Core view
In mid March, the PMI index of the mining and manufacturing industry recorded 49.5%, down 0.7 percentage points from the previous value. Due to the superposition of multiple factors such as the recurrence of the epidemic in many places, the intensification of geopolitical conflicts and administrative production restrictions, the outlook of the manufacturing industry fell significantly in March. First, the March epidemic was the largest local outbreak since Wuhan. Many cities have taken strict sealing and control measures, and the production reduction and shutdown in some areas have spread to the upstream and downstream; Second, affected by the geographical conflict between Russia and Ukraine, the export orders of some enterprises have been reduced or cancelled; Third, the winter Paralympic Games and the two sessions have been held successively in mid and early March, and Hebei, Shanxi and other regions are facing certain administrative production restriction pressure. Combined with the performance of economic data from January to February, we lowered the GDP growth rate of 5.4% year-on-year in the first quarter, which is still a good answer compared with the previous value of 4%. We believe that steady growth remains the primary goal of monetary policy. The probability of subsequent RRR reduction has increased, and we will continue to expand credit and stabilize growth. Under this combination, the long-term interest rate will pay more attention to wide credit in the future, and the yield of 10-year Treasury bonds is expected to reach a high of about 3% in the second quarter. In terms of equity, the credit extension will continue, and we will continue to be optimistic about the stable growth sector. In the future, we will focus on the switching opportunities of growth stocks after the US bond yield peaked.
The overall slowdown of enterprise construction and the contraction of production index
In March, the production index fell by 0.9 percentage points to 49.5%. There were concentrated epidemics in many places, superimposed the influence of international geopolitical instability factors, the overall slowdown of industrial production and operation activities, and the production index returned to the contraction range. High frequency data show that in early March, affected by the convening of the two sessions and the winter Paralympic Games, some iron and steel plants in Hebei and Shanxi limited the production of stuffy furnaces, the overall blast furnace operating rate rebounded less than that in February, the operating rate of refineries fell, and the daily average output of crude steel and rebar of main steel mills was much lower than that in the same period of last year. In addition, the production reduction and shutdown in some areas also further affected upstream and downstream enterprises. It can be verified that the supplier delivery time index fell by 1.7% to 46.5%. In terms of midstream industrial production, PTA operating rate, polyester chip operating rate and coating operating rate fell against the season. Affected by prevention and control measures, the average cement delivery rate this month is much lower than that in the same period last year, and the repair of automobile tire operating rate is less than expected. Recently, affected by the earthquake, tsunami and other factors, some factories in Japan's semiconductor industry chain were shut down, and the problem of automobile "core shortage" continued.
Frequent outbreaks, blocked domestic demand, geopolitical conflicts and weak external demand
In March, the new order index fell by 1.9 percentage points to 48.8%. The repair of domestic demand was blocked and external demand weakened. In March, the epidemic broke out in many places across the country. Shanghai, Shenzhen, Jilin, Nanjing and other provinces and cities raised the level of epidemic prevention and control. The epidemic prevention and control had a great impact on offline consumption and service industry. Among them, the transaction area of commercial housing in 30 large and medium-sized cities showed a downward trend, the average daily sales of wholesale and retail of passenger car manufacturers turned negative year-on-year, the box office data fell to the freezing point since the epidemic in Wuhan, and the repair of domestic demand was subject to certain resistance. The new export order index fell 1.8 percentage points to 47.2%, and foreign demand fell again after picking up in February. On the one hand, the recent intensification of international geopolitical conflicts, the unrest in Russia and Ukraine, the reduction or cancellation of export orders of some Chinese enterprises, and the BDI Baltic dry bulk index showed an obvious downward trend after the middle of the year; On the other hand, the sharp fluctuation of commodity prices has also brought great cost pressure to the middle and downstream industries. The CCFI China export container freight rate composite index has decreased significantly month on month due to the weak influence of supply and demand.
The price index rose sharply, suggesting an increase in PPI month on month
In March, the purchase price index of main raw materials rose 6.1 percentage points to 66.1%, and the ex factory price rose 2.6 percentage points to 56.7%. Under the geopolitical catalysis of the situation in Russia and Ukraine, crude oil prices rose sharply in March, and Brent crude oil hit a high of US $139, a new high in 13 years. Affected by this, the national development and Reform Commission raised the prices of gasoline and diesel twice this month, and the prices of gasoline and chemical related industrial chains continued to rise. At the same time, based on the reduction of coal imports and the strong demand in China, the price of thermal coal rebounded sharply; Copper, aluminum, zinc, nickel and other non-ferrous metals rose sharply under the multiple pressures of low inventory, Russia Ukraine conflict and rising costs, and the overall price index rose significantly. In March, the inventory index of main raw materials decreased slightly by 0.8 percentage points to 47.3%. At the same time, the epidemic factors led to poor transportation, and the inventory of finished products increased by 1.6 percentage points to 48.9%, showing the characteristics of passive replenishment as a whole.
Cut the first quarter GDP by 5.4% year-on-year
In March, the PMI of manufacturing industry decreased significantly, and the PMI of service industry fell more sharply. Multiple negative factors such as the recurrence of the epidemic and geopolitical conflict in March disturbed production and consumption. However, the economic data from January to February showed good performance. We lowered the GDP growth of 5.4% in the first quarter, which is still a good answer compared with the previous value of 4%. We believe that steady growth is still the primary goal of monetary policy. The financial data in February was slightly lower than expected. The probability of subsequent RRR reduction by the central bank has increased, and we will continue to expand credit and stabilize growth. Under this combination, the long-term interest rate will pay more attention to wide credit in the future, and the yield of 10-year Treasury bonds is expected to reach a high of about 3% in the second quarter; In terms of equity, the credit extension will continue, and we will continue to be optimistic about the stable growth sector. In the future, we will focus on the growth stock switching opportunities brought by the peak yield of US bonds.
Risk warning: the epidemic situation worsened beyond expectation; The implementation of the policy is less than expected; Geopolitical conflict exceeded expectations
