Xun Yugen, a strategic analyst at Haitong, said that the factors that triggered this round of market adjustment were the US Federal Reserve's interest rate hike, the conflict between Russia and Ukraine and the rebound of the Chinese epidemic, and the three bad news gradually disappeared. The implementation of the steady growth policy is expected to drive the market repair. This year, the fundamentals and policies are more like 12 years, the stock market is more like 16 years, and the pit filling market is in progress. Continue to pay close attention to the main line of steady growth, such as financial real estate and new infrastructure (photovoltaic wind power and big data cloud computing), which is more flexible.
[Haitong strategy] spring will come at last (Xun Yugen, Li Ying, Wang Zhenghe)
core conclusion: ① the factors causing this round of market adjustment are the Fed's interest rate hike, the conflict between Russia and Ukraine and the rebound of China's epidemic, and the three bad news are gradually fading. ② It is expected that the market will be more stable in 12 years and the policy will be more stable in 16 years. ③ Continue to pay close attention to the main line of steady growth, such as financial real estate and new infrastructure (photovoltaic wind power and big data cloud computing), which is more flexible.
spring will come
Since December last year, the A-share market has continued to adjust. The largest decline of CSI 300 since 2021 / 12 / 13 has reached 23.3%. A-shares have risen since March 16, but investor confidence is still low. The performance of a stock market in the first quarter was as cold as winter. The rebound of the epidemic in some cities added a psychological haze. Looking forward to the future, I believe that the epidemic will eventually dissipate, economic activities will return to normal, the stock market will repair itself after the sharp decline, and spring will eventually come.
\u3000\u3000 1. the three bad spots that caused the market decline gradually fade
Since December last year, the A-share market has continued to adjust, and the biggest decline of CSI300 since 2021 / 12 / 13 has reached 23.3%. We have analyzed the factors causing this round of market adjustment in the reports such as three problems worried by the market - 20220327 and the pit filling market of volatile market - 20220320, mainly including the interest rate increase of the Federal Reserve, the conflict between Russia and Ukraine and the rebound of the epidemic in China. We believe that the three bad conditions are gradually disappearing, and further analysis is as follows:
the Fed's expectation of raising interest rates has been very high, and it will have little impact on the stock market next looking back on the history, we find that the initial and final interest rate hikes of the Federal Reserve have caused the greatest disturbance to the stock market. Specifically, in the interest rate hike cycle from 1999 / 06 to 2000 / 05, the largest decline of the S & P 500 before and after the first interest rate hike and at the end of the interest rate hike is - 12% and - 14% respectively, that of the S & P 500 from 2004 / 06 to 2006 / 06 is - 9% and - 8% respectively, and that of the interest rate hike cycle from 2015 / 12 to 2018 / 12 is - 14% and - 20% respectively. Since 2022 / 03, the largest decline before and after the initial interest rate hike has reached - 15%. At present, the market expects the fed to raise interest rates a total of 9-10 times this year (calculated by 25 BP per interest rate hike). After the first interest rate hike by the Fed landed in March, US stocks rose sharply, indicating that the interest rate hike expectation has been priced in by the market. We expect that other interest rate hikes in the year will have little impact on the market.
In addition, the interest rate gap between China and the United States has been narrowing recently, and some investors are worried that this will lead to the continuous outflow of foreign capital from a shares. At present (as of April 1, 2022, the same below), the interest rate spread of China US 10-year Treasury bonds is only 39 BP, which is close to the level at the end of the last interest rate increase cycle in November 2018. Looking back on history, we find that the narrowing of interest rate spread between China and the United States has occurred many times, and even the interest rate spread of 10-year Treasury bonds is upside down, such as 2005 / 032007 / 10, 2008 / 092008 / 11, 2009 / 052009 / 08, 2010 / 012010 / 06, etc. From the perspective of the two historical cycles of monetary policy in China and the United States, there have also been reverse periods. For example, from the second half of 2005 to the first half of 2006 and 2016, China's monetary policy was relatively loose during the interest rate hike by the Federal Reserve. We calculated the three-month rolling correlation coefficient between the inflow and outflow of funds going north since the beginning of the 15th year and the 10-year interest rate difference between China and the United States, which is close to 0%, that is, the impact of the interest rate difference between China and the United States on the funds going north is actually minimal over a longer period of time. As of March 31, the overall net outflow of foreign capital this year was 24.3 billion yuan, especially 45.1 billion yuan in March, which was due to foreign investors' concern about the deterioration of Sino US relations caused by the conflict between Russia and Ukraine. This concern has been gradually eliminated since the first video call between China and the United States on March 18. From an annual perspective, since the opening of the Shanghai Hong Kong stock connect in 2014, the funds going north have been net inflows. We believe that with the gradual stabilization of market sentiment, foreign capital will still be net inflows this year.
