is serious, which has dragged down the performance of the A-share market as a whole.
First, the spread of the epidemic in China exceeded expectations, which led to the upgrading of epidemic prevention measures, dragged down the decline of consumption and the commencement of enterprises, and further increased the downward pressure on the economy; Second, the decline of the real estate industry will become an important factor that will drag down the macroeconomic and investment growth in 2022; Third, overseas geopolitical conflicts tend to be repeated, and the market’s concerns about global stagflation and the uncertainty of big country game are heating up.
We believe that the market’s expectation of fundamentals needs to be adjusted urgently, and the grinding time of this round may be further prolonged. In the medium term, China’s repeated epidemic, shrinking real estate demand and unstable overseas situation will further impact China’s fundamental expectations and capital risk appetite. Affected by this, the bottom grinding period of the A-share market may be further prolonged, and we still need to wait to observe the landing effect of more stable growth policies. Considering that the market has retreated by an average of about 20% – 30% since the peak in 2021, the current valuation level is in a more reasonable range as a whole, and the possibility of upward rebound cannot be ruled out in the short term. However, the medium and long-term effects of the above influencing factors deserve more vigilance. On the whole, the macroeconomic and capital markets are facing a difficult environment in 2022. It is necessary to reduce the expectation of investment return in 2022 to a certain extent, select industries and companies with relatively high prosperity, and prevent industries and companies with obvious deterioration of fundamentals.
In terms of structure, it is suggested to pay attention to the allocation and cost performance of the medium-term profit boom and upward sectors. First, scientific and technological innovation and green upgrading industries corresponding to high-quality transformation, such as semiconductor, new energy, energy storage, new energy automobile industry chain, etc; Second, the inflation benefit sector. From the historical experience, the transmission of raw material prices and the characteristic background of this round of upward inflation, the petroleum and petrochemical, coal, non-ferrous metals, agriculture, forestry, animal husbandry and fishery sectors will benefit.
Haitong Securities Company Limited(600837) : the range and impact of foreign capital outflow from the perspective of history
Starting from March 7 this year, the capital of land stock connect going north began to flow out sharply in a row. In history, A-Shares have also experienced several large phased outflows of foreign capital. Compared with April May 2019 and February March 2020, the proportion of net outflows of foreign capital is not large, but it accounts for a high proportion of turnover. At present, similar to October 2018, when the market incremental funds are small, the impact of foreign capital outflow is amplified.
Although foreign capital has also phased out A-Shares significantly in history, from the opening of Shanghai Hong Kong stock connect in 2014 to going north in 2021, the capital flows into A-Shares every year, so the proportion of foreign capital in the A-share market is also increasing. As of 21q4, the overall value of foreign-owned stock market was about 3.9 trillion, accounting for nearly 10% of the free circulation market value of a shares, of which the proportion of land stock connect and QFII / rqfii was about 7:3 However, up to now, the proportion of A-Shares in the global portfolio is still very low. In 2020, the market value of A-share listed companies has reached 13% in the global capital market, while the weight of A-Shares in MSCI acwi index is only about 0.4%, and the proportion of Chinese Listed Companies in the stock portfolio of Norwegian central bank investment management company is only 3.8%. In the future, with the rapid increase of the importance of China’s economy in the world, the inflow of foreign capital into A-Shares is still a long-term trend for a long time.
Cinda Securities: the core time window of A-share rebound is from late March to April
Strategically, 2022 will be a compressed version of 20182019, with the first half similar to 2018 and the second half similar to 2019 The adjustment speed since the beginning of the year has reached the quarterly adjustment speed of 2018. Compared with 2018, there were four rebounds during the period, mostly lasting for 3-4 weeks.
The impact of quarterly reports on the rebound rhythm. Quarterly report is an important verification period and a time window for correcting the matching degree of performance and valuation. The market rebounded before and after the disclosure period of the three quarterly reports in 2018. The profit expectation in 2018 is gradually lowered. However, in the first quarter and the second quarter, there are still many primary industries with upward roe, but in the third quarter, it is difficult to find industries with upward roe. As a result, the rebound before and after the first and second quarterly reports appeared in the first half of the disclosure period, and the rebound after the third quarterly report appeared in the second half of the disclosure period.
