Referring to the experience of Xi’an, Shenzhen and Jilin, it is expected that the middle of April will be the inflection point of the current round of Shanghai epidemic and the key window for the second force of the steady growth policy. The medium-term repair market of A-Shares will run through the second and third quarters. On the one hand, in this round of local epidemic, the newly confirmed cases in Shanghai are expected to usher in an inflection point in mid April. It is expected that after this round of local epidemic is effectively controlled, local policies will rebalance between epidemic prevention and control and economic development to alleviate economic pressure. On the other hand, it is expected that the disclosure of economic data will promote the second centralized development of the steady growth policy, in which the “package” policy for real estate will continue to be strengthened. At the same time, mid April is also a key window for the reduction of policy interest rates. To sum up, if the inflection point of the epidemic and the policy force point are superimposed as expected, the medium-term repair market of A-Shares will run through the second and third quarters. It is suggested to continue to stick to the main line of steady growth, firmly layout the varieties of “low valuation” and “expected low”, and focus on the real estate and infrastructure industry chain in the second quarter.
referring to the experience of Xi’an, Shenzhen and Jilin, it is expected that 4 the current round of Shanghai epidemic is expected to usher in an inflection point
1) the new confirmed cases in Shanghai are expected to usher in an inflection point in mid April containment is still a very effective way to deal with the spread of Omicron strain despite its high economic cost. Looking back on the three rounds of outbreaks in Xi’an, Shenzhen and Jilin since the end of 2021, the time from the beginning of the outbreak, the implementation of closed management to the realization of social clearance is 28 ~ 37 days. The epidemic situation in Shanghai is the focus of short-term market attention. Since April, the overall number of infected people has continued to rise every day, but the rising rate has slowed down recently, and the proportion of infected people outside the isolation and control area has fallen to less than 5%; Considering that the number of daily confirmed cases outside the control area of more than 1100 cases on April 9 is still high, and it will take some time to reset the social aspect dynamically, but combined with the existing urban experience and the data of Shanghai, it is expected that the daily new cases in Shanghai are expected to usher in an inflection point in mid April. At the same time, more detailed zoning and grading differentiated prevention and control measures and the increasingly smooth logistics in the city are also more conducive to improving market sentiment.
2) local policies will rebalance between epidemic prevention and control and economic development to alleviate economic pressure Shanghai epidemic has caused a certain degree of spillover to surrounding provinces and cities. In addition, some other provinces and cities have also tightened prevention and control measures due to the serious epidemic situation in Shanghai. Several counties and cities have implemented regional static management, and the overall economic activity has slowed down significantly. Combined with the lessons of this round of epidemic, it is believed that more provinces and cities will establish a stronger “dynamic clearing” prevention and control system that can adapt to the Omicron variant virus in the future. On the one hand, referring to the ninth edition of covid-19 pneumonia diagnosis and treatment plan released by the National Health Commission, it is expected that adjustments will be made in case detection, classified admission, isolation management and antiviral treatment in the future, which will be more scientific, accurate and targeted. On the other hand, in March, the Standing Committee of the Political Bureau of the CPC Central Committee also stressed that we should coordinate the epidemic prevention and control and economic and social development, take more effective measures, strive to achieve the maximum prevention and control effect at the least cost, and minimize the impact of the epidemic on economic and social development. With the outbreak in Shanghai ushering in the inflection point as expected and the rebalancing of local prevention and control policies, the fundamental disturbance will also be gradually alleviated. However, it is expected that the disturbance of this round of local epidemic to the economy will continue in the second quarter. In order to achieve the annual economic growth target, the urgency of policy overweight increased significantly in April.
the disclosure of economic data will promote the secondary centralized development of steady growth policy
1) the stable growth policy of secondary force will enter the intensive implementation period 4 on April 7, Premier Li Keqiang stressed at the Symposium of experts and entrepreneurs on the economic situation chaired by him that “at present, some unexpected factors in the international Chinese environment exceed expectations, and the economic operation is facing greater uncertainty and challenges. Policies and measures should be strengthened in a timely manner, and new plans should be studied”. Looking forward to the second quarter, the main contradiction of the economy is more focused than that in the first quarter, which is mainly reflected in the severe setback of the service industry caused by the epidemic. At the same time, residential sales remain depressed after the obvious easing of credit, and the risk of developers’ debt default has not been effectively curbed. We expect that the steady growth policy in the second quarter will be more focused. Greater tax cuts and fee reductions will be introduced for retail, catering, logistics, tourism, hotels and other industries damaged by the epidemic. Greater direct subsidies will be introduced for groups whose employment and income are seriously damaged due to the epidemic in relevant service industries. At the same time, more direct support will be given to the financing of real estate developers, Due to the implementation of urban policies, the restrictive policies in the real estate field may be greatly relaxed.
