The Shanghai stock index rose 2.19% last week. How will A-Shares operate this week? We have summarized the latest investment strategies of major institutions for investors’ reference.
CITIC strategy: focus on the second time to grasp the medium-term repair trend
The epidemic unexpectedly affected the pace of steady growth, and the urgency of policy overweight increased significantly in the second quarter. It is expected that the steady growth policy will shift from full deployment to centralized development. A number of pessimistic expectations in the market will bottom out in advance before the fundamentals. Since the second quarter, the negative impact of the economy on the market is weakening. It is suggested to grasp the trend of mid-term repair in the second and third quarters and firmly layout the “two low” varieties. The measures to stabilize the economic growth in the whole country in March were still needed to offset the impact of the epidemic in the second quarter. Secondly, the main problems of the current economy are more prominent. It is expected that the policy will shift from comprehensive deployment to precise and centralized force. After this round of epidemic is effectively controlled, it is expected that the prevention and control measures will be further adjusted to reduce the impact on the economy in the future. Finally, the pessimistic economic expectation has reached the extreme. The economic probability in the second quarter showed a trend of first restraining and then rising. The positions and position structure of investors have been fully adjusted. The selling pressure in the A-share market has been significantly released. The peak of concern about overseas risk factors has passed. There has been positive progress on Russia Ukraine issues and China probability regulation issues. In terms of configuration, it is suggested to continue to adhere to the main line of steady growth, focus on the layout of low valuation and expected low varieties, and pay more attention to the real estate industry chain in the second quarter.
GF strategy: can A-Shares reach the top area of ERP and reverse the V word?
A shares still need to “think carefully and practice”, focusing on the inflation benefit chain + steady growth evolution theory. The current odds ratio of A-Shares is not a strong constraint of the market. Although the odds have not yet seen signs of improvement, and the overseas Federal Reserve will still resolutely tighten, we need to observe whether there is a possibility of further overweight after the steady growth of the epidemic in China. We maintain the view that the value style is dominant. The ERP of market growth and market value has experienced differentiation for three consecutive years and is moving towards convergence in 22 years. A shares continue to suggest paying attention to the low peg strategy of “upward revision of performance expectations”, focusing on the inflation benefit chain and the “steady growth evolution”: 1 “Supply and demand gap” inflation logic resources / materials (coal / industrial metals); 2. “Old style” steady growth, bearing the role of economic “stabilizer” (real estate / consumer building materials / household appliances); 3. “New” steady growth focuses on low peg growth benefiting from digital economy and energy security (digital new infrastructure / photovoltaic).
Monarch strategy: change positions in the rebound before the blossom of mountain flowers
Before the flourishing of Shanhua: after the transaction “will not be worse”, we need the fundamental expectation to “get better”. Understanding whether the market rebound is due to the convergence of risk expectations or the reversal of fundamental expectations is particularly important for judging the future strategy. However, at present, the investment from “no worse” to “better” is still full of fog: 1) after “no speculation in housing”, the expectation of residents’ departments that house prices will only rise but not fall has been reversed, but the cycle of sales recovery may take more time than in the past rather than immediate effect, which in turn will restrict the micro behavior of new land acquisition and new construction of real estate enterprises; 2) “War never tires of fraud”, the situation in Russia and Ukraine has been difficult to return to the starting point, and geopolitical disturbances such as the US mid-term elections are still an important source of the current risk premium; 3) The demand for liquidity and cash in the residential sector and the enterprise sector increased, and the risk-free interest rate in the stock market increased. A shares have entered the stock game from the incremental market, which makes the expectation of immediately breaking through the pressure zone at the transaction level very easy to fail. Our view: spring will finally come, we should have confidence. However, under the existing policy mix and fundamental expectations, before the path of demand and credit easing is clear, we believe that the Shanghai stock index 31003400 fluctuates. At this stage, it is recommended to do a good defensive counterattack rather than a trend counterattack.
