Report summary:
Market review in the first quarter: the A-share market experienced a significant adjustment in the first quarter, especially in the first half of March. Under the influence of the superposition of bad news such as the tense situation in Russia and Ukraine, the approaching pace of interest rate hike by the Federal Reserve, the sharp decline of Chinese stocks and the spread of the epidemic in many places in China, pessimism spread and irrational killing occurred in the market. After that, the statement of the financial committee meeting brought great confidence to the market, and the market gradually bottomed and rebounded. As of March 31, 2022, the Shanghai Composite Index fell 10.65%, the Shenzhen Component Index fell 18.44%, the Shanghai and Shenzhen 300 index fell 14.53%, the gem index fell 19.96%, and the Kechuang 50 index fell 21.97%.
Market operation logic in the second quarter: macroeconomic environment and monetary policy are important variables affecting the trend of a shares. The valuation and supply-demand relationship of A-Shares also play a vital role in the trend of a shares. In terms of macro economy, we will focus on steady growth. In terms of monetary policy, the Federal Reserve’s monetary policy continues to tighten marginally, while China continues to relax. “Tightening outside and loosening inside, focusing on me” is the main tone. In terms of valuation, it is at a historically low level as a whole. In terms of stock demand, the funds of individual investors are expected to return to the net inflow, the public offering is expected to gradually pick up after the steep decline in the first quarter, the entry of long-term funds into the market is expected to increase on a small scale, the financial management funds are expected to gradually enrich the layout of equity products, the inflow of foreign capital is slowing down, and the repurchase tide is expected to continue. In terms of stock supply, although IPO Financing is still high, it will not continue to accelerate. Especially after the sharp decline of A-Shares in the first quarter, we have to consider the strength of the market. Refinancing pressure is still large, the scale of lifting the ban is at a high level, and the pressure of reducing holdings is still large. The delisting frequency will be accelerated. Compared with the first quarter, the supply and demand of A-Shares improved in the second quarter.
Market outlook for the second quarter: (I) research and judgment of the general trend. 1. Main board Market Outlook: after the adjustment in the first quarter, with the support of policies, fundamentals and liquidity, A-Shares will see a bottom recovery in the second quarter. At present, A-Shares have good medium and long-term investment performance price ratio, and can focus on the direction of steady growth and post epidemic repair. 2. Outlook for the North board of science and technology innovation: the valuation has become more and more reasonable, and the scientific and technological growth representing transformation and upgrading is still the main line of medium and long-term bull stocks. Focus on “specialization and innovation”, select high-quality horse racing, and small and medium-sized market capitalization stocks with uncompetitive main business and pseudo growth will continue to be marginalized. (II) industry configuration. 1. Big finance: securities companies have good performance, low valuation and great flexibility, which can be focused on. In addition, the valuation of bancassurance is low, and there are opportunities for valuation repair in the future. 2. Real estate: due to urban policies, from excessive pessimism to repair. 3. Large infrastructure: with the recurrence of the epidemic in many places, the urgency of local and central steady growth increased rapidly in the second quarter. At present, infrastructure is an important way of countercyclical regulation. We are optimistic about the investment opportunities of large infrastructure sectors (rail transit, construction central enterprises, water conservancy pipe network and new infrastructure). 4. Post epidemic repair industry: Civil Aviation Airport, tourism hotel, film and television and other “epidemic damaged” industries are expected to usher in a dilemma reversal. 5. Cultural media: the cultural media index has been adjusted for nearly seven years. On the whole, the industry valuation is relatively low. At present, it is an opportunity for long-term strategic layout. In addition, with the continuous improvement of 5g penetration in the future, as an important downstream industry of 5g, the whole media industry will continue to benefit. 6. Agriculture, animal husbandry, feeding and Fishery: optimistic about the concept of Shenzhen Agricultural Products Group Co.Ltd(000061) price increase, advantageous seed enterprises and aquaculture leaders. 7. Semiconductors: switch from focusing on shortage and price rise to domestic substitution or subdivided growth enterprises. (III) theme investment. 1. Digital Economy: Digital industrialization and industrial Digitization: digital currency, digital government, etc. 2.5G concept: 5g infrastructure is expected to enter the peak period of construction, focusing on the main equipment manufacturers, base station antennas, RF devices and other fields. 3. “Meta universe” and “industrial machine”: at present, the concept of meta universe is still in the hype stage. High selling and low absorption is a relatively dominant strategy. The industrial machine is a sector direction that has a greater opportunity to obtain policy dividends than meta universe. It can be considered to favor such companies in stock selection in the future. 4. New energy track: the demand side of new energy vehicles, photovoltaic and other industries is still strong. After the adjustment in the first quarter, it is expected that there will be differentiation in new energy track stocks in the second quarter, and high-quality stocks can still choose the opportunity to participate. 5. Vocational Education: after continuous adjustment, the education sector is expected to rebound. Recently, the policies on vocational education are intensively launched, and the development of vocational education can be expected in the future. 6. Military industry: the conflict between Russia and Ukraine has made the international geopolitical situation more complex and uncertain. It is expected that the subsequent military industry will receive more policy support.
Risk factors
\u3000\u30001. The conflict between Russia and Ukraine worsened and spread again.
\u3000\u30002. China’s economic downturn exceeded expectations.
\u3000\u30003. Covid-19 variant caused repeated outbreaks.
\u3000\u30004. Volatility of U.S. stocks leads to sharp spillover risk.
\u3000\u30005. The global economic recovery was less than expected.
\u3000\u30006. Overseas macro liquidity tightened more than expected.
