Core view
Review:
Since the beginning of 2022, we have continued to emphasize the importance of “steady growth”, focusing on the opportunities of bank and real estate chain. In a series of report topics such as “it’s the turn of big finance” on January 3, “retreat or attack, rely on big finance” on January 16, and “big finance, continue to cut” on February 6, it is emphasized that paying attention to the “big finance” market is the winner and loser of 2022 investment. Big finance seems to be defensive, but in fact it is the best attack. Pay attention to big finance (bank and real estate chain).
On February 27, the “grinding, forbearance and consumption” market entered four phases of superposition, including the verification period of economic data, the policy expectation period of China’s two sessions, the landing period of the Federal Reserve’s interest rate meeting, the fermentation period of Russia Ukraine conflict, the game of stock funds, and the market grinding, forbearance, consumption and tossing.
Phase IV uncertainty elimination (economic data verification period, China’s two sessions policy expectation period, the landing period of the Federal Reserve’s interest rate meeting and the fermentation period of the conflict between Russia and Ukraine). The “financial stability Commission” made a timely voice, directly faced the market concerns, and led the spring farming market with the first quarterly report of the annual report as the starting point and the boom direction rising in turn. In terms of configuration, the short-term decline and deep rebound led the growth of science and Technology (photovoltaic, wind power, intelligent driving, Internet and digital economy). In the medium term, the external “chaos” has not been completely eliminated. It has low correlation with foreign capital and high correlation with internal steady growth. The “big finance” (bank and real estate chain) dominated by China is worthy of key allocation.
The “golden stability committee” directly faces the concerns of the market and leads the spring ploughing market. On March 16, the financial stability and Development Commission of the State Council held a special meeting to face market concerns and restore market confidence. Multi sectoral meetings were held to emphasize relevant policies, inject confidence into the market and effectively avoid a potential liquidity “crisis”. Previously, the market was affected by the long arm jurisdiction of the United States, and zhonggai shares and platform economy companies were greatly impacted, causing liquidity pressure on relevant portfolios, which was transmitted to a shares, affecting market sentiment and continued to decline. The meeting stressed that for China concept shares, “at present, the regulatory authorities of China and the United States have maintained good communication, have made positive progress, and are committed to forming specific cooperation plans” to alleviate market concerns. For platform economy companies, it is emphasized that “red lights and green lights should be set well to promote the stable and healthy development of platform economy and improve international competitiveness”.
Chaotic clouds fly across, phase IV uncertainty is eliminated, and A-Shares are still calm. The conflict between Russia and Ukraine, the contraction of the Federal Reserve and geopolitics have caused many external “chaos” since the beginning of 2022. On February 27, in our report “grinding, forbearance and consumption”, we stressed that the market may increase volatility and shock in the face of the uncertainty of the superposition of four periods (economic data verification period, China’s two sessions policy expectation period, the landing period of the Federal Reserve’s interest rate meeting and the fermentation period of Russia Ukraine conflict). At present, the “golden stability meeting” made a timely voice, the uncertainty of phase IV was temporarily eliminated, A-Shares ushered in a rare respite period, and the stock market is expected to stabilize. The more chaotic the outside, the more stable the inside. Steady growth in 2022 is not only an economic issue, but also a political issue. In the future, we are expected to see more policies to stabilize the economy and stabilize the market. The relevant statements of the “golden stability Commission” have alleviated some concerns of the market, such as: 1) actively introduce policies beneficial to the market, carefully introduce contractive policies and clarify the direction of future policies. Among them, the financial commission of the State Council shall be accountable when necessary to ensure the communication and coordination of relevant departments, form a joint force to maintain the stability and consistency of policy expectations, and ensure the effective implementation of policies. 2) Prior to the market’s attention to the real estate tax, Xinhua News Agency reported on March 16 that according to the relevant person in charge of the Ministry of finance, considering all aspects of the situation, there are no conditions for expanding the pilot cities of real estate tax reform this year.
