Core conclusion: the end of the policy was established on March 16, which is a very positive and optimistic policy signal in the short term. According to historical experience, the end of the policy can support the monthly rebound of the market. The real reversal needs to re compare the matching degree of profit and valuation after the second bottom. From the perspective of valuation, taking the 5-year historical average ± 2 times the standard deviation as the upper and lower limits of valuation based on historical experience, the downside risk of the full a limit calculated by PE is still 7-8%, and the Shanghai Composite Index has reached the lower limit of valuation. The result calculated by dividend rate is slightly worse. From the perspective of profitability, the second quarter also needs to focus on verifying the effect of steady growth and the impact of upstream price increases on the profits of the middle and lower reaches. Only when all these factors meet expectations can the index determine the reversal. At present, the probability is only a monthly rebound. Strategically, 2022 will be a compressed version of 20182019, with the first half similar to 2018 and the second half similar to 2019.
(1) if there is no problem with profitability, the valuation is indeed close to the bottom. After the drastic adjustment since the beginning of the year, the valuation of the stock market has decreased significantly, and the risk premium index of bonds has rebounded significantly. Risk premium index generally has three algorithms: (1) PE reciprocal - 10-year Treasury bond interest rate; (2) PE reciprocal - 10-year AAA corporate bond interest rate; (3) Dividend yield - 10-year Treasury bond interest rate. If the five-year historical average ± 2 times the standard deviation is taken as the upper and lower limits of the valuation of historical experience, the all a limit downside risk calculated by the first two methods is still 7-8%, and the limit downside risk calculated by the third method is still 14.7%. The Shanghai Composite Index has reached the lower limit of valuation with the first two methods, and it is still 11% lower than the lower limit of valuation with the third method.
(2) the problem of profitability needs to be eliminated and verified for at least one quarter, or even the low expectation in the second quarter. There is a negative concern about the profitability of most sectors in 2022, which needs at least one quarter to be eliminated. On the one hand, it is necessary to verify the effect of steady growth and whether it can reverse the downward trend of demand in the real estate chain and consumption chain last year. On the other hand, since the beginning of the year, the price of upstream resource products has continued to rise. From historical experience, the independent rise of upstream roe will first hurt the roe in the middle and lower reaches, and then lead to the decline of demand, leading to the peak and fall of upstream roe. Similar situations occurred in early 2008, the first half of 2011 and the first half of 2018. The extent of this impact needs to be observed. At present, the impact has not been completely ruled out.
(3) the policy is strengthened, and the rebound probability is monthly. Based on historical experience, the end of the policy is enough to support the monthly rebound of the market. After the rebound, we need to verify whether the profit will deteriorate further before we can confirm whether it is a reversal. In almost every bear market in history, there will be a policy bottom to stabilize the stock market. After the policy bottoms in 2008 and 2018, the stock market rebounded sharply, and then bottomed twice. After reaching a slightly new low, the market completely bottomed out and entered the reversal in 2009 and 2019 respectively. After the end of the policy at the end of June 2015, the stock market rebounded for one month, followed by two risks. The important reason behind this is that the stock market valuation has not yet reached a low level. After the end of the policy period at the end of 2011, the stock market also rebounded well, but after entering Q2 of 2012, with the further decline of profits, the stock market center went down again.
Risk factors: the real estate market fell more than expected, and US stocks fluctuated violently.
