Daily Comment No. 190: low volatility in the two cities, focusing on structural opportunities of undervalued sectors

Market review: the index fluctuated at a low level, led by agriculture, forestry, animal husbandry and fishery

Today, the Shanghai and Shenzhen index remained low and volatile throughout the day. As of the close, the Shanghai index fell 0.20% to 3632.33 and the Shenzhen index fell 0.44% to 14791.31. In terms of sectors, agriculture, forestry, animal husbandry and fishery, media and comprehensive growth led, while power equipment, non-ferrous metals, medicine and biology led the decline. The turnover of the two cities was 1266.32 billion yuan, an increase of 19.44% over the previous trading day and 25.31% over the average of the previous five days. The net sales of Shanghai Stock connect was 941 million yuan, the net purchase of Shenzhen Stock connect was 1.401 billion yuan, and the net purchase of northbound funds was 460 million yuan throughout the day.

Market focus:

The people's Bank of China recently said that the continuous conversion of two direct tools, the Pratt & Whitney small and micro enterprise loan extension support tool and the Pratt & Whitney small and micro enterprise credit loan support plan, will be implemented from January 1, 2022. Continue to promote the increment, price reduction and expansion of inclusive small and micro loans.

Strategy suggestion: focus on structural opportunities of undervalued sectors

Today, the two markets failed to usher in a "good start". The Shanghai and Shenzhen index fluctuated at a low level throughout the day, and the rising momentum was obviously insufficient. The capital flowed back in the afternoon, realizing a small net inflow throughout the day. The market turnover exceeded 1.2 trillion yuan again, and the market sentiment was warmer than that at the end of December. At the macroeconomic level, the curtain of 2022 officially opened. Recently, many departments have successively issued specific plans and schemes for the goal of "stable growth", focusing on stabilizing foreign trade and ensuring the development of manufacturing industry. The tone of monetary easing is clear. Compared with overseas markets with high inflation and tightening expectations, China's A-share market is significantly more attractive to foreign capital. In the medium and long term, the post epidemic repair of China's economy fully demonstrates resilience, while the overseas market is facing structural problems such as difficult to level the labor gap and slow supply chain constraints. Therefore, the long-term trend of foreign capital's additional allocation of A-share assets remains unchanged, and the overall liquidity of the A-share market is relatively abundant. In terms of the general trend of a shares, we believe that "structural bull" may be the main market feature in 2022. Under the support of liquidity, the undervalued sector may be the first to usher in repair, so it has better cost performance. Under the logic of cross cycle adjustment and "bottom recovery", the first quarter may be a better layout period. It is suggested to focus on the structural opportunities of the undervalued sector at this stage.

In terms of sectors, the agricultural sector performed strongly all day today. The leading targets of pig industry such as Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , New Hope Liuhe Co.Ltd(000876) closed up sharply, or were mainly driven by the rebound of pig prices beyond expectations. At present, the valuation of individual stocks in the pork breeding sector has been at a relatively low level, and it is expected to usher in repair during the production capacity removal cycle. At present, it may be a better left layout period, so it is recommended to pay attention. The cultural media sector led the rise, mainly driven by the sharp rise of the yuan universe sector, which once again prompted the current time point to start with the idea of risk return ratio, implement the performance cashing ability of specific stocks, and avoid blindly chasing up. In addition, the lithium battery and photovoltaic sectors fell sharply, and the relevant sectors are expected to maintain a high boom under the industrial logic. However, it should also be noted that under the current valuation level, the release of market bad information may cause a large selling pressure in a short time, and the volatility of the sector may increase. It is recommended to be vigilant against the risks.

 

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