Last week (March 14-march 18), the stock index opened low. The Shanghai index fell 1.77% to close at 3251.0 points, the Shenzhen Component Index fell 0.95% to close at 1232865 points, the small and medium-sized 100 fell 1.67%, and the gem index rose 1.81%; In terms of industry sectors, real estate, non bank finance, medicine and biology led the increase; In terms of theme concepts, the rise of the continuous board index, the striking board index and the first board index ranked first; The average daily turnover of Shanghai and Shenzhen stock markets was 1110406 billion. The turnover of Shanghai and Shenzhen stock markets increased by 2.34% over the previous week, including 0.88% in Shanghai stock market and 3.48% in Shenzhen stock market; In terms of style, large cap stocks have a comparative advantage, with Shanghai Stock Exchange 50 down 0.77% and China Stock Exchange 500 down 2.19%; In terms of exchange rate, the closing point of US dollar against RMB (CFETS) was 6.3641, up 0.65%; In terms of commodities, icewti crude oil fell 3.69%, Comex gold fell 3.20%, Nanhua iron ore index rose 1.40%, and DCE coking coal fell 1.68%.
The bottom of the mood is confirmed, and the future market can be more optimistic. Last Wednesday, Liu he presided over a special meeting of the financial stability and Development Commission of the State Council, which responded to the current market concerns about the overseas listing of zhonggai shares and resolving real estate risks. Although there are some signs of improvement in the China concept stock problem, considering that the decline of this round of index is closely related to China’s economic prosperity, the growth rate of social finance and the improvement of economy still need to be further confirmed by high-frequency data. At the same time, the recurrence of the epidemic also has a certain impact on market sentiment. Overall, we believe that 25 Xinjiang Haoyuan Natural Gas Co.Ltd(002700) is the strong support for the downward trend of the gem index. However, considering the long transmission period from wide currency to wide credit and the obvious suppression effect on the performance end, it is expected that the index will still grind the bottom at a low level for 1-2 months, and the probability of A-share market this year presents a U-shaped trend (the bottom is relatively flat). At present, the A-share market has basically digested the negative events such as fed interest rate hike, Russia Ukraine conflict, China concept stock risk and real estate risk. If there are no additional negative events in the follow-up market, we believe that “it is difficult for the Shanghai Composite Index to fall below 3000 points and the gem index to fall below 2500 points”, and the overall market opportunity is greater than the risk. However, 2022 is the year when the Federal Reserve raises interest rates, the year when the European and American economies rise and fall, and the year of high inflation in the past 40 years. The peripheral markets are not peaceful. We should be sufficiently vigilant against the black swan incident in the global market. Even if there are some risks in the peripheral market this year, there is no need to be overly pessimistic. In the second half of 2022, China will hold the 20th National Congress of the Communist Party of China. This year, the necessity of stabilizing growth, employment and expectations will be greatly increased. We expect that China’s response to risk events will be accelerated and strengthened, and China’s policies will be favorable.
The Federal Reserve raised interest rates for the first time. On March 17, the Federal Reserve Open Market Committee (FOMC) announced that it would raise the benchmark interest rate by 25 basis points to the range of 0.25% ~ 0.50%, which is the first interest rate increase since December 2018. In terms of the rhythm of interest rate hike, the median value of the Fed’s dot matrix shows that the Fed is expected to raise interest rates seven times in 2022, with the interest rate of 1.9% by the end of 2022 and 2.8% by the end of 2023. From a historical perspective, usually before and after the Fed’s first interest rate hike, risk assets such as US stocks, Hong Kong stocks and A-Shares will be under significant pressure. However, in the subsequent process of the Fed’s continued interest rate hike, the impact of interest rate hike on risky assets will subside.
Investment suggestion: in 2022, the market is more complex, and investors should look for deterministic investment opportunities from uncertainty. In 2022, the A-share market is optimistic about four sectors in turn (ranking in order): (1) dilemma reversal sector: epidemic reversal sector (aviation / Airport / hotel / Tourism / Cinema), cost dilemma reversal consumption sector (household appliances, food and beverage), and pig breeding sector with industrial cycle reversal; (2) Sectors with booming production and marketing: in the next 1-3 quarters, the performance improvement expectations from strong to weak are: national defense and military industry, household appliances, transportation, communication and computer; (3) New energy and other track stocks: it is expected that the differentiation of new energy track stocks will intensify, the individual stocks with proven performance will still have high growth, and the individual stocks with false performance will be corrected; (4) Downstream consumer sector: China’s PPI rose 12.9% year-on-year in November, CPI rose 2.3% year-on-year, and the scissors gap was at an all-time high. It is expected that the convergence period of this round of ppi-cpi will continue from November 2021 to August 2022. The consumer sector will probably achieve excess returns in the first half of next year. We can pay attention to food, beverage and household appliances.
Risk tip: macroeconomic downturn, recurrence of the epidemic, fluctuations in overseas markets, deterioration of China US relations and risks in emerging market countries.