To sum up, we believe that the core time window for the next rebound is from late March to April. A complete reversal requires one of the following three changes: crude oil has weakened for more than one quarter, real estate sales have stabilized and improved, and valuations have reached extreme values, which are not yet available.
Guosheng Securities: how does the frequent actions of the Federal Reserve + table contraction affect A-Shares
The Fed’s monetary tightening will affect A-Shares through three channels. First, the exchange rate transmission channel: monetary tightening will boost the US dollar index and increase the pressure of RMB devaluation in the short term. On the one hand, exchange gains and losses will directly affect the current profits of listed companies, on the other hand, it will improve the overseas competitiveness of export-oriented enterprises and reduce the profit space of import-oriented enterprises. Second, the interest rate transmission channel: the tightening of money by the Federal Reserve will increase the yield on US dollar assets, while China’s long-term and short-term interest rates have a high correlation with the US federal fund interest rate. The rise of China’s bond interest rate will suppress the valuation of A-share growth sector, that is, it will have a “structural impact”. Third, sentiment transmission channels: the tightening of the Federal Reserve has led to increased volatility in overseas markets, increased risk aversion, and the confidence of A-share investors will also be affected in the short term.
There are three possible scenarios for the impact of the Fed’s monetary tightening on A-Shares in the future. Scenario 1: Fed tightening + foreign capital return + but the value of RMB relative to the US dollar is stable, which will block the “exchange rate” channel. The impact on A-Shares is short-term (emotional transmission) + structural (growth stocks are suppressed). Scenario 2: the Federal Reserve raises interest rates + the interest rate spread is narrowed + China remains loose, which will block the “interest rate” channel. The “internal loose” has more pricing power over the A shares than the “external tight”, and the Chinese market will not fall significantly. Under the “external tightening and internal loosening”, the winning rate of consumption and finance is high, blue chip stocks and low price to book ratio stocks are more likely to obtain excess returns, and social services, banking, medicine and biology and other industries are relatively dominant. Scenario 3: China is forced to adopt the follow-up interest rate hike, which leads to the overall and continuous pressure on a shares, but the probability of this situation is small.
Soochow Securities Co.Ltd(601555) : investor sentiment fell sharply after the sharp decline. What is the market worried about
Valuation is not the core contradiction of the current market. ① After the sharp fall, investors’ sentiment fell sharply and kept asking where the bottom is. We made an extreme scenario assumption: if it fell to the bottom of the A-share bear market, the downward space of the Shanghai composite index is limited, and the ERP estimates that the decline is about 10%. ② Compared with the bottom of the bear market, the overall valuation of A-Shares is at the bottom center, the median is high, the market valuation is still expensive, and the small market valuation is at the historical bottom. 3. The total value of core assets has returned to normal center, and the downward space is not large. Only some Baijiu and new energy sources are expensive.
Under what circumstances will it be more optimistic? ① In the short term, more optimistic factors are overseas: the easing of conflict, the decline of inflation and the landing of interest rate increase. Reduced global concerns about stagflation will significantly enhance risk appetite. ② China’s optimism depends more on Policies: interest rate and reserve requirement reduction, real estate relaxation or high-level entrepreneurs’ Symposium.
In terms of configuration, high dividends and growth. ① In the short-term stagflation environment, the high dividend portfolio is dominant, focusing on banks, real estate, coal and chemical industry. In the period of decline and shock consolidation after the sharp rise of the market, the high dividend strategy gives play to the characteristics of “bear market umbrella”, and the excess return is obvious. ② Medium term recessionary easing, growth is still the main line of the year, and focus on the digital economy. From a medium to long-term perspective, China’s economy is in a recession like environment. Under the pressure of steady growth, policies will continue to remain loose. With the subsequent stabilization of economic fundamentals and the restoration of pessimistic market expectations, the style is expected to return to growth.
