Matters
On April 18, the National Bureau of statistics released the latest economic data. In the first quarter, China's GDP increased by 4.8% year-on-year and 1.3% month on month; In March, the industrial added value increased by 5.0% year-on-year, compared with the previous value of 7.5%; The production index of service industry increased by - 0.9% year-on-year, with the former value of 4.2%; Retail sales of social consumer goods increased by - 3.5% year-on-year, with the previous value of 6.7%; In the first quarter, fixed asset investment increased by 9.3% year-on-year, with the previous value of 12.2%.
Core view
Current situation: the overall performance of the economy in the first quarter was within the range of market expectations, and the impact of the new round of epidemic on the economy since March has been reflected. With the development of the epidemic, it is necessary for the single quarter economic growth to reach a high level in the second half of the year to achieve the annual target. The pressure of "steady growth" in the second half of the year is still not small. According to the economic data of March, affected by the epidemic, the supply and demand at both ends are weakening. Infrastructure, export and manufacturing investment are still the key to supporting the economy. Infrastructure investment driven by the "steady growth" policy is the only bright spot.
Question: the economic data in March shows three main problems facing China's economy at this stage: (I) employment continues to deteriorate, and the pressure in the most difficult employment season is greater. Under the guidance of the employment priority policy, China's driving force for "steady growth" will also be stronger.
(II) there is a risk of medium and long-term decline in exports, and investment and consumption may be dragged down. (III) real estate investment may turn negative in the next step, and the inflection point of investment growth still needs to wait for the recovery of new projects.
Looking back, whether the epidemic subsides or not is the key to important changes in economic fundamentals, market sentiment and policies. The longer the epidemic lasts, the greater the scope of influence, and the uneven hot and cold phenomenon of different types of enterprises will become more and more intense.
Asset outlook
Stocks: at present, there is no turning point in the epidemic, the downward pressure on the economy is increasing, the impact of the epidemic is greater, the operation of the industry is weakening, the "steady growth" policy has a strong driving force for hedging, and the differentiation of different sectors is also obvious. Therefore, in the stage of steady growth, the value sector is relatively dominant. When the steady growth takes effect and the market valuation contraction process is over, the growth sector will have the opportunity to rotate. In addition, the epidemic situation is an important factor affecting the market in the short term, and the post epidemic recovery and dilemma reversal sectors can also be given appropriate attention.
Bonds: the current economy is basically favorable to the bond market, but it is also basically priced at present. Last week, the central bank announced the RRR reduction, and the capital side is still relatively abundant, so there is little short-term pressure. The long-term interest rate fluctuates between "wide credit" and "weak economy", and the market is dominated by shock pattern. It is suggested to reduce the duration and choose short-term bond funds to survive the volatile market environment.
