I. overseas markets: geopolitical conflicts and the continuous interest rate hike cycle of many central banks around the world may exacerbate the uncertainty of the world economic outlook. Recently, U.S. President Biden announced the largest storage disposal plan in history, and the crude oil price has fallen to some extent. However, the disturbance of geographical conflict is difficult to eliminate in the short term. At present, the supply of oil market is still tight, and the high oil price will still disturb global inflation and economic growth. The United Nations Conference on Trade and development lowered the global economic growth forecast for 2022 from 3.6% to 2.6%. The recent upside down of US bond interest rates also made the market worried about the prospects of the US economy. At the same time, the market's expectation of the Fed's interest rate hike has increased again. According to CME observation, the current market expects the probability of the Fed's interest rate hike of 50bp in May to rise to 74.4%.
2. The repeated epidemic has led to short-term pressure on China's economy, and the "steady growth" policy needs to be further strengthened. Since March, the local epidemic has rebounded, affecting many provinces, and the pressure on epidemic prevention and control has increased. At present, the sealing and control management in some areas of Jilin Province and Shanghai is still continuing, which also disturbed China's consumption recovery in March and April. At present, the real estate market is still under pressure. The lower than expected PMI data of manufacturing industry in March also reflects the great impact of the epidemic on the production and operation of enterprises. On March 29, the national standing committee meeting clearly pointed out that "we should not relax our goal, put steady growth in a more prominent position, and the policies to stabilize the economy should be carried out early and quickly, without measures detrimental to stabilizing market expectations", which means that the follow-up "steady growth" policies need to continue to be overweight to hedge the impact of the epidemic.
III. 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.
IV. investment strategy: defensive counterattack and moderately balanced allocation. 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. In April, the Politburo meeting will be held, and the main tone of "steady growth" is expected to be maintained to consolidate the "bottom of the market" of a shares. In April, the industry configuration was based on defense and counterattack, and the style was moderately balanced: 1) it was dominated by sectors with undervalued value, high dividends and benefiting from stable growth policies, such as "banking, real estate, building materials, coal", etc; 2) Give consideration to some growth sectors with high elasticity of performance, such as "new energy (photovoltaic, energy storage, hydrogen energy), semiconductor, East West calculation", etc.
Risk warning: geo risk escalation; The policy strength is less than expected; Repeated outbreaks outside China; Large fluctuations in overseas markets, etc.
