Market changes
On March 30, the market rose sharply, of which the Shanghai stock index closed up 1.96% and the gem index closed up 4.02%. At the industry level, real estate chain, power equipment, food and beverage and other industries led the increase.
External geopolitical conflicts eased, internal real estate and energy policies were actively implemented, and multiple benefits promoted the emotional repair of the market and hot topics
The main reasons for the sharp rise in the market are: ① substantial progress has been made in the new round of Russia Ukraine negotiations, which has boosted the risk appetite of the global market. On March 29, the fifth round of Russia Ukraine negotiations made positive progress. Ukraine confirmed that it would become a permanently neutral non nuclear country under the guarantee of international law and would give up the establishment of foreign military bases and foreign garrisons. Russia’s security strategy was met and decided to significantly reduce military operations in Kiev and Chernigov. Boosted by the positive progress of Russia Ukraine negotiations, global stock markets rose sharply, and directly related assets such as crude oil and gold and safe haven assets fell sharply. ② Fuzhou has relaxed the purchase restriction policy and continued to take loose measures in real estate regulation. On March 30, the purchase restriction policy in Fuzhou was relaxed: ordinary houses can be purchased without providing medical social security or tax certificate or settlement for 12 months in recent two years, and the purchase conditions of second homes can be relaxed at the same time. Recently, loose policies and measures for real estate regulation and control have been introduced everywhere, which is the most important support for the strong performance of the real estate chain in the near future. Similarly, under the catalysis of the relaxation of purchase restrictions in Fuzhou, the real estate chain rose sharply today. ③ Policies actively promote the development of clean and efficient energy such as wind power. On March 29, the National Energy Administration issued the guidance on energy work in 2022, which clearly required to increase the proportion of clean energy power generation, strengthen the planning and construction of clean energy supply and consumption, and vigorously develop all-round assistance measures such as wind power and photovoltaic clean energy, catalyzing the sharp rise in today’s battery, wind power, photovoltaic and other fields. ④ At the end of the quarter, the central bank increased the amount of reverse repurchase to stabilize market liquidity expectations. As the demand for funds increased near the end of the quarter, the central bank increased the investment of reverse repo in the open market from March 28 to 30. The daily investment volume reached 150 billion for three consecutive days, with a total net release of 380 billion. The scale is large, which is intended to smooth the fluctuation of funds at the end of the quarter and stabilize the market liquidity expectation.
In the short term, the oversold rebound is particularly expected. In the long term, the undervalued value is not pessimistic
The short-term market oversold rebound is expected to continue. On the one hand, market risk appetite is expected to improve due to external risk mitigation, and the internal stability policy will continue. In the external environment, the Fed raised interest rates in full expectation, and the geopolitical conflict between Russia and Ukraine made positive progress than expected, easing the market’s concerns about stagflation risk, which is expected to become a booster for the continued oversold rebound in the short term. In China, the acceleration of steady growth was emphasized and confirmed by the financial stability Commission. The macro policy tone remains positive, the monetary policy continues to be stable and loose, the liquidity remains reasonably abundant, the total amount of credit increases moderately, the fiscal policy continues to improve the strength and rhythm, and the real estate regulation and control policy continues to be warm. On the other hand, the short-term macro liquidity is safe, and the micro liquidity is expected to improve. Macro liquidity, MLF can be extended in excess, the reduction of reserve requirements and interest rates is still on the way, and the overall abundant environment is still worry free in the short term. In terms of micro liquidity, on the basis of good mood and improved profit-making effect, northbound funds and institutional funds are expected to continue net inflow. Overall, the external environment eased, the internal policy remained positive, and the market oversold rebound could be expected to continue.
The market valuation is at a low level, and the cost performance of medium and long-term investment is improved. There is no need to be overly pessimistic. As of March 29, the valuations of wandequan a, Shanghai stock index, gem index and other major indexes fell to 42%, 32% and 40% since 2010 respectively, and the valuations of some industries were significantly underestimated. The index and industry valuation levels that have fallen sharply and have been low have thickened the safety margin of investment and have medium and long-term investment value.
Maintain balanced allocation, optimize the stable growth chain with high short-term cost performance and layout the valuation market in the third stage of medium and long-term growth
The market fluctuates violently and the rotation is accelerated. It is suggested to carry out long-term dislocation allocation around three main lines: 1) the short-term price of the stable growth chain is still high, and with the continuation of real estate regulation and marginal easing, we can continue to participate in the upstream and downstream of the real estate chain, banks, new and old infrastructure and other directions. 2) In the medium and short term, we can continue to participate in the opportunities related to the main line of medicine and price increase (planting industry / chemical fertilizer / dairy products). After the inflection point of the epidemic, we can pay more attention to the travel chain (Airport / hotel / catering, etc.). 3) For the growth style, we are still optimistic about the valuation market in the third stage in the medium and long term. It is suggested to adjust the industries with high prosperity and valuation diffusion, such as power equipment, electronics, national defense and military industry, computer and so on.
Risk tips
The development of Omicron mutant strain exceeded expectations; There are deviations in policy interpretation; China’s economic downturn exceeded expectations; The tightening of monetary policy by the Federal Reserve exceeded expectations.
