The Shanghai stock index fell 1.25% this week. How will A-Shares operate next week? We have summarized the latest investment strategies of major institutions for investors’ reference.
Citic Securities Company Limited(600030) : the inflection point of the epidemic is approaching and the market is about to be repaired
The inflection point of Shanghai epidemic is approaching, and it is expected that the social aspect will be cleared gradually; This round of epidemic has seriously dragged down the economy, and it is difficult for growth to return to the target level in the first half of the year. It is expected that policies related to expanding investment in the second quarter will be strengthened and accelerated, and supply chain dredging and consumption stimulation will be carried out at the same time; Due to the epidemic, the medium-term repair market has been delayed, but the stable growth market will be more clear and lasting. First of all, under the trend of the sharp decline of the propagation coefficient and the sharp rise of the shelter capacity, it is expected that Shanghai will basically achieve the goal of social clearance around April 20. Secondly, the economic situation in the first quarter of this year is expected to be weaker than that in the third quarter of 2021. At the same time, under the influence of the epidemic, the economy is expected to continue to be under pressure in the second quarter, and the negative impact is not weaker than that in the first quarter. Finally, the policy of stabilizing the real estate and service industry is expected to speed up. At present, all departments focus on dredging the supply chain and industrial production in the Yangtze River Delta. After the epidemic is controlled, it is expected that the policy will comprehensively increase and stimulate consumption according to the damage. At present, monetary easing such as reducing reserve requirements and interest rates is difficult to directly alleviate the concerns of investors. The market is still waiting for the inflection point of the epidemic and the resumption of work and production. The medium-term repair market may be delayed, but the pessimistic expectation has been fully released and the market is imminent. It is suggested to strengthen the main line of steady growth and lay out varieties with low valuation and expected low.
Monarch strategy: continue to change positions, and the value market is far from over
The revaluation of physical assets with stable cash flow has not ended. As the expectations of residents and the enterprise sector have weakened, the same easing measures to achieve the same expected effect are bound to require greater relaxation, but this conflicts with the requirements of high-quality development. Investors should not expect too strong demand assumptions, flood irrigation or significant relaxation of epidemic control. However, with the transformation of economic structure and the downward pressure, the dependence of growth on traditional economic sectors has increased. The tail risk pricing (valuation compression) of real estate, platform economy and even consumption should converge, and there is a lack of obvious substitutes for the winning rate of stable growth. From the perspective of investment, more importantly, supply constraints and the impact of the epidemic have increased the return on assets of some cycles and consumer industries, and narrowed the relative distance from the growth sector, which is an important premise for the revaluation of this part of assets. In addition to the cycle, the consumer industry is also experiencing a round of extensive and profound supply side clearing, which means that the “leftovers” will obtain more shares and long-term profit elasticity. Looking forward to the second quarter, the demand expectation is still unstable, and the focus of stock investment is on supply constraints rather than demand assumptions.
CICC strategy: A shares focus on policy meeting signals
In the past month, the Shanghai stock index has fluctuated and consolidated in the range of 31503300 points. In the research report released on March 24, we believe that the short-term market may still be repeated, but the stage similar to the sharp decline in the early stage may have ended, and the subsequent market may gradually enter the bottom grinding stage. At present, there are still many internal and external uncertainties, but considering that the current asset price may have reflected more pessimistic expectations, the cumulative correction time of the market is long, the adjustment range is large, and the overall market valuation has returned to the historically low position, there is no need to worry too much about the future performance. The market opportunities in the medium and long-term dimension are greater than the risks. Structurally, we believe that under the current uncertain environment, on the one hand, we should control positions; On the other hand, in terms of configuration, it is suggested to find a direction with “relative certainty”, and pay appropriate attention to the relevant sectors of “stable growth”; For enterprises with better performance that may exceed expectations, the first quarter may be the low point of the whole year from the perspective of year-on-year profit growth; Shareholders and executives increase their holdings of enterprises with good fundamentals. In addition, for the manufacturing growth style with high market attention, there are signs of accelerated adjustment recently. We believe that although there may be a lack of catalytic factors in the short term, some high-quality companies gradually show their long-term configuration value after more early adjustments.
