Core conclusions:
In the special report “the relationship between economic cycle and industry style”, we systematically combed the impact of economic cycle on excess returns of different sectors. In this report, we focus on answering the question: will there be any difference between the excess returns of subdivided industries in the sector and their sectors? Including the difference in inflection point and amplitude. If there are differences, what is the logic at the meso level at work?
After 2010, the consumer sector has outperformed the CSI 300 index for a long time. 1) Since 2008, the consumer sector has performed well from the bottom of credit to the top of price. The probability of outperforming the CSI 300 index is 75%, and the annualized excess return has reached more than 10%. 2) The consumer sector is least likely to generate excess returns from the end of policy to the end of credit. The probability of outperforming the CSI 300 index is only 25%, and the annualized excess return is only – 10%.
In the food and beverage industry, the “right to raise prices” affects the inflection point and range of excess returns. 1) The inflection point of excess return in the food and beverage industry is more consistent with that in the consumer sector. It will also close and rise from the bottom of credit to the top of price. 2) from the perspective of segmentation industry, the “raise price” of enterprises will affect the inflexion and extent of excess returns of Baijiu, dairy products and condiments. After 2015 Baijiu Baijiu liquor needs to be converted into mass consumption, high-end liquor continues to raise prices, and ROE of listed companies continues to improve. The upward trend of Baijiu liquor industry is not only ahead of the consumption sector, but also the excess earnings after that.
Optional consumer industries, the inflection point of excess return is more sensitive to the economic cycle. Optional consumer industries such as home appliances, automobiles and light industry manufacturing are more sensitive to the peak of the economy. Specifically, the winning rate of the consumer sector from the top of the economy to the top of the price is 75%, and the annualized excess return is 10%, which is basically consistent with the situation in the period of economic recovery. The winning rate of optional consumer industries such as household appliances, automobiles and light industry manufacturing from the top of the economy to the top of the price decreased to 50%, and the annualized excess return also decreased by 5 ~ 10PCT compared with the period of economic recovery.
In the pharmaceutical and biological industry, the high-level market is usually dominated by industrial policies. 1) The pharmaceutical industry is heavily dependent on policy. On the one hand, industrial policies will have an impact on the demand side. For example, the medical reform in 2009 improved the medical insurance coverage and promoted the substantial growth of drug demand. On the other hand, policies will also have an impact on the supply side. For example, social medical services will be encouraged in 2015 and innovation in drugs and pharmaceutical machinery will be encouraged in 2017, which have led to a significant win in the corresponding subdivided industries. 2) The main difference between the pharmaceutical and biological industry and the consumer sector is that the former performs better than other stages from the end of credit to the end of economy, both in terms of winning rate and annualized excess return. This phenomenon may be due to the fact that the pharmaceutical industry has the attributes of both consumption and growth. Under the background of warmer credit, uncertain economic situation and higher residual liquidity, the pharmaceutical industry will also perform better.
The agriculture, forestry, animal husbandry and fishery industry will be dominated by the logic of “pig cycle” after 2015. 2015 is an important inflection point of the excess return of the agriculture, forestry, animal husbandry and fishery industry. After that, the inflection point of the excess return of the agriculture, forestry, animal husbandry and fishery industry is highly related to the pig price. The logic at the industrial level is that the listing of leading enterprises in the pork breeding industry and the withdrawal of a large number of small and medium-sized breeding enterprises have led to the improvement of leading concentration and the increase of elasticity of pig price rise.
Risk warning: the report conclusion is based on the analysis of historical conditions, and the historical law may fail.
