Core conclusion: generally, the bear market of A-Shares has lasted for a long time in history, but there have also been V-shaped reversals after a short bear market (decline 20% in the quarter), such as Q4 in 2009, the second half of 2010 and the second half of 2013. After major adjustment in the quarter, there are two conditions for V-shaped reversal: (1) the performance will continue to exceed expectations in the next six months; (2) Extremely low valuation + extremely loose policy. We believe that the first condition is difficult to appear within the year, and the second condition may appear at the end of the second quarter or the third quarter. If we refer to the experience of U.S. stocks, the V-shaped reversal only needs the easing of monetary policy again, which is an upward risk that needs to be highly valued, which is very different from the history of a shares. In the short term, the rebound in the previous two weeks has gone too fast in space and not yet in time, so it may be necessary to let space wait for time. The core driving force of the rebound is “oversold rebound + policy stability expectation + re correction of the matching degree of valuation and performance before and after the quarterly report”. The first and second driving forces have been fulfilled a lot, and there is still room for the third driving force. With the gradual disclosure of the first quarterly report in early April, it is possible to extend the rebound time to mid April. Strategically, 2022 will be a compressed version of 20182019, with the first half similar to 2018 and the second half similar to 2019.
(1) in the history of a shares, the general bear market lasted for a long time, but there was also a V-shaped reversal after a short bear market (decline 20% in the quarter). Due to the low proportion of long-term allocated funds in China’s stock market, the general bear market in the history of A-Shares is difficult. For example, in 2001, 2 Yunnan Yuntou Ecology And Environment Technology Co.Ltd(002200) 3, 2008, 20112012, 2015q2-2016q1 and 2018, the bear market lasted for a long time, the overall index fell greatly and affected a wide range. However, there have been a few V-shaped reversals after a short bear market (a decline of 20% in the quarter). The most important three times are Q4 in 2009, the second half of 2010 and the second half of 2013.
The main reasons for the three adjustments are the tight regulation policies and the resulting periodic liquidity problems of the stock market. In terms of time, it all appears that after the economy has entered a relatively hot state, the macro policy is in the process of tightening. The range of the three adjustments was about 20%, followed by a V-shaped reversal, and returned to the previous high point in 1-2 quarters. In hindsight, the most important reason for the V-shaped reversal is that the earnings of A-Shares continue to exceed expectations.
There were also two small-scale V-shaped reversals during the epidemic in early 2020. The adjustment range of Wande all a index was small, about 15%. Then, driven by the historical extreme value of valuation, the stable growth policy, the blowout of fund issuance, the effective control of the epidemic and other factors, the rapid V-shaped reversal was carried out. In the case of extremely low valuation, there have been extremely loose policies, extremely active residents’ funds and extremely rapid economic recovery.
(2) U.S. stocks often have a V-shaped reversal after a 20% pullback. It takes a long time for investors to reverse the downward trend of a shares, especially if they want to end the downward trend. However, V-shaped reversal is very common in US stocks. Since 2009, the U.S. stock market adjustment has ended with a V-shaped reversal every time. It can be seen that behind the previous V-shaped reversals of U.S. stocks, there is the impact of the Federal Reserve’s policy easing again, which is much simpler than the conditions for the V-shaped reversals of a shares.
Risk factors: the real estate market fell more than expected, and US stocks fluctuated violently.