the biggest impact of the conflict between Russia and Ukraine on the stock market is probably over from the performance of European and American stock markets, since the war between Russia and Ukraine on February 24, the NASDAQ index has increased by 9.4%, the S & P 500 index by 7.6%, the UK FTSE index by 0.5%, the German DAX index by - 1.3% and the French CAC40 index by - 1.4%. Most of the indexes have recovered the decline since the declaration of war between Russia and Ukraine. We believe that the biggest disturbance moment of the conflict between Russia and Ukraine on the emotional side may have passed. We will pay more attention to its impact on the fundamentals later. We have analyzed in "which industries are affected by Russia Ukraine events? - 20220318" that Russia and Ukraine do occupy a relatively important position in global agriculture, energy and metal raw materials. For example, Russia and Ukraine export corn accounts for about 17% of global exports, wheat for about 25% and barley for about 30%. In addition, Russia's chemical fertilizer and energy exports also account for about 10% - 20% of global exports. Since the escalation of the conflict between Russia and Ukraine at the end of February, the prices of wheat, corn, crude oil and other commodities have risen sharply. Therefore, some investors are worried that the inflationary pressure will be further highlighted after the sharp rise in commodity prices, putting pressure on the stock market.
In an interview with the media on April 2, alahamia, head of the Ukrainian delegation to the Russian Ukrainian negotiations, said that Ukraine and Russia were close to reaching an agreement, but there were still differences on the Crimea issue. Referring to the conflict between Russia and Georgia in 2008 and the conflict between Ukraine in 2014, with the easing of the conflict, the subsequent prices of crude oil and other commodities with significant price increases in the early stage will also fall rapidly. Different from energy commodities, crop production has seasonal factors. If we miss the current spring ploughing and sowing, the supply of subsequent crops may be limited. For China, although corn imported from Ukraine accounted for 29% of China's total corn imports and barley accounted for 26% in 2021, China is also a large agricultural country, so its dependence on grain imports is low as a whole. For example, China's corn imports accounted for only about 6% of China's total corn supply in 2021. It can be seen that the impact of international Shenzhen Agricultural Products Group Co.Ltd(000061) price rise on China may be relatively small. Wind's consensus expectation shows that the year-on-year forecast values of China's PPI and CPI in 2022 are 3.8% and 2.4% respectively, and there is little inflationary pressure throughout the year. On the whole, if the conflict between Russia and Ukraine fails to end for a long time, the price of Shenzhen Agricultural Products Group Co.Ltd(000061) and energy in the follow-up part may still be affected to some extent, which needs further observation.
China's epidemic is expected to be gradually controlled, and the steady growth policy hedges the impact of the epidemic Since 3 March, the epidemic has rebounded in some cities across the country. As of April 3, 1405 cases had been confirmed in a single day, and more than 11771 cases of asymptomatic infection had been found in Japan alone. This epidemic has spread all over the country, the widest since the first outbreak of covid-19 in March 20 years. The epidemic in Changchun, Shanghai, Shenzhen and other cities is relatively serious. As the epidemic continues to heat up, daily travel and economic activities around the country have been significantly affected. In particular, the epidemic data in Shanghai rose rapidly in late March, and investors' concerns increased. On March 28, the Shanghai composite index opened low and fell to 3159 points. Recently, the epidemic situation in Shenzhen has been basically controlled, and the number of newly confirmed cases per day has decreased from 105 on March 19 to 3 on April 3. Shanghai is still actively adjusting its response measures. From the perspective of market performance, after the decline in early trading on March 28, the market has slowly picked up in the last week, and the Shanghai Composite Index has increased by 2.2% in a week, indicating that the impact of the epidemic on sentiment has been digested.
