Core view
Review: on January 3, 2022, “it’s the turn of big finance” opened, emphasizing the opportunities of adding banks and real estate chains with “big finance”. As of April 15, real estate + 11.18% and banks + 3.4%, ranking among the top three. In the following topics, such as retreat or attack, rely on big finance on January 16, big finance, continue to cut on February 6, crossroads: the choice between big finance and growth on March 27, and the second quarter strategy big finance is still calm released on April 10, we emphasized that paying attention to the market of “big finance” is the winner and loser of 2022 investment. Big finance seems to be defensive, but it is actually the best attack, Focus on big finance (bank, real estate chain).
The trend of external chaos and internal stability continues, the inflection point of global liquidity interest rate has been formed, the capital flows back to low-risk assets and developed markets, and global investors have a phased aversion to overvalued varieties. The pressure of internal economic growth is great, and corporate profits are in a downward cycle, which makes the current market focus on shock and bottom grinding, and pay attention to structural opportunities. Recently, the recovery of supply chain is improving, and the market shows marginal signs of improvement for the recovery of economic supply chain. In the second half of the year, the market will gradually improve, which is expected to meet the counter attack moment of “Normandy landing” and “infinite scenery in dangerous peak”. First, China’s economic fundamentals are going up and overseas ones are going down. Our comparative advantage is increasing. Second, corporate profits are expected to gradually pick up after the first and second quarters. Third, with the US debt approaching 3% and the expected price in of interest rate increase, the stage of the rise of US debt and the biggest impact of the Fed’s interest rate increase is getting farther and farther away, which is expected to promote the return of global funds to a shares.
At this stage, the reason why the market is at the bottom is that it fluctuates and hovers, and the hot spot rotation is also fast. The main reasons are: externally, the rise of US bonds is fast, approaching 3%. The Federal Reserve is about to open the interest rate increase and contraction table in May, and global capital still flows back to developed markets. Because the rhythm of epidemic prevention and control in Europe and the United States is different from that in China, the economic recovery cycle is misplaced, the overseas economy is at the top, and our economy is at the bottom or bottom. Internally, due to repeated epidemics, multiple closures, and many supply chains pressing the pause button, it is difficult to see the recovery of consumption. The liquidity of new development funds in the stock market is difficult to improve, and the northward land stocks are not warm. The market is still in the stock game, with tangled and volatile trends.
Can RRR reduction solve this problem? Therefore, whether the RRR reduction is consistent with investors’ expectations is a relatively minor problem and contradiction for whether the market is going up. Instead, investors are more concerned that epidemic control and supply chain recovery are the core contradictions to get out of the current dilemma. Before this situation is improved, it is difficult for the market to get rid of the current shock dilemma.
Investment suggestion: take “big finance is fast and big consumption is slow” as the main idea. From big finance to big consumption, is the market of big finance (bank and real estate chain) over? Of course not. The second quarter is still a good additional window. Big consumption gradually ushers in buying opportunities, similar to the “big finance” at the end of 2021 and the beginning of 2022.
“Big finance fast” means that “big finance” should be configured early and fast. The “big finance” (bank and real estate chain) with high correlation with internal certainty, high correlation with steady growth and low correlation with external positions will help investors keep their net worth curve calm in the “flying through the clouds”. Since the recommendation of “it’s the turn of big finance” on January 3, the second quarter may be the last better window period for the additional allocation of “big finance” this year. “Large consumption is slow” means that consumption recovers, service consumption allocation should be allocated slowly, buying points are close, and there is no hurry to buy them all at once. Because of repeated epidemics, data verification and other disturbances, the process is full of twists and turns, so as to fight a “guerrilla war” and turn small victories into big victories. We can pay attention to consumption (transportation, catering, tourism, hotels, medical services, mass consumption, etc.).
Banks: focus on large banks with undervalued “stagflation” and high dividend yield, and urban commercial banks and rural commercial banks with good performance growth in Chengdu Chongqing economic circle, Yangtze River Delta economic circle and other places.
Since the recommendation of “it’s the turn of big finance” on January 3, high-quality urban rural commercial banks in the Yangtze River Delta and Chengdu Chongqing have performed well. Looking ahead, I think the current time point, the bank market is still not over. The recent policy level has also brought further catalysis to the banking sector. That is, 1) encourage small and medium-sized banks to reduce the upper limit of deposit interest rate. We believe that this will help reduce the cost of bank liabilities, alleviate investors’ concerns about weak interest rate spread, alleviate the operating pressure of banks themselves, and greatly promote the bank’s credit easing behavior. 2) Encourage high-quality banks to reduce the provision coverage in an orderly manner. For high-quality banks with excellent asset quality and less non-performing assets in Chengdu, Chongqing and the Yangtze River Delta, this is conducive to releasing profits and continuing the boom duration of high-quality banks.
Real estate chain: the high-quality real estate enterprises benefiting from the supply side reform deserve to continue to be allocated. Taking advantage of the possible “performance pit” in the first quarterly report, we will gradually add home furnishings, consumer building materials, household appliances and other varieties in the post real estate cycle.