Long term investment value
The market reaction is extremely pessimistic expectation. After the extreme venting of sentiment, the medium and long-term investment cost performance is significant, so there is no need to be habitual pessimism. Since mid December 2021, the market has continued to retreat, the recent volatility has increased significantly and the decline rate has accelerated. We believe that the market has responded in advance to the pessimistic expectations of possible risk events in the future, and even the response to the pessimistic sentiment has been significantly amplified.
So far, we believe that the risks that the market has reacted to include: first, the Fed’s expectation of raising interest rates has been continuously strengthened and reached the extreme. At present, the market is expected to raise interest rates by 25bp in March, raise interest rates 6-7 times in the year and shrink the table in the middle of the year; Second, it has reflected the unexpected outbreak of peripheral conflicts and the expectation of protracted war, and even responded to the possible risk of global stagflation to a certain extent; Third, peripheral conflicts are also mapped to China, and have made very advanced pessimistic expectations; Fourth, the strength and sustainability of the steady growth policy are also expected to reverse. The recent market performance has obviously reflected extreme pessimism as a whole, and even amplified the bad and ignored the good, but this situation will not continue to deteriorate.
China International Capital Corporation Limited(601995) : “stagflation” resumption and Its Enlightenment to the present
Waiting for the “emotional bottom”, the Chinese market may show relative resilience in the medium term. There is still great uncertainty in the supply risk caused by short-term geographical events and other factors. While aggravating the inflation risk, it may also suppress the total global demand in the future. The probability of overseas “stagflation” may be increasing. Under the background that the relevant risks have not been completely eliminated, the market sentiment may still be difficult to improve systematically. We expect that the turnaround in the market stage may need to wait for the marginal easing of inflationary pressure and geopolitical situation, and the potential observation window may be in the next 2-3 months.
In the medium term, the Chinese market may be relatively resilient. First, China’s growth and policy cycle are relatively favorable, and the reserve space for the “steady growth” policy is relatively sufficient. The follow-up “steady growth” policy will continue to work, and the growth may gradually improve around the second quarter; Secondly, the absolute valuation of China’s market is at a relatively low historical level, which is also attractive compared with other major markets; Finally, China’s inflation pressure is relatively controllable. As an important manufacturing country in the world, China has the largest and relatively complete industrial chain in the world. As long as China continues to pursue scientific and technological innovation and industrial upgrading, the Chinese market may be relatively more resilient in the global supply risk.
Structurally, we believe that the undervalued “steady growth” sector may have relative benefits. If the supply risk at the macro level is gradually alleviated in the future, the growth expectation is gradually stabilized, and the style may gradually return to the fields related to the growth style with high momentum; On the other hand, the manufacturing industry in the middle and lower reaches has fully responded to the risk of rising costs in the near future. If there is a peak signal in the upstream price in the future, the manufacturing industry in the middle and lower reaches is expected to usher in a turnaround driven by profit reversal.
Bohai Securities: go north and follow certain rules for capital departure! Market panic decline or more risk aversion from Chinese funds
Affected by local overseas conflicts and the decline of overseas Chinese stocks, funds going north also showed a continuous departure trend. However, generally speaking, the departure of funds going north still complies with certain rules, and the panic decline of the market may come from the risk aversion of Chinese funds. In the short term, external and other risk factors and domestic hedging behavior still have the possibility of repetition, or promote the repeated process of the bottom of the market. However, in the medium and long term, the expectation that the steady growth policy will promote the recovery of enterprise prosperity is relatively clear, and it is expected to bring the low point of enterprise profitability upward. The market panic and the venting process of risk aversion factors will probably bring low allocation opportunities within the year. In terms of industry allocation, based on the 5.5% GDP target and sufficient financial “food and grass”, we can pay attention to the investment opportunities in the new infrastructure sector, one of the important starting points of “stable growth”, and focus on the digital economy; In addition, we can also pay attention to the rebound opportunities of the pharmaceutical sector under the adjustment of epidemic prevention mode.
