According to market review, major indexes rebounded sharply last week. The Shanghai Composite Index closed up 2.19% and the gem index closed up 1.10%. In terms of style, the CSI 300 closed up 2.43% and the CSI 500 closed up 1.54%. In terms of trading volume, the volume continued to shrink throughout the week. The two cities traded 4.64 trillion yuan throughout the week, a decrease of 121.7 billion yuan month on month; Among them, large-scale capital inflow from the north, with a net inflow of 22.902 billion yuan throughout the week. In terms of industry, shenwanyi industry rose more or fell less, with real estate, building materials, banking and media industries leading the increase, all exceeding 5.0%; The electronics, national defense and military industry, non-ferrous metals and mechanical equipment industries led the decline.
In terms of policy, Li Keqiang chaired the national standing committee meeting and deployed the “steady growth” initiative. The meeting pointed out that “the current international situation is becoming more complex and severe, China’s development is facing new challenges, and the downward pressure on the economy is further increased”, and asked “not to take measures that are not conducive to stabilizing market expectations and formulate plans to deal with possible greater uncertainty”, indicating that the complexity of China’s current economic situation is further increasing, which means that the policy of stabilizing growth will be further strengthened. According to the arrangement of the meeting, it is expected that expanding effective investment through local bonds will be the main focus, so the infrastructure field will still be continuously promoted by policies, including water conservancy projects, transportation, energy, affordable housing projects and other fields with strong certainty. Then, the first quarter regular meeting of the monetary policy committee of the central bank pointed out that it is necessary to “strengthen cross cyclical and counter cyclical regulation and strengthen the implementation of prudent monetary policy”. Under the background of unabated downward pressure on the economy, fiscal and monetary policies will continue to exert force. In addition, under the background of increasing economic uncertainty, the real estate policy is also expected to further relax on the premise that the main tone remains unchanged.
In terms of data, the PMI index in March 2022 was 49.5, down 0.7 percentage points from the previous month, and the outlook of the manufacturing industry fell back to the contraction range. From the sub item data, the production demand has fallen below the boom and bust line. In terms of import and export, the contraction pace of export and import has expanded, and the pressure of domestic and foreign demand has appeared. In terms of price, the ex factory price index and the purchase price of raw materials continue to rise. Under the background of the rise in the prices of petroleum, coal and other related products, the scissors gap between the two has further expanded, and the cost pressure of the manufacturing industry has not decreased. For PMI of different types of manufacturing enterprises, the manufacturing outlook of large and medium-sized enterprises fell, while small enterprises rebounded, mainly due to the disappearance of Spring Festival inhibitory factors that have a greater impact on small enterprises. On the whole, under the background of the multi-point spread of the epidemic in March and the superposition of geopolitical instability factors, the production and demand of the manufacturing industry have been affected to a certain extent. Considering that the recent epidemic prevention and control policy once again emphasizes “strictly grasping the epidemic prevention and control”, the epidemic situation in some areas is expected to be controlled in the future, so that the suppressed production and demand at this stage can be restored to a certain extent. However, we still need to pay attention to the cost pressure of manufacturing enterprises under the background of rising raw material prices.
In terms of strategy, based on the judgment that the performance is under pressure in the short term, is expected to gradually recover in the medium and long term, and that the valuation is at the bottom and there is room for rise, we believe that the overall downward space of the current market is small, subject to uncertain factors, and the market is still characterized by shock. Once the uncertain factors are alleviated or the micro main body is improved, the upward space of the market is large. It is suggested that investors should weaken the style, focus on the direction of performance growth expectations, and sector opportunities may be more dominant. Industry allocation, based on the judgment that the market will be in the bottom building process for some time in the future, we believe that after the overall decline of all sectors in the market, the sectors with relative certainty will receive capital intervention. Therefore, we can pay attention to the pharmaceutical segments related to covid-19 prevention and control under the medium and long-term end logic of the epidemic, as well as the tourism and shipping sectors under the same logic and the market is gradually desensitized.
Risk tip: overseas market fluctuation risk, economic downturn exceeding expectations, and global epidemic development exceeding expectations.
