Key investment points
PPI general direction or downward
In the post epidemic era, the monetary policies of various countries began to turn around, and the continuous interest rate increase and table contraction weakened the tail raising impact of loose liquidity. Since June 2021, the global economy "Canary" South Korea's exports have gradually slowed down. The latest data show that South Korea's manufacturing PMI has experienced the fastest decline since July 2020, and the global demand side has issued a warning signal. Similarly, China's export growth rate, like China's PPI, is an intuitive reflection of the supply and demand pattern of the global manufacturing industry. The data clearly point to that the disturbance of the supply and demand pattern caused by the epidemic is recovering. If you look at the last two smooth upward stages of PPI, from 2009 to 10 and from 16 to 17, the former is 4 trillion, and the latter is shed reform + supply side reform, which are driven by strong demand. This time, it is more the supply impact brought by the epidemic, and the decision-making power of commodity price trend is gradually turning to the demand side.
The demand side is weak at least in the short term. Even if the current large-scale social finance data can work, i.e. credit relief works, it may have to wait until at least the second half of the year.
What does PPI downlink mean?
In the past ten years, PPI saw the top turning head twice, in July 2011 and February 2017 respectively. After that, PPI has entered a downward trend. Through the observation of profitability and stock price performance in the two stages, we find that profitability responds in the current period. With the decline of price, profitability is basically transmitted to the middle and lower reaches of manufacturing industry at the same time; In terms of stock price performance, due to the obvious characteristics of macroeconomic stagflation in 11 years and the poor performance of the overall market, the stock price performance in 2017 is obviously the same as the profit transmission process, rotating from the upstream cycle to the middle and downstream manufacturing. During this period, the performance and stock price performance of high boom sub industries are outstanding in the rotation stage, especially after the decline of PPI in 2017, the stock price performance has increased higher and lasted longer.
Market microstructure observation (202204040408)
1) risk appetite still needs to be catalyzed. The proportion of financing transactions has been stable at about 6.6% recently, and the turnover rate of gem index hovers at a low level.
2) from the perspective of industry transaction heat, the real estate industry chain is more favored by the market in recent one week. In the perspective of transaction heat in recent one year, midstream manufacturing and TMT are the main ones at the end, specifically machinery, automobile, light industry manufacturing, electric power and public utilities, electronics, computer, communication and new power.
3) this week (up to 20220408), the net outflow of funds going north was 6.56 billion. The largest net inflow was from banks, new power and building materials, and the largest net outflow was from medicine, transportation and electronics. The shares of newly established funds with partial shares remained in the doldrums.
Investment advice
1) the decision-making power of commodity price trend is gradually shifting to the demand side. From the social finance data, the credit extension will wait until after September at least. Therefore, if you are long in this position, it is recommended to find the varieties after the 09 contract as far as possible.
2) PPI upward period is often the best stage for cyclical stocks to make money, and the peak of stock price often appears at the right shoulder of the year-on-year growth rate. The past two times ended with double top structure. If the same is true this time, the market of high probability cyclical stocks will come to an end.
3) with the decline of PPI, the profitability is transmitted from the upstream to the manufacturing industry in the middle and lower reaches along with the decline of cost. After the market adjustment, it is suggested to pay attention to the growth segmentation of the high boom in the middle and lower reaches.
Risk tips: the epidemic situation outside China exceeds expectations, inflation exceeds expectations, there is error in data statistics and the risk of failure of historical laws.