Xingzheng strategy: repair continues to focus on three directions
At present, it is still an emotional repair window, with index shock consolidation, focusing on structure. 1. The epidemic has exacerbated the downward pressure on the economy, but also increased the space and impetus for subsequent monetary and credit easing. In March 2022, the manufacturing PMI index was 49.5%, down 0.7 percentage points from the previous month, the lowest level in the same period since 2015. Meanwhile, the non manufacturing business activity index was 48.4%, down 3.2 percentage points from the previous month. Under the impact of the epidemic, the downward pressure on the economy has further increased. However, from the two sessions, to the meeting of the Finance Committee and then to the national Standing Committee on March 21, the decision-making level’s determination to “stabilize growth” has been repeatedly confirmed. The subsequent monetary and credit policy easing is expected to accelerate the landing, providing strong support for stabilizing the macro-economic market. 2. Real estate credit risk has also been “removing thunder” in succession. On the evening of April 1, rongchuang announced that the extension of “20 rongchuang 01” bonds with a principal of 4 billion due on the same day was approved, marking the lifting of the domestic debt default crisis of rongchuang and driving the sharp rise of housing stocks in Hong Kong stocks on April 4. 3. The decision-making level has a clear determination to maintain the stability of the capital market. The meeting of the Financial Committee stressed “maintaining the stable operation of the capital market”, and the national standing committee continued to emphasize “maintaining the stability of the capital market” and required “preventing and correcting the introduction of policies that are not conducive to market expectations” to continue to stabilize market confidence. 4. However, under the disturbance of overseas risks, it is also difficult for the market to reverse the V-shape and move upward. External factors including overseas inflation, the Fed’s expectation of raising interest rates and shrinking the table, fluctuations in US stocks and the conflict between Russia and Ukraine will continue to be disturbed. Therefore, in the case of probability, the index is still shock consolidation.
West China strategy: defensive counterattack under the expectation of reducing reserve requirements and interest rates
The “policy bottom” of this round of A-Shares has been basically proved, and the probability of “shock upward after grinding the bottom” is high. After the resumption of trading in 2008, A-Shares have bottomed all over the time. The confirmation of “policy bottom” is usually accompanied by the continuous introduction of policy combination, including monetary policy, fiscal policy and capital market related policies. After the “policy bottom” is confirmed, the market often rebounds, but the construction of the market bottom is often not achieved overnight. The disturbance of external factors or concerns about economic fundamentals may make the market grind the bottom again. The “policy bottom” of this round of A-Shares has been basically proved, and the “market bottom” is not too far away. The Shanghai stock index is near Jinlong Machinery & Electronic Co.Ltd(300032) 00 points or a relatively solid bottom, and there is a high probability of shock and upward after the bottom of A-Shares is worn in the future. Since March, A-Shares have continued to adjust, mainly due to the turmoil in Russia and Ukraine, the shift of the Fed’s monetary policy and concerns about the local epidemic. On the one hand, the repeated epidemic restricts investors’ risk appetite, on the other hand, it will lead to the revision of enterprise profit expectations, especially the middle and downstream enterprises are facing the dual pressure of the epidemic and the rise of raw material prices. In the future, maintaining the stable operation of the economy in the first quarter and the first half of the year is very important to achieve the annual goal. The “steady growth” policy needs to continue to be overweight to hedge the impact of the epidemic, and there is still room for reducing reserve requirements and interest rates in the second quarter.
Guosheng strategy: Xu ERTU’s strategy for the second quarter of 2022
Market outlook: the decision to postpone, the value is the shield, Xu and Tu. In April, there was no decision, and the epidemic caused the test period of the implementation effect of the steady growth policy to be postponed again. The middle and later stage of the second quarter is an important observation period. In the short term, the first quarterly report is an important starting point to participate in the oversold growth; In the medium-term dimension, considering the interest rate environment, the reversal of incremental funds and the inevitable slowdown of the boom track, the overall beta market of the boom track has changed from strong to weak. In the first half of the second quarter, it was difficult for the market to get rid of the shock pattern under the influence of internal stagnation, the scope of policy force will continue to spread, the value stocks represented by big finance will continue to dominate (the ranking of real estate moves forward), the certainty of SSE 50 at the index level is higher, and pay attention to the subject stocks with relatively undervalued value and low positions and the dilemma reversal sector; If the spread of the epidemic is controlled in April, the real economy is expected to stabilize in the middle and late second quarter, that is, the logic from the end of credit to the end of economy takes effect, the market is expected to stabilize and improve, and the style is likely to turn to consumption and midstream manufacturing.
