Market review in December 2021: seemingly offensive, actually defensive. After the central work economic conference, although macro analysts have raised their expectations for steady growth in 2022, this has not been really traded by the market. It can be seen from the market performance in December: yuanuniverse, power grid construction, real estate completion chain, infrastructure and dilemma reversal and some consumer goods with periodic price increases (later decline) are relatively dominant, This reflects the real expectation of the market for fundamentals. The scenario is that the environment is only understood as the relaxation of liquidity and the correction of early-stage policies. There are doubts about the strength of policies. The starting point lies in the limited new infrastructure. Even consumer goods with price rise expectations will eventually fall due to the decline of investors’ concerns, which will eventually lead to the periodic decline of stock prices. Investors will trade more assets in assets that are bullish on liquidity and avoid macroeconomic weakness or the so-called “scarcity and high prosperity”.
If you are willing to follow the consensus of the market, the difficulty of obtaining income is not low. Consensus 1: the market believes that it is only a correction in the direction for the real estate chain, but at the same time, it is willing to believe that the performance of “high-quality companies” on the chain will be moderately repaired. We take may 2021 as the anchor to measure the repair space: the subdivided industries with large rebound space not only need the recovery of completion volume, but also need to straighten out the repair of gross profit margin; Logically, the most logical building and decoration sector (Q3 performance is only damaged by volume) has actually rebounded more than in May. Real estate is a plate with large rebound space, but it is also a “consensus” market worried about insufficient policy strength. Consensus 2: the most definite direction of infrastructure investment is the power and power grid investment sector. In our annual strategy and weekly report, we have made key recommendations based on the structural shortage of power and the poor growth rate of investment on the power grid side; We are still optimistic, but such sectors have reached a consensus in the short term, and we need to pay attention to the risk of overvaluation and transaction congestion. Consensus 3: price increases can be transmitted to consumers, resulting in improved profit margins. Historically, when the growth gap between PPI and CPI converges, the revenue growth of the consumer sector is not low, while the overall growth rate of the consumer sector falls into a negative value in Q3 of 2021. If there is no support of “quantity” in the future, the simple “price increase” will lead to concerns of dampening demand; Consensus 4: broad liquidity, Panasonic’s boom investment or “macro immunity”. Historically, the year-on-year rebound of M2 social finance often leads the trend rebound of social finance for more than 10 months. The purpose of wide currency itself is to cooperate with the policy of wide credit, which has been experienced for 8 months. After experiencing the “lessons” in 2015, it should not be based on the assumption that regulators are still willing to provide liquidity idling to support the significant expansion of valuation. From the perspective of industry, the meta universe plate needs to solve the problem of industrial comparative advantage; The stock price elasticity of the new energy sector in 2021 not only stems from good fundamentals, but actually exceeds the general expectation of the market in 2020; When looking for the industry “beyond expectation” space in 2022, the resource bottleneck in the upstream of the industrial chain has become a “hard constraint” to be considered. Consensus 5: small cap growth market. We also valued the opportunities for Small Cap Growth Based on the environment under the supply shock of the United States in the 1970s, but what needs to be solved is that the valuation and price of its constituent stocks are not as cheap as the index looks, it is difficult to mine individual stocks, and it also needs industrial logic clues to guide investment.
Options beyond consensus: dividend, cycle and Rural Revitalization. If investors believe that the expected return on opportunities under the consensus is not high, or the risk return ratio is poor, there are actually more options. First, from the perspective of ppicpi concerned by the market, in the range where the scissors difference is still positive, the middle and upper reaches are still the profit advantage plate; From the perspective of large categories of assets, since the market consensus also recognizes that the possibility of a significant economic downturn is reduced, the probability of capital gains from the allocation of 10-year Treasury bonds and potential capital losses from the allocation of dividend assets are decreasing, and the difference between the dividend rate of dividend assets and the yield of treasury bonds is at the highest level in two years. Second, lay out the next scenario of credit expansion to prepare for “Pro cyclical”. Third, the market believes that the rebound of consumption is often based on the rebound of demand, common prosperity and social zero. However, we find that the performance of core consumer stocks since 2016 is not accompanied by the strength of social zero. On the contrary, it is the rise of gross profit margin caused by the expansion of income differentiation (the median disposable income is weaker than the whole). Under the logic of common prosperity, the structure of consumption opportunities may change, Focus on sinking the market and county consumption. The real opportunities for consumption may be in the varieties with low gross profit margin ignored in the past. Fourth, globally, commodities in 2021 are the only assets with negative cumulative 10-year earnings at the forefront of growth. Being vigilant about 2021 is only the beginning of the trend reversal. The recent regional commodity export ban and shutdown abroad are in contrast to the lifting of China’s perceived supply constraints.
Investment advice: we suggest investors pay more attention to areas where consensus has not been formed and changes have not taken place, and the actual opportunity cost is not high. Current recommendations: coal, crude oil chain (oil service, oil transportation), real estate, nonferrous metals (copper, aluminum), banks and steel. The theme recommends Rural Revitalization (county consumption, etc.). Our main line remains unchanged throughout the year.
Risk tip: uncertainty of covid-19 epidemic: there are new variants of covid-19 epidemic. The re spread of covid-19 epidemic may lead to the upgrading of epidemic prevention measures all over the world and have an adverse impact on economic recovery.
