After the stock index fell to around 3000 this week, the Shenzhen V rebound market was engraved again; Hong Kong stocks showed greater flexibility, sweeping away the previous decline. The convening of the gold stability meeting marks the re establishment of the policy bottom. Looking back, will the stock market rebound or reverse? After the bottom, how should the market choose?
Is the bottom already present—— A reasonable estimate of the valuation base. 1. Based on the index valuation of existing constituent stocks, as of March 15, the dynamic valuation of CSI 800 index was 12.4x, reaching the level of March 20 (12.4x), and the equity risk premium was 5.2%, close to the level of March 20 (5.4%). 2. Using the method of fixed P / E ratio net profit, in the neutral case, taking the valuation bottom at the beginning of the epidemic outbreak in 2020 as the benchmark, the whole a has only 0.7-4.8% room for decline from the closing price on March 15. 3. Starting from the technical indicators and taking the strong and weak trend indicators as the reference basis, the bottom signal has been triggered on March 14. From the historical experience, the average decline range after the emergence of the bottom signal is about 2.8%, and the maximum decline range is 9.9%. Considering that the market fell more than 4% again on March 15, it can also be considered that the market has reached the bottom area. In conclusion, no matter which dimension, we believe that the vicinity of 3000 points ( Wuxi Boton Technology Co.Ltd(300031) 50) corresponds to the reasonable valuation bottom of the market.
What is the law of the sharp fall and rebound in history? We selected the historical period in which the short-term decline of the market has exceeded 15% since 2010. The statistical results show that during the sharp decline and rebound period, the keyword of industries and individual stocks is the “reversal” effect, that is, the greater the decline in the early stage, the greater the rebound in the later stage; At the same time, in view of the sharp rise in the weak environment, we can also draw the following conclusions: after the weak rise, the gem has the greatest elasticity and the best continuity; The medium-term performance of Hang Seng index is significantly stronger than that of a shares.
Rebound or reverse—— The possibility of double dip is not ruled out. We have discussed in the previous report that the policy will take effect with a high probability from the end of the policy to the end of the market, but there is no clear time lag relationship. The core of the reversal of the market trend lies in whether the implementation effect of the policy can really solve the core contradiction at that time. Referring to 2018, how is the downward trend of the market reversed? At the end of July 2018, the meeting of the Political Bureau of the CPC Central Committee proposed “six stabilities”, the end of macro policy appeared, and the market changed from unilateral decline to weak shock; From October to November, vice premier Liu He and his party and the two sessions expressed their support for the capital market. The market started a monthly rebound, and then bottomed out twice; Until the beginning of 2019, the central bank comprehensively lowered the reserve requirement to confirm the lowest point of the index, and then the credit data in January was much higher than expected, and the main rising market was established. For the moment, the possibility of a second bottom dip cannot be ruled out until there is a substantial improvement in “internal stagnation” + “external inflation”.
However, in any case, the bottom area has appeared, the short-term 50 uncertainty is still the highest, the rebound elasticity of oversold growth stocks is greater, and the medium-term main line remains to be determined in the future. No matter whether it is a double dip or not, we believe that the area near 3000 ( Wuxi Boton Technology Co.Ltd(300031) 50) corresponds to the bottom of the market, and 2022 is not a bear market. So far, the macro environment is still in the combination of “weak economy, wide currency and low credit”. Historical experience shows that undervaluation is still the current direction of minimum resistance; Meanwhile, in the broad-based index, the valuation and risk premium of SSE 50 have reached the historical extreme value on March 15. The growth demand in the first half of the year continues to strengthen, and the follow-up policy rhythm is likely to accelerate. In the short term, the market value uncertainty represented by SSE 50 is still the highest, while the growth stocks with both the first quarter report exceeding the expectation and the previous oversold are more flexible, and the medium-term main line remains to be determined in the future.
Strategic suggestions and industry recommendations: (I) credit entities are both weak, the demand for steady growth is further strengthened, monetary credit transmission needs to be strengthened, and high-quality banks and state-owned enterprise developers are recommended; (II) recommend the communication and state-owned enterprise reform in the direction of new infrastructure development + military industry determined by the growth trend; (III) oil transportation benefiting from the expansion of regional alternative demand, as well as aquaculture and catering with the concept of dilemma reversal.
Risk tips: 1. The epidemic situation is out of control; 2. A sharp recession; 3. The policy has changed more than expected.