Guohai strategy: macro policy and stock market outlook in the second quarter
Monetary policy in the second quarter may maintain structural easing, and quantitative policy tools are still expected. The Fed tightened more than expected, restricting China’s monetary policy space. Considering that China has not implemented interest rate reduction in the Fed’s interest rate increase cycle in history, the probability of using price tools decreased in the second quarter. Under the limited space for interest rate reduction, the priority of “precise force” in the second quarter was improved, and the force of quantitative tools is still worth looking forward to. Under the background of obvious contraction of valuation in the first quarter, the stock market deduces the bottom grinding stage from the bottom of policy to the bottom of market. The performance of listed companies faced downward pressure in the second quarter, and the valuation changes were affected by the tightening of the Federal Reserve. The subsequent valuation expansion was due to the recovery of credit and the bottom of economic confirmation. There are three clues for structural opportunities: steady growth, post cycle and business growth segmentation.
Livelihood Strategy: inflation is the real core, the main line and the real cycle
Inflation is becoming unstoppable. Chinese investors focus more on the more definite contradiction between supply and demand, while ignoring the broader opportunities such as the rise of physical assets and energy arbitrage under inflation expectations, which obviously lags behind the overseas market. Inflation trading will spread to a wider dimension, and we estimate that there is still much room for the valuation of upstream resource products to rise. In terms of specific configuration, the upstream is still a relatively more dominant sector, and the best tool for demand recovery is in the real estate sector: first, copper, aluminum, gold, coal, oil and gas, agriculture (planting and chemical fertilizer); Second, pay attention to the opportunities under the reconstruction of trade pattern: oil transportation, dry bulk transportation; Third, on the main line of steady growth, we should give up the simple mapping of 20162017 and look for industries whose supply has been cleared in the previous downward cycle: real estate, and the layout of regional and structural expansion: banks (local, county and township) and construction.
Cinda strategy: the impact of the epidemic is different from that in 2020
The recent epidemic situation has had a negative impact on the short-term economy. Some investors are adjusting their positions and sectors according to the experience of 2020. We believe that the impact of the epidemic this time is different from that in 2020: (1) the scope of impact is smaller; (2) The internal trend of the stock market is different. In 2020, the internal trend of the stock market is a bull market. Although the epidemic has a great impact on the economy, it only makes the A-share market deviate from the internal trend for two quarters. In 2022, the internal trend of the stock market is V-shaped shock. The recent epidemic has exacerbated the adjustment range in early March and brought faster stable growth policies, which will have an impact on the market in the quarter, but it will not change the internal trend of V-shaped shock in 2022. Since mid March, the core driving force of the market rebound has been “oversold rebound + policy stability expectation + re correction of the matching degree of valuation and performance before and after the quarterly report”, and the rebound can last until mid April.
Western strategy: it is decided in April that the current boom is still the best defense
Pay attention to the guiding significance of “April decision” to the market performance of the whole year. There is often a saying of “April decision” in the A-share market, that is, the market performance and style characteristics around April often determine the overall trend of the market throughout the year. The reason for such an expectation mainly comes from two reasons. On the one hand, with the convening of the “two sessions” in March, the market has revised the monetary and fiscal policies of the whole year, which is more fully recognized than the hazy expectation in the “spring agitation” period. On the other hand, as listed companies continue to disclose annual reports and quarterly reports, investors can start to make clearer directional choices based on fundamentals and policy research and judgment. The former determines the overall operation direction of the market, while the latter determines the style interpretation of the market, which leads to the so-called “April decision” of the market.