2) the “package” policy of real estate continued to be strengthened, and the real estate industry chain was the most important point of steady growth in the second quarter 1-february: the income from commercial housing sales and state-owned land use right transfer decreased by 19% / 30% respectively. According to the urban tracking data of the real estate team of Citic Securities Company Limited(600030) research department, the number of new houses / second-hand houses in sample cities decreased by 41% / 34% year-on-year respectively in March, indicating that the real estate sales in March further deteriorated. We believe that the rescue policy for real estate enterprises alone may not boost the demand for real estate investment in the short term, and the policy support of local governments on the demand side of real estate is more important. Overall, the “package” policy for real estate should include canceling and relaxing purchase and loan restrictions, accelerating project development, promoting monetized resettlement, improving the use efficiency of pre-sale funds, reducing land payment requirements, reducing pre-sale conditions, etc. Taking Zhengzhou as an example, the number of new houses / second-hand houses sold in the week before Qingming Festival (3.28-4.3) is 156% / 142% of the week when the policy was issued (2.28-3.6), and it is expected that the subsequent credit environment will also be significantly improved with the recovery of sales. Of course, while introducing the supporting policy, we should still strictly abide by the bottom line of “housing, housing and non speculation” to prevent house prices from rising too fast.
3) the window for the re launch of monetary policy aggregate tools will be gradual to reduce the financing cost of the real economy 3 on March 16, the meeting of the Finance Committee stressed that “to effectively revitalize the economy in the first quarter, monetary policy should take the initiative to respond, and new loans should maintain moderate growth”. The executive meeting of the State Council held on April 6 pointed out that “we should make timely and flexible use of a variety of monetary policy tools, give better play to the dual functions of aggregate and structure, and increase support for the real economy”. Despite the strong recovery of macroeconomic data from January to February, considering the impact of the epidemic and the downward pressure on real estate, we think there is room for further development of monetary policy. It is expected that the middle of April will be an important window for the reduction of policy interest rates.
grasp the mid-term repair market throughout the second and third quarters
1) fundamentals dominate the medium-term repair market of A-Shares The main driver of a shares has switched from sentiment to fundamentals, while the negative impact of the economy on the market is weakening, and a number of pessimistic expectations in the market bottomed out in advance of the fundamental data.
First, it is expected that the gradual turning point of China’s local epidemic and the rebalancing of prevention and control policies will underpin the fundamental expectations; Secondly, the economic and financial report data disclosure starting in mid April is expected to further strengthen the urgency of the implementation of the steady growth policy; Finally, we expect that the steady growth policy with real estate and monetary policy as the main focus in the near future will shift from comprehensive development to centralized development, so as to promote the gradual repair of fundamental expectations.
2) it is estimated that the market style is partial to value in the second quarter, and the real estate and infrastructure industry chain is the biggest highlight on the one hand, it still takes time to ease the internal and external constraints of the growth sector: the internal constraints come from performance, and the growth center of the growth track needs to be intensively disclosed and verified in the quarterly reports in mid and late April; The external constraint comes from the US bond interest rate. According to the newly disclosed minutes of the Federal Reserve’s interest rate meeting in March, the probability of raising interest rate by 50bps in May is very high, and the table reduction plan may be announced. It is expected that the 10-year US bond yield will still rise by 30 ~ 40bps On the other hand, under the current complex situation, the urgency of adding weight to the steady growth policy has significantly increased. We expect that in addition to the infrastructure main line supported by projects and funds and gradually reflected in the data, the policy will focus more on the relief of the service industry and the relaxation of restrictions in the real estate field from the second quarter, and take more accurate measures against the core contradictions of the economy. It is expected that the style of the A-share repair market in the second quarter is more stable, and the value sector driven by the main growth line.
3) continue to stick to the main line of steady growth and firmly lay out varieties with low valuation and low expectation specifically includes: varieties with relatively low valuation, it is recommended to pay attention to high-quality developers, property management and building materials enterprises after the expected mitigation of real estate credit risk, communication operators , A new infrastructure field in the field of new infrastructure \ enterprises. It’s suggested to focus on the configuration opportunities of midsmidstream manufacturing, which is suppressed by cost issues, and after commodity prices peak after commodity prices are at their peak, such as 6 \ \ department store super . In addition, the recent focus can be focused on a quarterly expected to exceed the expected variety, and it is recommended to focus on photovoltaic, semiconductor, Baijiu, Chinese medicine, building sector.
risk factors
Global epidemic recurrence; The friction between China and the United States in the field of science and technology trade has intensified; The implementation of China’s policies and the progress of economic recovery are not as expected; Macro liquidity at home and abroad has tightened more than expected; The conflict between Russia and Ukraine further escalated; The inflection point of local epidemic in China was later than expected.
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