On the whole, the relaxation of real estate has become the general trend. Due to urban policies, rigid demand and “new citizens” have become new sources of demand. The market also basically recognizes the logic of improvement at both ends of supply and demand analyzed in more than 10 “big finance” series reports since the beginning of 2022. At the current time point, for the stocks of real estate enterprises, we believe that investors can focus on the high-quality real estate enterprises that can “survive” and benefit from the supply side reform, focusing on the core allocation idea of “the remnant is the king”.
For the post real estate cycle, at the current time point, due to the impact of the epidemic, the operation level in the first quarter is still relatively difficult. It is not ruled out that listed companies take advantage of the difficult time point generally expected in the annual report and the first quarter report to make substantial provision and impairment. Therefore, how big or how poor the “performance pit” of the first quarterly report is, it can be confirmed only when it is announced. When it is fully confirmed and expected to be verified, it is also a good opportunity for investors to get on the bus again in the “post real estate cycle” provided by the market, or even in the end. In the future, the post cycle of real estate benefits from many factors, such as first-hand housing, second-hand housing and affordable housing. The real estate sales data is expected to be gradually improved, and the real estate chain has been verified level by level.
Big consumption, deja vu, is about to usher in buying points, similar to the market expectation for the steady growth direction of “big finance” at the beginning of 2022 after the economic work conference at the end of 2021.
From the order of balance sheet repair, “big finance” is followed by “big consumption”. After the impact of the epidemic in the past two years and the high bulk prices of raw materials in the upstream, we see that some small, medium-sized and micro enterprises have great cash flow pressure, because the operation of the epidemic service industry has encountered difficulties, and the income of employees in some service industries has decreased significantly. At this stage, the source of the market’s great concern about the economy is that there is no signal of economic stabilization, and the disturbance of the epidemic continues. On the whole, there is great pressure on the balance sheet of the private sector. We need to increase fiscal expenditure, subsidies and steady growth policy support in order to alleviate the deterioration of the balance sheet of the private sector. Infrastructure and real estate play an obvious role in driving the economic industrial chain. Infrastructure and real estate are booming, small, medium and micro enterprises have strong vitality, employment has increased, income has increased, and consumption willingness has increased, so as to promote economic growth on a benign track.
From a policy perspective, the “big consumption” policy is accelerating. The national Standing Committee has spent a lot of ink on emphasizing consumption and promoting new consumption ( Wuxi Online Offline Communication Information Technology Co.Ltd(300959) consumption); Encourage mass consumption of automobiles and household appliances; Tap county and township consumption.
The follow-up is expected to see a series of supporting measures from the central level to the local level. Indeed, investors will believe that epidemic prevention and control is more critical, otherwise consumers have nowhere to go.
From the perspective of epidemic prevention and control, we are gradually taking into account the economy, and the change also needs to be gradual. At present, the protection of the supply chain has been put in a more important position. Whether it is Shanghai’s “one enterprise, one policy” or the latest statements of transportation and various ministries and commissions as a whole, epidemic prevention and control and economic development are looking for a new balance.
From the perspective of economic growth target, the consumption of 5.5%, which accounts for half of GDP, will not recover, and the target of 5.5% will be difficult to achieve. Will 5.5% decrease? I think it’s hard. Because the significance of 5.5% is not only internal, but also external. We need to show the world that we still have good growth momentum and economic growth potential, and have comparative advantages compared with major developed economies to attract overseas investors. Secondly, at the current time point, the first quarter has passed, and the consumption in March and April is not optimistic because the “city closure” economic data of Shenzhen and Shanghai are not optimistic. The subsequent completion of economic goals requires the joint efforts of infrastructure, real estate and consumption to achieve the goals.
At the current time point, the share price of consumer stocks reflects the more difficult situation in the first quarter, but has not yet reflected the interim report, or the situation in April and may. The data of April and may are uncertain. Whether it will be worse due to the spread of the epidemic and other factors. It is possible. It is not ruled out. But overall, in the process of balancing epidemic prevention and control and economic development, the data in the second quarter is expected to see signs of gradual improvement. The share price performance of consumer stocks may also be subject to ups and downs due to the fluctuation of data and the epidemic, but it is unlikely to be worse than when “Shenzhen” and “Shanghai” are “closed” at the same time. From the perspective of asset portfolio, for a long time, the buying point to gradually meet large consumption is a more comfortable and appropriate time point for cost performance, odds and winning rate. However, the process of gradually and slowly adding the consumption sector is not smooth. We should match it slowly and buy it slowly. We are not in a hurry to buy it at one go. Because of the repeated epidemic situation, data verification and other disturbances, the process is twists and turns. We should fight a “guerrilla war” and turn a small victory into a big victory. We can pay attention to consumption (transportation, catering, tourism, hotels, medical services, mass consumption, etc.).
Risk tip: the conflict between Russia and Ukraine escalated, overseas interest rate hikes exceeded expectations, and the spread of the epidemic exceeded expectations.
