Review of market performance in the first quarter of 2022
In the first quarter of 2022, from January 1, 2022 to March 31, 2022, the Shanghai stock index fell by 9.74%, the CSI 300 fell by 13.56%, the SME board composite fell by 14.84%, the gem composite fell by 17.22%, and the CSI 1000 fell by 13.37%. The top five industries with positive yield in the first quarter were oil, natural gas and supply and consumption cost fuel index, real estate management and development index, construction and engineering III index, transportation infrastructure index and commercial bank index. The industries with the last five increases were electronic equipment, instruments and components index, aerospace and national defense index, air cargo and logistics III index, beverage index and automobile index. The wind machinery index fell by 18.80%, ranking 51 / 62 in the industry growth month, and the sector outperformed the Shanghai Composite Index by 9.06 percentage points.
From January 1, 2021 to March 31, 2021, the top five stocks in the wind machinery sector were Luoyang Northglass Technology Co.Ltd(002613) , Zhejiang Zhongjian Technology Co.Ltd(002779) , Zhejiang Tiantai Xianghe Industrial Co.Ltd(603500) and Shandong Swan Cotton Industrial Machinery Stock Co.Ltd(603029) , with increases of + 109.92%, + 58.99%, + 32.38%, + 29.45% and + 27.86% respectively. The top five stocks with declines were Jiangsu Lixing General Steel Ball Co.Ltd(300421) , Shenzhen Changhong Technology Co.Ltd(300151) , Shanghai Kelai Mechatronics Engineering Co.Ltd(603960) , Zhejiang Hangke Technology Incorporated Company(688006) and Hangzhou Great Star Industrial Co.Ltd(002444) , with declines of – 48.39%, – 46.62%, – 45.47%, – 43.96% and – 43.18% respectively.
Core investment view in Q2 2022
From the perspective of fundamentals, 2022 should focus on the following three investment opportunities. Under the trend of digitalization and intellectualization, we should focus on the new direction of infrastructure construction and focus on the investment opportunities of 5g, pan semiconductor and intelligent application industry chain; Under the green trend of double carbon background, we should focus on the investment opportunities of low-carbon new energy and energy storage, energy conservation and emission reduction industrial chain. Under the trend of internal circulation construction and manufacturing industry chain reconstruction, we should focus on the investment opportunities for the localization of aerospace and key and high-end general electromechanical equipment and parts industry chain.
Looking back to the first quarter of 2022:
The adjustment in the first quarter was in line with our expectations, but the adjustment range and pace exceeded our expectations. We expect that maintaining growth will once again become the top priority of the government’s work and become the key investment point of A-Shares in the first quarter. However, the external war, the aggravation of the spread of the epidemic in China, the looser liquidity than expected and the early withdrawal of foreign epidemic policies exceeded our expectations. As a result, the price of bulk commodities fluctuated sharply upward, the consumption and manufacturing production in China’s key cities fell more than expected, and the recovery of foreign supply led to an unexpected decline in China’s export orders. Many factors strengthened the market’s expectation of the decline in future profits of the manufacturing industry, while the lower than expected liquidity put pressure on the valuation of the A-share market, The loosening of the chips of the original institutions and the decline of the market profit-making effect exacerbate the sharp contraction of the market risk preference. At present, the market is dominated by emotion, the market risk preference is low, and the profit-making effect is poor, which makes the financial management continue to redeem, and the industry rotation is dominated by the game of stock funds.
From the perspective of the sectors with better performance in the first quarter, the traditional investment sector dominated by maintaining growth, the real estate industry chain reversed by the industry, the cyclical sector dominated by commodity price rise, as well as the epidemic related detection boxes, antigens, covid-19 specific drugs and traditional Chinese medicine performed best. From the perspective of sector rotation, fully covering the decline of strong sectors is the premise of news driven hot rotation, which is a typical phenomenon of stock game market.