In the future, we will mainly focus on the impact of the epidemic on fundamentals and the compensatory effect of policies. Since the outbreak of the epidemic in early 2020, covid-19 pneumonia virus has continued to mutate, and local epidemics in China, such as Nanjing, Xiamen, Ningbo, Xi'an and other areas, have also been distributed. However, the epidemic can be basically controlled in the end. We believe that the Omicron mutation virus is no exception. The key is how long it takes and how to make up for the damage to the economy caused by the epidemic. According to the calculation of Haitong research macro group, the current round of epidemic spread in economically developed cities, and the impact on consumption can not be ignored. If calculated according to the three situations of 5, 10 and 15 percentage points respectively, it is found that it will drag down the overall national consumption by 3.5, 7.1 and 10.6 percentage points in March, which also means that the year-on-year growth rate of retail sales of social consumer goods in March will be 6.7% of the previous two months, down to 2.8%, - 1.0% and - 4.8% respectively, That is, consumption in March may have a negative year-on-year growth. On March 29, the executive meeting of the State Council proposed to strengthen confidence, stick to the goal, put steady growth in a more prominent position, make early and quick policies to stabilize the economy, do not take measures that are not conducive to stabilizing market expectations, and formulate plans to deal with greater uncertainty. Due to the recent rebound of the epidemic, it is expected that the steady growth policy will continue to increase, and finally be able to hedge the impact of the epidemic.
\u3000\u3000 2. market repair power is accumulating
the time and space for this round of adjustment have been obvious, and the current A-share valuation is at a historical low looking back on the four complete cycles of rise and fall of CSI 300 in 2005, from the perspective of adjustment time, the average number of rise / fall months of CSI 300 in the past four rounds of rise range was 21.0 / 11.6 months, the number of fall months was about 0.5 of the number of rise months, the current rise month of CSI 300 (19 / 01-21 / 02, the same below) was 25.5 months, and the decline (21 / 02 to now, the same below) was 13 months, with a ratio of 0.51 From the perspective of adjustment space, the decline points of CSI 300 in the past four rounds of decline are 0.7 ~ 0.8 times the increase points, while the rise range of CSI 300 in this round is 2995 points and the decline range is 1947 points, and the ratio of the two is 0.65 Compared with history, the time and space of the CSI 300 adjustment has been very obvious.
At the same time, the current overall valuation of A-Shares is not high. When the market adjusted the low point on March 15, 2022, the PE (TTM, overall method, the same below) of all A-Shares was only 16.4 times, in the 30% quantile from low to high from January 4, 2013 to March 15, 2022, and Pb (LF, overall method, the same below) was 1.66 times and 23% quantile. With the stabilization and rise of the market, the valuation level of A-Shares has improved, but it is still at a historically low level. From the perspective of price comparison of major categories of assets, as of April 1, 2022, the dividend yield / 10-year Treasury bond yield of CSI 300 is 0.78, and the average value of this ratio since 2013 is 0.71, which is currently in the historical quantile of 26% from high to low. The risk premium rate is measured by the reciprocal of all A-share PE minus the yield of 10-year Treasury bonds. As of 2022 / 4 / 1, the index is 2.89%, while the average value of the index since 2013 is 2.38%, which is currently in the historical quantile of 32% from high to low.
steady growth policy is the positive energy driving market repair 3 on March 29, the executive meeting of the State Council proposed to strengthen confidence, stick to the goal, put steady growth in a more prominent position, implement policies to stabilize the economy early and quickly, do not take measures that are not conducive to stabilizing market expectations, and formulate plans to deal with greater uncertainty. We believe that a series of subsequent policies and measures are expected to be introduced one after another. With the steady growth policy being implemented one after another and achieving practical results, it is expected that the annual GDP growth of about 5.5% can be realized, and the corporate profits are expected to stabilize and recover in the second half of the year. We expect that the net profit attributable to the parent company of all A-Shares in 22 years will increase by about 5-8% year-on-year.
In terms of monetary policy, the first quarter regular meeting of the central bank on March 30 proposed to give full play to the dual functions of the total amount and structure of monetary policy tools, take the initiative to respond and boost confidence; Further dredge the transmission mechanism of monetary policy, maintain reasonable and sufficient liquidity, and enhance the stability of total credit growth. Looking back, under the loose tone, the central bank still has room to reduce the reserve requirement in the future, so as to further support the economy.
In terms of fiscal policy, the national Standing Committee on March 29 requested that the remaining special bond quota be issued as soon as possible. The quota issued in advance last year should be completed by the end of May and the quota issued this year should be completed by the end of September; This year, another batch of water conservancy projects that have been included in the plan and have mature conditions will be started. These projects, together with other water conservancy projects, can complete an investment of about 800 billion yuan in the whole year. On April 1, the national development and Reform Commission held the first inter ministerial joint meeting on the implementation of 102 major projects in the 14th five year plan, requiring all departments to ensure the implementation and effectiveness of each task and speed up the construction of projects under construction. According to the prediction of Haitong research macro group, the growth rate of generalized infrastructure investment in 22 years is expected to reach about 6% - 8%.
