Event:
On March 15, the Bureau of statistics released the economic data from January to February 2022. From January to February, the added value of industries above Designated Size, total retail sales of social consumer goods and fixed asset investment (excluding farmers) were + 7.5%, + 6.7% and + 12.2% respectively year-on-year.
How to view the economic fundamentals from January to February?
If we only look at this data, there is no doubt that the economic fundamentals are in the stage of steady recovery, and the recovery strength is significantly higher than the previous expectations of the market, whether it is the supply side reflected by the industrial added value and service industry production index, or the demand side depicted by the total retail sales of social consumer goods and real estate investment.
However, on the whole, although the sub indicators have improved, there are still some contradictions between some data, such as cement and steel production and infrastructure, real estate investment, real estate sales, land acquisition and real estate investment, which still need to be further verified by the follow-up data.
Looking forward to the future, we believe that the manufacturing industry will continue the momentum of prosperity recovery under the care of policies, and may become a driving force for this year's economic growth to exceed expectations; Infrastructure investment may have a good performance in the first half of the year, but the supporting financing constraints have not been alleviated, the rebound space of infrastructure investment in the whole year may be limited; Judging the inflection point of real estate investment still needs to focus on the changes of house purchase policies in first and second tier cities.
Supply side: industrial production has improved significantly, and the output related to high-end manufacturing has increased significantly.
From January to February, the year-on-year growth rate of industrial added value recorded 7.5%, an increase of 3.2pct compared with December 2021; The quarter on quarter growth rate recorded 0.34%, a slight decrease of 0.08pct compared with December 2021. In terms of categories, the improvement of manufacturing industry is the most obvious. From January to February, the year-on-year growth rate of manufacturing added value recorded 7.3%, an increase of 3.5pct compared with December last year; The mining industry also performed well on the basis of the previous high, with a year-on-year growth rate of 9.8% from January to February, up 2.5pct month on month; The year-on-year growth rate of added value of electricity, fuel and water industry decreased slightly by 0.4pct.
From the perspective of product output, the performance of downstream high-end manufacturing is better than that of upstream. The output of cement, pig iron, crude steel and steel from January to February decreased by 17.8%, 10.8%, 10.0% and 6.0% respectively compared with the same period last year, and the decline expanded to varying degrees. We believe that the decline in the output of these upstream products is related to the rise in the prices of raw materials such as iron ore and coal since December last year, and may also be affected by the higher base in the same period last year. New energy vehicles and industrial Siasun Robot&Automation Co.Ltd(300024) showed good performance, with growth rates of 150.5% and 29.6% respectively, up 36.5% and 14.5 PCT respectively, which may be related to policy support and improvement of chip supply. Meanwhile, the production index of the service industry from January to February was 4.2% year-on-year, ending the downward trend for 10 consecutive months and increasing by 1.2pct compared with December last year, indicating that the service industry is also in the process of repair.
Demand side: domestic demand has improved, and real estate investment has exceeded expectations.
Only from this data, there has been a comprehensive repair of demand in the first two months of 2022. In terms of consumption, from January to February, the total retail sales of social consumer goods increased by 6.7% year-on-year, an increase of 5.0 PCT compared with December last year; 1. The quarter on quarter growth rate in February was 0.9% and 0.3% respectively, up 0.8 and 0.2pct respectively from December last year. Excluding the price factor, the total retail sales of social consumer goods from January to February actually increased by 4.9% year-on-year, with a marginal increase of 5.4pct. The unexpected repair of social zero may be related to the different epidemic prevention and control efforts before and after the Spring Festival this year and last year.
In terms of investment, from January to February, the year-on-year growth rate of fixed asset investment recorded 12.2%, and the three major industries all improved significantly, among which the improvement of real estate investment was the most obvious and exceeded expectations.
From January to February, the growth rate of real estate investment recorded 3.7%, a significant increase of 17.6pct compared with the year-on-year growth rate in December last year, reversing the single month negative growth trend for four consecutive months. From the perspective of land acquisition, the land purchase area and land transaction price are still negative growth, and the decline is further expanded, and the investment willingness of real estate enterprises is still weak. From the perspective of commencement, the real estate commencement in the first two months of the year showed the characteristics of "new construction, strong construction in progress + weak completion". Although the new construction area still had a negative growth, the decline narrowed by 37.1pct, the year-on-year growth rate of construction area returned to positive and increased by 19.0pct, while the year-on-year growth rate of completed area fell by 1.7pct. At present, under the guidance of "guaranteed delivery", real estate enterprises may focus more on the construction of stock projects. From the perspective of sales, the sales area of commercial housing decreased by 9.6% year-on-year, narrowed by 6.1pct, and the margin of real estate sales recovered, but it still needs to be further improved.
The growth rate of infrastructure investment with wide and narrow caliber was 8.6% and 8.1% respectively, 4.9 and 8.7 PCT higher than that in December last year. Since the beginning of the year, the effect of "moderately ahead of infrastructure construction" has been remarkable.
The investment in manufacturing industry increased by 20.9% year-on-year, achieving a further significant improvement in the higher early growth level, an increase of 9.1pct compared with December last year, which is more consistent with the increase in the output of manufacturing related products reflected in the industrial production data.
Investment strategy: enlarge the trading attribute in the short term and carefully look for inflection points in the medium term.
Today, the adjustment of the bond market is more obvious. The yield of 10-year Treasury bonds rose by about 5.5bp, and the main contract of 10-year Treasury bonds futures closed down by 0.44%. We think there may be three factors: on the one hand, it is related to the failure of the expectation of interest rate reduction; On the other hand, it may be more caused by the reversal of investors' judgment on the determination of policy to stabilize growth; In addition, the recent correction of the equity market may cause negative feedback of "redemption of asset management products - institutions selling highly liquid assets".
From the medium-term perspective, the central economic work conference at the end of last year established the annual main line of steady growth, and the economic and policy performance since the beginning of the year can fully see that the determination of the policy level to achieve the expected objectives is relatively firm, so it determines that the interest rate will develop upward with a high probability in the trend. However, it should also be noted that this year is a year of comprehensive consideration of short-term goals and medium and long-term goals. The introduction of various policies must also consider the medium and long-term requirements such as the "new development pattern". The style and probability of policy force will be "small step fast" and "point to end". The rise of interest rates will not be achieved overnight, and the upward range may be relatively limited.
From the short-term perspective, the style of the policy and the repeated epidemic situation determine that the market sentiment will continue to swing repeatedly between "expecting stable growth of the policy" and "worrying about the effect of stable growth", so that the game between institutions and the absolute level of interest rate will become more important factors affecting the trend of short-term interest rate, and the resistance effect of key points in the early stage (2.75% and 2.9% of 10-year Treasury bonds) will be more obvious, Correspondingly, the game near the key points will be more intense.
For interest rate bond investment, we suggest to enlarge the trading attribute in the short term, pay attention to the possibility of market reversal near the key points, and strategically consider the thickening income of leveraged carry interest; Focus on the possible inflection points and allocation of position building opportunities in the second quarter in the medium term.
Risk tips
RMB may depreciate further; The epidemic situation is repeated and uncertain.