China Securities Co.Ltd(601066) strategy: waiting for U-shaped bottom construction, there are still challenges in the short term
The next month is a key observation period, which is mainly due to the fact that China’s epidemic situation, China’s epidemic prevention and economic policies, global inflation, overseas interest rate hikes and table contraction expectations are still in a negative or chaotic state. The next month is the key observation period for the clarity or marginal improvement of these situations, and the market may usher in the conditions for confirming the completion of the bottom. A series of issues such as the epidemic situation in Shanghai, the closure and resumption of work, the setting of follow-up economic policies at the Political Bureau meeting at the end of April, global inflation and the expectation of raising interest rates are also important observation points in the future. Before these factors are clear or improved, the market is facing challenges and pressure. Investors should be cautious, observe and wait. Generally speaking, we believe that the market is in the medium-term U-shaped bottom construction period, and still faces some challenges and pressures in the short term. The tone and configuration focus on wait-and-see and defense, and specific industries focus on: banking, agriculture, public utilities, real estate chain, CXO, military industry, etc.
Guosheng strategy: how to save risk appetite?
As of mid April, the risk premium of all a index excluding financial oil had exceeded + 1 times the standard deviation. Even if the policy overweight and RRR were implemented, it failed to boost market sentiment. On the whole, the macro risk level at this stage is still high. The predictability of the epidemic development, the stagflation expectation caused by Russia and Ukraine, and even the tightening rhythm of the Federal Reserve is low. Therefore, it is not difficult to understand why the risk appetite continues to be under pressure. In the future, there are roughly three ways to repair the A-share risk preference: first, the monetary end force is no longer the focus. At this stage, the core lies in whether the endogenous credit expansion can be realized, and the medium and long-term loan of enterprises is the key. Second, the shift in the global interest rate environment (or Fed tightening expectations). Third, the epidemic situation and control policies have taken a turn for the better.
Guohai strategy: what are the investment opportunities at the bottom stage of the market?
For the A shares from the bottom of the policy to the bottom of the market in the past five times, although the yield of the broad-based index is still negative, the stage with the largest decline slope has passed. Before, the pessimism of the market has gradually repaired from the bottom, and the effectiveness of the steady growth policy has gradually changed from questioning to believing. The A shares in the bottom grinding period do not lack structural investment opportunities. In the market bottoming stage from September to November 2008, the big finance and counter cyclical sectors dominated, and industries with prominent defense attributes such as medicine, biology and public utilities had relative returns. In the bottom grinding stage from October to December 2012, the real estate chain sector and banks had absolute returns, the growth enterprise market index, which was relatively resistant in the early stage, made up for the decline, and the performance of consumption and growth sector was sluggish. During the bottom grinding period from August 2015 to January 2016, the market and financial style dominated. Banks, real estate, non bank and social services in the industry sector had both absolute and relative returns. At the same time, this stage is also the starting point for the long-term style switching of A-share market. In 2018, the small cap style was obviously dominant in the bottom grinding stage of the market, the main line of the market was biased towards the growth style, and there was a phased correction in the consumer sector. The market bottom grinding stage index at the beginning of 2020 still continues the downward trend, the growth style is relatively dominant, and the communication, agriculture, forestry, animal husbandry and fishery and building materials industries have absolute gains.
Western strategy: confidence restoration is more important than RRR reduction
Looking ahead, with the dawn of China’s epidemic and the revision of market expectations for monetary policy, we believe that market confidence is expected to be gradually restored. As the decision-making level tends to agree on the epidemic situation in Shanghai, there will be high certainty that the epidemic situation in Shanghai will be effectively controlled in April. The signal released by monetary policy also means that the decision-making level has begun to make overall planning for the repair of the post epidemic economy. Although the economy is still under pressure in the second quarter, the downside risk of economic stall is small throughout the year.
