The economy of state-owned enterprises operated steadily, and the growth of revenue and profit slowed down. From January to February, the total operating revenue of state-owned enterprises increased by 14.0% year-on-year, including 16.0% for central enterprises and 11.0% for local state-owned enterprises. From January to February, the total profits of state-owned enterprises increased by 16.8% year-on-year, including 20.9% for central enterprises and 3.3% for local state-owned enterprises. The revenue and profits of state-owned enterprises have maintained a high growth level, but the growth rate is still in a downward trend. At the same time, the operating conditions of state-owned enterprises are also differentiated. The profitability of upstream enterprises such as coal and nonferrous metals is better than that of middle and downstream enterprises, and the profitability of the central bank is better than that of local state-owned enterprises. In March, due to the impact of the epidemic in big cities such as Shanghai and Shenzhen, it had a great impact on industries such as transportation and tourism consumption, and would also have a certain impact on the profits of enterprises in the short term.
The frequency of policy introduction was accelerated to stabilize market expectations. The executive meeting of the State Council deployed comprehensive measures to stabilize market expectations and maintain the steady and healthy development of the capital market. The meeting proposed to strengthen the support of prudent monetary policy to the real economy, maintain policy stability, prevent the introduction of policies that are not conducive to market expectations, properly handle the problems in the operation of the capital market, closely follow the situation outside China, take targeted measures to boost market confidence, stabilize foreign trade and foreign investment. The national development and Reform Commission has successively issued the implementation plan for the development of new energy storage in the 14th five year plan, the plan for the modern energy system in the 14th five year plan and the medium and long-term plan for the development of hydrogen energy industry (20212035), focusing on planning and promoting the development of China Shanxi Guoxin Energy Corporation Limited(600617) industry. The CBRC said that it supports insurance companies to increase investment in the capital market, especially the stocks of high-quality listed companies, through direct investment, entrusted investment and investment in public funds; Encourage insurance asset management companies to increase investment support for stocks and bonds; We will promote the establishment of a financial stability guarantee fund as soon as possible and reserve funds for the disposal of major risks. Harbin abolished the real estate sales restriction policy and plans to abolish the real estate market regulation policies, including the implementation of regional sales restriction policies, introduced in 2018.
U.S. regulators are tough and put pressure on Chinese stocks. The public company accounting oversight board (PCAOB) said in a recent statement that it was too early for the market to speculate that China and PCAOB had reached a final agreement on accounting regulation. The statement said that even for sensitive industries, relevant audit documents should be comprehensively inspected, and there is no room for negotiation. This will conflict with China’s relevant regulatory system. Meanwhile, the US Securities and Exchange Commission (SEC) added microblogging companies to its “pre delisting list”, which is the sixth company on the list and the first Chinese Internet company to enter the list.
Investment suggestion: the profit growth of state-owned enterprises slows down, and the epidemic may lead to poor profits of some enterprises. The policy focuses on stabilizing market expectations. U.S. regulatory policies put pressure on zhonggai shares. It is expected that the market will continue to fluctuate at the bottom. It is recommended that the position be reduced to 60% and focus on construction, medicine, agriculture, forestry, animal husbandry and fishery in the short term.
Risk warning: the policy and economic data are not as expected, and the risk events impact the market liquidity.
