the recent epidemic situation of 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
(1) whether the epidemic will spread determines the duration of this epidemic impact with the severe epidemic situation in Shanghai and Jilin, the epidemic situation will be an important variable affecting A-Shares in the short term. We believe that it is certain that the epidemic will have a negative impact on the short-term economy of Shanghai and Jilin, and the stock market has been fully priced. The follow-up focus is whether this impact will spread. From the recent data, although the epidemic data excluding Shanghai, Jilin and Guangdong have increased compared with the previous two years, they are still controllable, especially since late March. Therefore, as long as there is no rapid increase in other regions, we can still think that this is a phased impact, and the impact time is within the quarter.
(2) the impact of on the economy is just beginning to appear with the strengthening of epidemic control in Shanghai, the impact on the economy will gradually appear. The passenger volume of Shanghai subway has been reduced to the low point after the Spring Festival in 2020.
The latest PMI data in March also has downward pressure, but due to local control this time, the impact on the economy is likely to be much smaller than that in 2020. This can also be seen from the decline speed of PMI data.
Since the short-term impact of the epidemic is not as great as that in 2020, it will be more difficult to game a V-shaped economic recovery similar to that from April to July 2020. Taking the real estate sales data as an example, in Q1 2020, due to the impact of the epidemic and the Spring Festival, the sales area of commercial housing in 30 large and medium-sized cities decreased significantly from Shanghai Pudong Development Bank Co.Ltd(600000) square meters to nearly 0, and then quickly recovered to the level before the epidemic in two quarters. Although many of such drastic fluctuations are only month on month changes, they are also of great investment value due to large fluctuations. However, this decline in real estate sales began in Q3, 2021. The impact of the epidemic is not the main impact, so the data recovery after the epidemic cannot be as fast as that in 2020. The focus needs to be on the change of long-term expectation caused by stable growth, rather than the impact of the epidemic on short-term month on month data.
(3) deduction of the impact of the epidemic on the rhythm of the stock market based on the above analysis, we can determine that as long as the epidemic does not continue to spread rapidly to more cities, the short-term impact of the epidemic on the economy is far less than Q1 in 2020 Looking back on 2020, we can find that although the epidemic has changed many long-term economic trends in China and around the world, it has not changed a new round of global business cycle that began in 2019. The epidemic had a huge short-term impact on the global economy, but it only made the A-share market deviate from the internal trend for two quarters.
Compared with 2020, there are two differences in the impact of the epidemic this time: (1) the scope of influence is smaller; (2) The internal trend of the stock market was still weak in the first half of the year. We made it clear at the end of 2021 that there will be a V-shaped shock in 2022, and the recent epidemic has exacerbated the adjustment range in early March. Based on the experience of 2020, this impact will not completely change the annual internal trend of the stock market (4) short term strategy: the rebound will last until mid April the current rebound will be stronger than that in February and may last until mid April rebound is mainly driven by three forces: (1) oversold rebound: 12 mid March, wandequan A’s maximum decline was about 20%, and the quarterly maximum pullback speed has exceeded 2018, so there is a need for technical oversold rebound (2) various policy stability expectations: the financial stability and Development Commission of the State Council held a special meeting, the real estate policies of many cities across the country were relaxed, and the executive meeting of the State Council once again highlighted the importance of steady growth (3) re correction of the matching degree of valuation and performance before and after the quarterly report: bear market is easier to rebound well before and after the quarterly report. Can the rebound eventually turn into a reversal? We believe that we need to see that China’s interest rates begin to decline sharply again or real estate sales stabilize and recover. Both forces need some time. Therefore, after the rebound, the market may return to weakness in late April.
industry configuration suggestions: the impact of recent epidemic has strengthened the policy of steady growth on the one hand, and made some investors begin to layout the post epidemic fundamentals for month on month repair on month basis on the other hand. The former logic is long-term and may last for a long time. It can be done locally for a long time. In the latter logical partial game, considering that the impact of the chain economy this time is smaller than Q1 in 2020, the intensity of the chain repair after the epidemic will be much smaller, which can only be regarded as a rebound.
Strategically, there are three core contradictions affecting the allocation: the tight global interest rate environment, the overall profit center of A-share listed companies will decline compared with last year, and the economy is now between the bottom of policy and the bottom of credit. These three factors are conducive to value style, especially the style of absolute undervaluation. We believe that this style will continue in the first half of the year. It is suggested to pay strategic attention to finance, real estate and construction. Tactically, the market is still in the process of monthly rebound, and can periodically oversupply and oversold growth stocks. It is suggested to pay attention to computers, media, military industry and medicine.