For overseas markets, the impact of repeated overseas epidemics on the economy and capital markets may be worse than the Fed’s interest rate increase and contraction, which will also become a marginal variable to promote foreign capital inflows. From the perspective of market style, the dominant market of value style since the end of last year has been deduced to the extreme, and the market will return to equilibrium in the second quarter. Focus on the structure: 1) express logistics, catering, tourism, airport aviation, media and other offline economy related industries with strong performance recovery expectations after the epidemic are expected to lead the market rebound; 2) With inflation expectations gradually rising, CPI related agriculture and mandatory consumption sectors are still the main market of the whole year; 3) The annual report and the first quarterly report honor the phased repair of the leading boom track (new energy, semiconductor, medicine, military industry, etc.) with high certainty.
Livelihood Strategy: marginal thinking is not everything
This week’s economic data, the central bank’s RRR reduction and other series of information are “not very important” for the market trend in our view. The core variable of the future market stage is “cognitive change of the epidemic situation”. We believe that Omicron, as a highly “infectious” variant, itself will have an impact on the original steady state of each country, but the transmission path and time are different under different prevention and control modes. Since the “coexistence” model is widely adopted in the West and there are few delayed feedback mechanisms from the perspective of complex systems, the capital market showed a trading logic from the impact of the epidemic to normalization in December 2021: during this period, the volatility of the S & P 500 and Nasdaq indexes did increase and the yield also decreased, but the range is far less than that when the epidemic broke out in 2020; China adopts “dynamic clearing”. There are many delayed feedback mechanisms under the regulatory mode. The real impact of the capital market starts late and the fluctuation and time are relatively long. We are relatively optimistic that no matter what model, the capital market will have a day when fluctuations converge and impact the past. However, we would like to solemnly remind investors that whether they are looking forward to the “change of epidemic prevention policy” or observing the “dynamic clearing effect”, if the transaction can return to the world before the epidemic or the scene from 2020 to 2021, the trend of the final fundamentals will probably deviate greatly from the above cognition.
West China strategy: repeatedly grinding the bottom value, and the blue chip still wins the first chip
The aggressive interest rate hike expectation of the Federal Reserve and the Chinese epidemic restrict the market risk appetite. The sustained development of the epidemic has led to the short-term pressure on China’s economy, poor logistics and supply chain disturbance, resulting in the shutdown of some enterprises and the impact on Residents’ consumption. Before the epidemic becomes clear, it is expected that A-Shares will continue to grind the bottom repeatedly. In April, the implementation of RRR reduction released the signal of “steady growth” and continued to increase the weight. The follow-up focused on the implementation of policies in key areas and the recovery of Fundamentals: first, both epidemic prevention and control and logistics support are expected to promote the resumption of work and production of enterprises; Second, in terms of consumption, consumption promotion policies such as consumption vouchers may be introduced one after another; Third, China’s monetary policy still has independent space, credit extension still needs to be increased, and the one-year and five-year LPR may be reduced. In terms of style, dividend strategy and stable growth value, blue chip still wins. In terms of industry configuration, pay attention to three main lines: 1) infrastructure related, such as “architecture and building materials”; 2) Real estate related, such as “finance, real estate”; 3) It is expected that the troubled industries will gradually improve, such as “breeding”.
Cinda strategy: how long can financial real estate lead the rise?
There are two reasons behind the continued strength of financial real estate since November 2021: the first is the transition of cattle and bears. The transition years of cattle and bears in history (2008, 2011, the second half of 2015 and 2018) will bring changes in style. The second is the policy of steady growth, which has led to the recovery of infrastructure orders, the relaxation of real estate regulation policies and the loose monetary policy. Historically, there are three comparable times: Q3 in 2011-early 2013, Q3 in 2015-q1 in 2016 and Q3 in 2018-q1 in 2019. According to these three experiences, the probability of excess return of financial real estate can last until the early stage of index stabilization. In terms of rotation order, banks produce excess returns first, followed by real estate, and non banks. Finally, the allocation proportion of non banks can be appropriately increased at present. The view on the overall index remains unchanged: strategically, 2022 may be a V-shaped shock, with the first half similar to 2018 and the second half similar to 2019. Tactically, the rebound rate since mid March has probably ended, and the next rebound time may have to wait for May. It is necessary to observe the real estate sales data after the epidemic.