Taking the first quarterly report of the annual report as the starting point, the boom direction is rising. 3. April is the peak period for the release of annual reports and first quarterly reports. Recently, we have seen that many enterprises have announced the business data of January and February in advance. On the whole, the direction with good performance can be focused on: cyclical products, such as pesticide and fertilizer sector of basic chemical industry, industrial metal copper of non-ferrous metals, semiconductor chain, photovoltaic and new energy chain batteries and auto parts in the growth of science and technology, urban commercial banks and rural commercial banks in big finance. 3. In April, the market mainly took the first quarter report as the starting point, from bottom to top, underestimated value, high growth and other directions, combined with the rebound of spring ploughing market, the opportunity of round rise.
The Fed’s interest rate hike has landed, ushering in the spring ploughing market and the respite period of the first quarterly report in the short term, and the medium term is the main source of market fluctuations. On March 17, the Federal Reserve announced an interest rate increase of 25bp, which is basically in line with market expectations. This is basically reflected in the market price, and the short-term uncertainty is eliminated. However, in the medium-term dimension, especially in May and June, the change of the Fed’s attitude may be the main source of market volatility. We published an in-depth topic on March 15. Under the framework of the global liquidity clock, we traced back to the Enlightenment of four rounds of global capital flows in 20072022 and the impact of water release and collection by the Federal Reserve on the market.
Looking back, several time points deserve attention, which may have another impact on the market. 1) About three weeks later, the minutes of the interest rate meeting will be analyzed in detail and the Fed’s attitude towards the table reduction will be explained in more detail. 2) Interest Conference on May 3-4. Secondly, several details of the Fed’s statement deserve attention.
1) dot matrix the forecast of interest rate in 2022 is raised from about 1% in December 2021 to nearly 2%, and the forecast of interest rate in 2023 is raised from 1.6% in December 2021 to 2.8%. The expected upward speed of interest rate is a little too fast, which is not good news for the capital market, especially for high valuation varieties.
2) in the 2022 US mid-term election, inflation is not only an economic issue, but also a political issue in the game between the two parties. Earlier, when Powell attended the hearing, a congressman asked “so you’re going to do what it takes to protect price stability?” (maintain price stability at all costs), Powell replied “yes”. Once upon a time, 10 years ago, when the European debt crisis was more serious in 2012 and the euro was facing a crisis of trust, Draghi, then president of the European Central Bank, used “whatever it takes” to defend the euro. When using such words at the central bank level, we can see the Fed’s firm attitude towards fighting inflation.
3) the current round of employment recovery in the United States is too fast and urgent, and wage stickiness may accelerate inflation. The impact of the epidemic, coupled with multiple factors such as “helicopter money” in the United States, the supply shortage of the U.S. job market is more serious. In the process of the Fed’s interest rate increase and reduction in 2015, it was a good data that the new non-agricultural employment could reach about 200000. Recently, we saw that the new population of non-agricultural employment in the United States in February was as high as 678000. In addition to the impact of price and other factors on inflation, if employment wages continue to rise and form a spiral of inflation expectations, for the Federal Reserve and Powell, the subsequent process of raising interest rates and shrinking the table may have to be accelerated and frequency increased under the guidance of “at all costs”.
From incremental game to stock game, even to reduction game, in the medium-term dimension, market stability depends on incremental funds. Since 2022, due to the significant adjustment of the market, the capital level:
1) the issuance of public funds was cold. The issuance scale of partial equity funds in January 2020 and 2021 were 86.0 billion and 404.6 billion yuan respectively, and 1381.1 billion and 218.6 billion yuan respectively in February. In contrast, in January and February 2022, the issuance scale of partial equity funds was 67.9 billion yuan and 3.7 billion yuan, and the issuance scale decreased rapidly.
2) foreign capital outflow. Since the “Russian Ukrainian conflict” on February 24, 2022, the world is facing a sharp increase in uncertainty about many problems such as economic growth and raw material prices in the future. From February 24 to March 14, 2022, the net outflow of funds from the North totaled 43.4 billion yuan, and from March 14 to March 18, the net outflow of funds from the North was 16.6 billion yuan. We continuously analyzed the recent behavior and characteristics of foreign capital in “what foreign capital has been doing in a shares” on March 9 and “six times of foreign capital outflow resumption” on March 15.