In terms of real estate policies, since the beginning of this year, more than 60 cities across the country have relaxed the property market policies, including relaxing purchase and loan restrictions, reducing the proportion of down payment, reducing mortgage interest rates, and implementing house purchase subsidies; At the same time, the policy for new citizens is gradually introduced. In that year, the shed reform area accounted for 10-20% of the residential sales area. At present, there are about 300 million new citizens. The release of housing demand of new citizens will help to improve real estate sales. Haitong research real estate group expects that under optimistic conditions, the year-on-year growth rate of real estate investment in 2022 will be 2.7% and the year-on-year growth rate of real estate sales will be - 2.7%.
this year's fundamental and policy background is more like 12 years, and the stock market may be more like 16 years from the perspective of fundamentals and policies, this year is similar to that of 12 and 16 years. The economy began to stabilize under the force of macro policies, but combined with the macroeconomic cycle, this year is more like 12 years. According to the combination of economic data and policies, the macroeconomic cycle can be divided into four stages: ① poor economic data under exogenous shocks and loose macroeconomic policies, corresponding to 2009 and 20 years; ② Economic data began to improve and policies began to change slightly, corresponding to the first half of 10 years and 21 years; ③ The economic growth rate has dropped, and the policy has not been changed or the change is not strong, corresponding to the second half of 11 years and 21 years; ④ The decline in economic growth has entered the late stage, and the steady growth policy has made efforts to support the economy. It is at this stage in 12 years and this year.
In the past 12 years, driven by various steady growth policies, the macro economy finally stabilized and rebounded; This year, various steady growth policies continue to advance steadily. We believe that similar to the 12-year plan, the steady growth policy will gradually promote economic stabilization.
In terms of the stock market form, if it is more extensive, this year's market trend may be similar to that in 12 and 16 years, both of which are volatile markets. However, if we further look at the high and low form of the annual index trend, this year may be more like 16 years. After the deep pit was hit at the beginning of the year, the pit filling will be carried out gradually. Specifically, under the disturbance of the Fed's interest rate increase and circuit breaker mechanism at the beginning of 2016, the market fell rapidly. In January 2016, the Shanghai stock index fell by 25%, the Shanghai and Shenzhen 300 index by 24% and the gem index by 30%. With the cessation of the implementation of the circuit breaker mechanism and the postponement of the Federal Reserve's interest rate increase process, the pit filling market gradually unfolded. Similar to 16 years ago, at the beginning of this year, under the influence of the Fed's interest rate increase, the impact of the Russia Ukraine incident and the disturbance of the Chinese epidemic, the market fell significantly. Since the beginning of the year, the Shanghai stock index has fallen by 17%, the Shanghai and Shenzhen 300 index by 21% and the gem index by 26%. With the gradual passing of the three negative factors and the implementation of the superimposed steady growth policy, we believe that this year's stock market shape may be similar to that of 16 years. After the pit was hit at the beginning of the year, the market gradually filled the pit and repaired it.
