this week (2022 / 03 / 212022 / 03 / 25), the market began to digest the pressure in the rebound and turned to step-by-step
Wandequan a fell by 1.4%, and its style was still dominated by value. The industries with the highest growth reflected the main line of "anti inflation". The industries with upstream resources achieved higher growth: coal (5.8%), agriculture, forestry, animal husbandry and fishery (4.0%), non-ferrous metals (2.2%), and real estate also achieved higher growth (3.9%) we proposed in last week's weekly A-share strategy report "doing business step by step is better than winning easily", and several important sectors have achieved good returns in the slowing rebound. The market that we calculated before needs to face three pressures after rebound also shows signs: (1) FRA / OIS interest rate spread narrowed this week, offshore dollar liquidity margin improved, and long-term allocation funds returned to the A-share market in the north, but with this phenomenon, the trading funds that had previously conducted policy game began to withdraw; (2) After the rebound, ETFs mainly held by institutions or individuals are redeemed, indicating that the debt pressure faced by the mainstream track will continue to exist in the rebound; (3) The performance of the sectors mainly held by fixed income + funds ranked lower this week, realizing a high decline, which means that the redemption pressure is still increasing.
fundamental policy update: the demand side is dominated by "bottom support"
The relaxation of the most important high-energy cities has not been seen in the real estate policy. The more obvious evidence of "policy bias" is that on March 25, the State Council asked "to complete the relevant work of raising the financial stability guarantee fund before the end of September", which added a new guarantee to prevent systemic financial risks caused by real estate. This week, Shenzhen proposed the plan of "500 million consumption coupons", but this amount is not high. According to our previous discussion in consumption: if we can come back, we should not expect too much from the stimulating effect of consumption coupons. At present, the direction of demand recovery is determined, but elasticity needs to be continuously tracked.
the end of inflation: need to "kill" more demand
under the impact of supply, when the end of the supply curve is approximately vertical, the price will rise until there is no demand to undertake. A better way to measure how much demand has been "killed" by the price level is to observe the profit distribution of the industrial chain, rather than simply think that there will be no inflation without demand growth : : when the lower and middle profits are compressed to a certain extreme value by the upstream, There will be enough individuals to stop production and reduce the demand for upstream to reverse the supply-demand gap. What we first found is that even at a time when US inflation is so high, there is still profit space in the middle and lower reaches that has not been "swallowed up" by the upstream - the proportion of upstream profits reached 38.2% in the 1970s, while the average proportion of upstream industry profits in 2021 was only 15.4%; Second, as far as China is concerned, the proportion of upstream profits has begun to rise since the third quarter of 2020, but the current proportion of upstream profits only slightly exceeds the pre epidemic level, and there is a big gap between the upstream / downstream and upstream / midstream profit ratios relative to the historical maximum from the perspective of market pricing: at present, the relative Pb valuation multiple of the upstream relative to the downstream only reached the level of the third quarter of 2019, which has not yet reached the level of the supply side reform in 20162017. At this time, what is implied is the expectation that the future profitability of the areas dominated by middle and downstream growth stocks can be continuously maintained and improved, which obviously does not meet the certain price standard of "killing demand". The most unprepared for "commodity" pricing may be the demand sensitive industries in the middle and lower reaches. At present, the new variable is that policymakers in various countries support the downstream in tax relief and financial subsidies, which essentially increases the sustainability of upstream profits.
if we want to solve the supply problem, we should understand the essence of "carbon neutralization"
The essence of carbon neutralization is: driven by consensus, the government, entrepreneurs and the capital market reallocate the limited resources of the whole society in energy investment, and the direction of allocation is to reduce efficiency in exchange for longer-term sustainable development. If we think that this problem can be solved quickly, it means that the limited resources of society need to be more allocated to traditional energy, and the three subjects need to resonate: the significant adjustment of the attitude of the government, the significant reduction of the valuation difference between the old and new energy in the capital market, and the reversal of entrepreneurs' expectations and behavior. In fact, the capital market is not prepared for pricing. It is worth noting that the current reversal of the relationship between physical assets / financial assets will intensify the above contradictions.
layout until the end of inflation
Investors need to think systematically about the interpretation direction of bulk commodities. The main lines of the current layout are the most certain: (1) under the main line of inflation: copper, aluminum, gold, coal, oil and gas, oil transportation, agriculture (planting and chemical fertilizer) (2) demand recovery should also look for industries whose supply has been cleared in the previous downward cycle: real estate , and from the perspective of structural expansion: banks (local, county and township), construction
risk tips : China's credit easing is less than expected, the economic downturn is more than expected, and the global inflation rate is less than expected.