3) absolute return is forced to reduce its position. Since the beginning of the year, the median rate of return of public funds has been about – 10%. There has been a certain redemption pressure on some special accounts, absolute income, bank financial management and private placement funds, and the overall capital is a downward trend.
4) the stabilization of the medium-term dimension of the market requires incremental funds to change the current stock game, or even the dilemma of the reduction game. ① The issuance of public funds recovered. ② the CBRC held a meeting to emphasize that it saw a more obvious flow trend. A. Guide institutions such as trust, financial management and insurance companies to establish the concept of long-term investment. B. give full play to the advantages of long-term investment of insurance funds and guide insurance institutions to allocate more funds to equity assets.
Investment suggestion: in the respite period of the first quarterly report, spring ploughing rises in turn, and the growth of science and technology leads (photovoltaic, wind power, intelligent driving, Internet and digital economy). In the medium term, the external “chaos” has not been completely eliminated. It has low correlation with foreign capital and high correlation with internal steady growth. The “big finance” (bank and real estate chain) dominated by China is worthy of key allocation.
First, the deep rebound and growth lead. In the report “growth counterattack” on March 16, we reviewed the main characteristics of six bottom rebounds of A-Shares in 20 years. The index rose by 20% – 30%, and non bank + growth is the main direction of the rebound. ① On the whole, non bank finance can basically achieve good positive returns in the rebound. Even many times can be ranked higher. ② Highly elastic growth stocks are the main force of the rebound. At 998 points in June 2005, 1949 points in December 2012, 1850 points in June 2013 and 2441 points in October 18, the growth industries such as military industry, computer and media all rebounded significantly.
1) as a whole, the main direction of the current counterattack is mainly focused on the previous adjustment, and the policy catalytic easing the concerns of investors, with greater flexibility, and the growth of a quarterly boom will become the main direction of counterattack. Hong Kong stocks and car chips related to zhonggai Internet, photovoltaic, wind power, new energy chain and intelligent driving.
2) under the background of “counting from the east to the west”, build national data center clusters in Beijing Tianjin Hebei, Dawan District, Yangtze River Delta, Chengdu Chongqing, Guizhou, Gansu, Inner Mongolia and Ningxia. The digital economy will rise as a national strategy in the 14th five year plan, and we can pay attention to the infrastructure direction represented by cloud computing and data center.
Second, the geopolitical conflict has not been completely eliminated because the contraction expectation of the external Federal Reserve has not yet fully responded. With the gradual recovery of economy and the gradual recovery of consumption, in order to avoid subsequent external disturbances. Additional allocation is a “big finance” (bank and real estate chain) with low correlation with foreign capital and high correlation with internal steady growth.
1) Hefei local auction is rare and hot. The downward pressure of the real estate economy is hedged against the steady growth policy. In addition, the marginal improvement of relevant policies for real estate enterprises is due to the strengthening of urban policy implementation and the relaxation of demand side. We can pay attention to state-owned and private enterprises of high-quality real estate. Those with strong alpha attribute in the real estate chain and C-end consumption attribute, such as home furnishings, consumer building materials and household appliances, are expected to usher in the dual catalysis of valuation repair and performance growth.
2) the macro economy is picking up from the bottom and is still in the window period of monetary easing and credit easing as a whole. The banking sector with low valuation, high dividend attribute and pro cyclical attribute is expected to be favored. At the same time, the recovery and improvement of the real estate chain will contribute to the further recovery of the quality of bank assets. We can focus on big banks that underestimate the value of “stagflation” and urban commercial banks and agricultural commercial banks in Chengdu Chongqing economic circle, Yangtze River Delta economic circle and other places.
Risk tip: the conflict between Russia and Ukraine escalated, overseas interest rate hikes exceeded expectations, and the spread of the epidemic exceeded expectations.