\u3000\u3000 3. slowly warming up and doing business step by step
year-round shock the market, and slowly fill the pit after a sharp decline at the end of last year, when looking forward to this year, we made a qualitative judgment: "2022 is a rest in the long bull, a stage of shaking the market and gaining momentum", "the market amplitude will increase", "if the stock fund index returns to the historical average next year, the increase of the fund index from now to the end of next year will be about - 6%, and investors need to reduce the expectation of annual yield", For details, please refer to "Qu Zequan, wrong is straight - China's capital market outlook 2022 - 20211211" and "outlook 22 years: our three special judgments - 20211219". In the first quarter, the market fell sharply, investor confidence was frustrated and market sentiment was depressed, which was similar to the "cold winter". We believe that "spring" will eventually come. The low point of the market this year has a high probability. In the future, it will be a market of slowly filling the pit. The driving force is the steady growth policy analyzed above. Similar to the "summer" bull market is not ready for the time being. To maintain the judgment of this year's market shock pattern, the pit filling market has been slowly launched after the rapid pit digging in the first two and a half months. The allocation of pit filling market in the first half of the year focused on the stable growth policy, and the policy force is expected to directly drive the growth of new and old infrastructure investment. The main line in the second half of the year will slowly follow the logic of economic recovery. Because the steady growth policy continues to promote, the economic growth rate may stabilize and recover in the second half of the year, especially the fundamentals of consumer industries are expected to improve. The second quarter focused on two directions related to the steady growth policy:
There is still room for real estate finance since late November last year, we have taken financial real estate as the first echelon. The logic lies in the steady growth policy and the repair of financial real estate valuation. "Highlights of financial real estate in history - 20223" pointed out that "since 2010, there have been 6 times of both absolute and relative returns in the financial real estate sector. The background of several highlights of financial real estate is loose macro policy + low valuation and low fund allocation ratio". In the past few months, financial real estate has also run out of excess return. Since the beginning of January (as of 2022 / 4 / 1, the same below), the excess return of Shenwan bank index relative to CSI 300 has been 17 percentage points, and the excess return of Shenwan real estate index has been 24 percentage points. Looking back on the market of financial real estate with excess returns for six times since 2010, on average, the average excess return of banks relative to CSI 300 is 18 percentage points and that of real estate is 20 percentage points. Therefore, the excess return of banks and real estate in this market has been very obvious. However, at present, the overall valuation of the large financial sector is still at the bottom. At present, the bank Pb (LF) is 0.61 times (from low to high 1.2% since the beginning of 2013), the real estate is 1.06 times (9.8%), and the securities is 1.45 times (12.5%), and the excess ratio of fund positions is lower than that of CSI 300. The steady growth policy continues to exert force and is optimistic about the market in the second quarter. Banks and real estate with undervalued and low allocation are still expected to continue to rise in the future. However, compared with history, the space to outperform the index may not be too large, while the brokerage index has greater potential to outperform the index. As of April 1, 2022, a total of 28 A-share securities companies have disclosed their performance in 2021, accounting for 81% of all listed securities companies. The total net profit attributable to the parent company of these companies has reached 183.4 billion yuan, an increase of 30% over 2020.
new infrastructure is more flexible, such as low-carbon economy and digital economy "new infrastructure" is the balance between short-term steady growth and medium - and long-term economic restructuring. It is also a major weapon for China's economy to move towards high-quality and innovative development. This year's government work report calls for orderly promotion of carbon peaking and carbon neutralization, and takes promoting the development of digital economy as a separate paragraph, which is enough to reflect the attention paid by recent policies to the field of digital economy. In the first quarter, financial, real estate and traditional infrastructure related industries performed better under the background of the continuous implementation of stable growth policies. In the second quarter, the stable growth policies continued to be promoted, in which the growth rate and elasticity related to new infrastructure were greater, especially the correction of related industries in the first quarter was more obvious, and the potential in the second quarter was greater, especially photovoltaic wind power in low-carbon economy, cloud computing data center in digital economy, etc. According to the prediction of Haitong power new group, the new installed capacity of wind power in China will increase by about 50% year-on-year in 2022, and the new installed capacity of photovoltaic will increase by more than 50%. According to the 14th five year plan for the development of digital economy, the CAGR of the added value of the core industries of digital economy is expected to reach 14.1% in 20-25 years. According to the white paper on cloud computing issued by China Academy of information and communications, the compound growth rate of the annual cloud computing market scale will be as high as 36.8% in 22-25 years. We analyzed in the first quarterly report: which areas are performing better? - 20220329 that the prosperity of new energy and technology in the first quarter was high. The industry high-frequency data showed that the new installed capacity of photovoltaic power generation in China increased by 62.3% year-on-year from January to February, the export amount of Cecep Solar Energy Co.Ltd(000591) batteries increased by 113.9% year-on-year, and the cumulative retail sales of new energy passenger vehicles increased by 153.1% year-on-year; In the field of digital economy, from January to February, the output of mobile communication base station equipment increased by 53.1% year-on-year, significantly higher than 11.7% in 21q4, and the growth rate of Telecom main business revenue was 9.0%, higher than 6.9% in 21q4. In terms of the performance of the first quarterly report, Haitong research power new group expects the year-on-year growth rate of the net profit attributable to the parent of power battery 22q1 to be more than 100%, photovoltaic to be 40-50%, computer group expects industrial software and national defense informatization to be about 30%, communication group expects network equipment suppliers to be 20-30% and optical devices to be about 40%.
risk warning: the conflict between Russia and Ukraine worsened, affecting the global economy and inflation.