We believe that in the second quarter of 2022:
Commodity prices continue to rise and fluctuate sharply, and the world’s financial rules are facing various impacts. The US interest rate hike, the regulatory conflict between China and the United States over Chinese stocks and the de dollarization of international commodity supply will have more impact and impact on China’s financial market. The unexpected withdrawal of foreign epidemic control policies has led to a rapid recovery of foreign supply, and the timing and extent of the decline in export orders of China’s manufacturing industry may exceed expectations. The conflict between the United States and Russia, the de dollarization of international commodity supply and the appreciation of RMB have made the price of resource products continue to rise and fluctuate sharply, increasing the impact on the cost of manufacturing industry. Overall, the current operating margin of China’s manufacturing industry is deteriorating. It was originally expected that the performance of the manufacturing industry will start from the second quarter. Now there is great uncertainty in the overall operating performance of the industry in the second quarter.
From the logic of fundamentals, 1 Pay attention to the advanced manufacturing direction determined by the good trend of space competition, and focus on the new infrastructure sub sector with the most determined policy direction; 2. We should still focus on low-carbon new energy and investment opportunities in energy storage, energy conservation and emission reduction industrial chains. 3. The world trade situation continues to deteriorate, and localization substitution is the most controllable and definite field and trend. Continue to allocate the core assets of national competitiveness, enterprises with independent high-end machining capacity, select those with card position advantages to realize the import substitution of key parts, or pay attention to those basic parts enterprises with growth certainty from bottom to top. 3. Specifically, we will continue to pay attention to sub sectors such as new energy power generation and batteries (hydrogen energy, nuclear energy, lithium battery, wind power and photovoltaic), military equipment (aerospace equipment, Beidou navigation, Satellite Internet of things and civil aircraft), new infrastructure of digital economy (5g, Internet of things, integrated circuits and third-generation semiconductors), as well as infrastructure enterprises with independent core machining capacity.
Short term capital behavior does not change the medium-term trend. Investors should choose appropriate strategies and investment cycles according to the nature of funds. For fundamental investment, we still suggest to select those specialized special new sub industries with better performance than expected in 21 years and continuous prosperity in 22 years for medium-term or above allocation. Focus on allocating oversold stocks with good fundamentals, and pay attention to sectors with strong certainty and reasonable valuation.
The targets related to advanced manufacturing include: Dongfang Electric Corporation Limited(600875) , Shanghai Electric Group Company Limited(601727) , Byd Company Limited(002594) , Wuxi Lead Intelligent Equipment Co.Ltd(300450) , Shenzhen Inovance Technology Co.Ltd(300124) , Beijing Sinohytec Co.Ltd(688339) , China National Nuclear Power Co.Ltd(601985) , Cgn Nuclear Technology Development Co.Ltd(000881) , etc; The digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Related to the digital economy and the new infrastructure. Among the ones that are the ones that are the ones that are related to the following:: ducducducducducducducthe Tsingtao Brewery Company Limited(600600) 600 Hangzhou Silan Microelectronics Co.Ltd(600460) 460460, \ , Shanghai Baosight Software Co.Ltd(600845) , Digiwin Software Co.Ltd(300378) , etc; Related signs related to the replacement of a base for a domestic made alternative to a domestic made to replace the base for a domestic made alternative. Related signs are: Hongda Xingye Co.Ltd(002002) 931 \ , Tongyu Heavy Industy Co.Ltd(300185) , Shanghai Hugong Electric Group Co.Ltd(603131) , Sinoseal Holding Co.Ltd(300470) , Anhui Yingliu Electromechanical Co.Ltd(603308) , Jiangsu Hengli Hydraulic Co.Ltd(601100) and Jade Bird Fire Co.Ltd(002960) etc.
Important developments of core coverage companies in the first quarter
\u3000\u30001. Sichuan Crun Co.Ltd(002272) ( Sichuan Crun Co.Ltd(002272) ): Announcement on the signing of framework procurement contracts by wholly-owned subsidiaries
\u3000\u30002. Tongyu Heavy Industy Co.Ltd(300185) ( Tongyu Heavy Industy Co.Ltd(300185) ): prospectus for issuing convertible corporate bonds to unspecified objects on GEM
Risk warning: industrial policy is lower than expected, market style preference, technology, competition and policy route risk.
