Four levels and eleven indicators of the "big bottom" of the recovery history
Since the 21st century, A-Shares have experienced five continuous sharp declines, namely: the sharp decline of share reform + policy tightening from 2004 to 2005; The subprime mortgage crisis + policy tightening in 2008 fell sharply; From 2011 to 2012, the economic momentum switching + policy tightening fell sharply; Deleveraging + killing valuation fell sharply from 2015 to 2016; The Sino US trade friction + policy tightening in 2018 fell sharply.
1. Where is the current market?
We selected 11 indicators at four levels, including transaction level (decline, turnover, turnover rate), valuation level (PE, PS, PEG), capital level (New Development Fund, financing activity) and Fundamentals (gross profit margin, GDP, social finance growth rate). Overall, the four level indicators show that it is difficult to say the "bottom" of history at present: the sentiment at the transaction level has not reached the freezing point; The absolute value of valuation is low, but the higher value needs to be further digested; Incremental funds show a strong wait-and-see atmosphere; The market's response to fundamentals is "from fast to slow", and the logical deduction is "from slow to fast".
2. The performance of the previous "big bottom" sector in the second round, and the "navigation" aftermarket strategy:
We use CITIC's first-class industry division. Based on the historical performance of five times, the large market value sector is relatively resistant to decline before the bottom, the finance, real estate, post cycle and upstream resource products sector is relatively resistant to decline, the small market value sector is the rebound pioneer after the bottom, and the probability of excellent performance of TMT, power equipment, new energy and military industry is relatively large.
Research and judgment of the general trend: return to the melody of "focusing on me" and pay attention to the verification of fundamentals
The recent rebound comes from the shock repair after the concentrated venting of panic. For sustainability, we should observe whether the influence of disturbance factors is fully priced. The adjustment that began in mid December last year began with the market's concerns about China's economy - wait-and-see for incremental funds, the continued cold of new development funds - the escalation of the conflict between Russia and Ukraine - Global stagflation concerns - the Fed's interest rate hike - disturbance by other events, etc.
In terms of external disturbance, geopolitical conflict and fed interest rate hike, the market has gradually pricein, and the rhythm of A-Shares has returned to "me dominated". U.S. stocks have basically recovered the lost ground since the conflict between Russia and Ukraine. After the interest rate hike boots landed, they entered the contraction cycle, the external disturbance factors gradually weakened, and the subsequent rhythm of A-Shares will return to the main melody of "I dominated".
From the current economic operation, the effect of wide currency and wide credit has gradually appeared. The data show that the economy has achieved a good start from January to February, but on the one hand, the demand side is still weak, and the recent epidemic has also had a certain impact on the economy in March. Therefore, in this year's gdp5 Under the steady growth target of about 5%, the space for follow-up policies is expected to increase, including monetary policy, fiscal policy and industrial policy. We also sorted out the industrial policies issued by the central government after the 2012 and 2018 sessions (see the text for details). After the 2012 sessions, the policy directions mainly include consumption, environmental protection, agriculture and real estate. After the 2018 sessions, the policy directions mainly include new energy vehicles, integrated circuits AI, 5g.
At the capital level, the wait-and-see atmosphere for incremental funds is still strong. On the one hand, the issuance of public funds is still at the freezing point. In March, 24 new funds were issued with a total share of 11.4 billion. Since January, new funds have been cut back. On the other hand, the net outflow of funds from northbound this week was nearly 13 billion yuan, with a net outflow for three consecutive weeks. In March, the net outflow exceeded 63 billion yuan, the second largest monthly net outflow record in northbound history, second only to march of 20 years. However, in the history of land stock connect, there have been only three net outflows for two consecutive months. The net outflow range of superimposed weekly frequency has gradually reduced, and the margin of future impact has weakened.
At the market level, we resumed five consecutive sharp declines of A-Shares since the 21st century, namely: the sharp decline of share reform + policy tightening from 2004 to 2005; The subprime mortgage crisis + policy tightening in 2008 fell sharply; From 2011 to 2012, the economic momentum switching + policy tightening fell sharply; Deleveraging + killing valuation fell sharply from 2015 to 2016; The Sino US trade friction + policy tightening in 2018 fell sharply. By comparing with the historical "bottom", we select four levels and eleven indicators to observe. An important conclusion is that the market's response to fundamentals is "from fast to slow", and the logical deduction is "from slow to fast". Maintaining the recent view, we believe that the shock repair is expected to continue, but at present, it is recommended to focus on individual stocks over the index, pay attention to the verification of fundamentals in the first quarter performance window period, and lay out three main lines in the future market:
1) main line of steady growth: select the targets with low value and high dividend cash flow. From the current economic operation, the effect of wide currency and wide credit has gradually appeared. The data show that the economy has achieved a good start from January to February, but the demand side is still weak, and the recent repeated epidemic has also had a certain impact on the economy in March. Therefore, in this year's GDP 5 Under the steady growth target of about 5%, the space for follow-up policies is expected to be improved, including monetary policy, fiscal policy and industrial policy. In the sector direction, the infrastructure real estate chain driven by the "old economy" and the new energy, integrated circuit, artificial intelligence and 5g driven by the "new economy" deserve attention. Light index and heavy individual stocks, and screen targets with low value, high dividends and good cash flow.
2) main line of inflation: under the global stagflation pattern, it is expected that energy and other bulk commodities will remain at a high level. From the perspective of the transmission mechanism of oil price rise, we can pay attention to the investment opportunities of three chains: first, crude oil and directly related products, second, middle and downstream chemicals, and third, it can boost the whole resource products. Under the demand of fat tail in developed countries + China's demand for steady growth, the upstream resource products are expected to benefit from the support of the demand side. From our previous combing of the business express of A-share enterprises from January to February, the profitability of resource products and industries in the industrial chain is excellent, far higher than that of consumer industries, and not inferior to the growth sector known for its high prosperity.
3) main line of cost performance: select growth targets with PEG 1. The adjustment of track stocks in the early stage is relatively sufficient, and the market outlook reproduces the scarcity and high growth of cost performance, and long-term layout of advantageous industries. The top-level plan for hydrogen energy was announced in the middle of this week. The document shows that by 2025, the number of fuel cell vehicles will be about 50000, a number of hydrogen refueling stations will be deployed and built, and the hydrogen production capacity of renewable energy will reach 1 China Vanke Co.Ltd(000002) 00000 tons / year. At present, many cities have passed the pilot and promoted the development of hydrogen energy track. We expect that the follow-up policies and plans for wind power, photovoltaic and new energy vehicles will be implemented one after another, and the development of industrial track will have a long slope and thick snow. Advantageous industries with core competitiveness have better ability to resist risks and fluctuations. At present, we suggest to pay attention to the verification of fundamentals, focus on the annual report and the first quarterly report, beware of poor performance expectations, and select some cost-effective growth targets with PEG 1.
Risk tips
The policy force was less than expected, the impact of repeated epidemics on the economy was more than expected, and the external disturbance was more than expected.
