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. The meeting responded to the hot issues concerned by many markets and sent signals of stabilizing the macro economy, financial market and capital market.
Steady growth is the top priority, and it is required to ensure the realization of the annual economic growth target: the meeting called for a practical boost to the economy in the first quarter. Along the policy thinking, the following favorable policies for stabilizing the basic macroeconomic market are expected to be introduced one after another. In the current high volatility environment, the certainty premium will increase, and the market funds may continue to focus on the main line of “stable growth”.
The macro-control will be strengthened, and the liquidity is easy to loosen but difficult to tighten: China’s economic growth needs relatively loose monetary conditions. It is expected that the macro-control tools will continue to be introduced, and the monetary policy will adhere to “give priority to me” and act more actively, which does not rule out the possibility of further relaxation. Macro liquidity is easy to loose but difficult to tighten, which is conducive to the capital allocation A-share market.
Promote the steady and healthy development of the capital market, and the tone of the A-share policy has significantly warmed up: the meeting conveyed the intention to protect the development of enterprises on issues such as China concept shares and platform economic governance. It is expected that subsequent policies and measures will be introduced to stabilize market expectations, and the stability and consistency of the policy tone will be strengthened. The meeting also welcomed long-term institutional investors to increase their shareholding ratio. The CBRC stated that it would increase the proportion of investment in the capital market through public funds, trusts and insurance institutions. On the whole, the statement of the meeting was relatively positive, which showed that the decision-making level attached importance to the healthy development of the capital market. Unilateral downward pressure release in the early stage of a shares.
The Fed’s interest rate hike is on the ground, and the pressure of capital fluctuation is expected to ease: last night, the Fed announced an interest rate hike of 25bp, and is expected to start to shrink in May, which is in line with market expectations. The normalization trend of monetary policy in the world’s major developed economies is determined, and the balance sheet is expected to shrink soon. The overall statement of the Fed’s interest rate meeting did not deviate from market expectations. Since March, the discussion on the possible return of funds caused by the Fed’s interest rate hike has heated up, and investors in the A-share market are worried about foreign capital selling Chinese assets. After the interest rate meeting, the response of global financial markets was more optimistic, indicating that asset prices have been included in the expectation of interest rate increase. Today, all A-Shares opened higher, and China’s financial conditions and policy attitude have a greater impact on the market.
Research and judgment on the general trend: from the perspective of the policy tone, the meeting of the financial stability Commission sent a “reassurance” to the market. Under the protection of the policy, the long-term trend of China’s healthy economic development is safe and the confidence of the capital market is enhanced; From the perspective of liquidity, the macro liquidity is stable and loose, the capital in the A-share market is abundant, and the early capital outflow is more due to the deterioration of mood under the resonance fermentation of a variety of negative factors, and there is no “money shortage” in the market; From the perspective of valuation, the current P / E ratios of CSI 300 and CSI 500 are about 11.5 times and 15.8 times respectively, close to the bottom area in early 2019; From the perspective of technological form, the short-term unilateral downward adjustment has been more complete, and the probability of continuous sell-off has been greatly reduced. A shares will enter a technical window period boosted by factors such as the sustained development of steady growth policies, ample liquidity, the decline of valuation to a low level and the continued promotion of industrial support.
In terms of industry allocation, it is suggested to look for investment opportunities along the ideas of the meeting of the financial committee: (1) the steady growth policy continues to work, the monetary policy is positive and promising, the real estate regulation is slightly loose, and pay attention to the opportunities of infrastructure, finance and real estate sectors; (2) China concept stocks rebounded sharply, paying attention to the oversold rebound opportunities of growth sectors such as technology and platform economy; (3) The valuation is fully adjusted and the P / E ratio is at a historical low in mechanical equipment, communication, transportation, textile and clothing and other sectors.
Risk factors: increased geopolitical risks; The epidemic situation worsened; The economy fell faster than expected; Regulatory policy tightened.
