The A-share and A-share funds fell sharply again.
From the market trend on April 20, the Shanghai stock index mainly fluctuated in a narrow range in the morning and went down again in the afternoon. As of the closing, the Shanghai stock index fell 1.35%, while the gem index fell further, reaching 3.66%. According to the data, the northbound funds sold a net 5.288 billion yuan unilaterally throughout the day, which was a net sale for three consecutive trading days.
In terms of the industry, shenwanyi industry fell more or rose less. Food and beverage, social services, beauty care, household appliances, etc. rose; Coal, real estate, power equipment and steel led the decline.
What triggered the market crash? Are there any opportunities in the follow-up market? Fund Jun interviewed a number of fund companies such as Nanfang, Boshi, China Merchants, China Europe, harvest, Huian, Jinying, Qianhai Kaiyuan, YONGYING, Morgan Stanley Huaxin, Cathay Pacific, Hang Seng Qianhai, ChuangJin Hexin and so on. These companies have said that many factors have triggered a sharp decline in the market, and there may still be shock pressure in the short-term market, but the medium and long-term investment value has been met.
multiple factors triggered a sharp market decline
What triggered the April 20 crash? Soaring US bond yields, increasing pressure on the short-term depreciation of the RMB, no reduction in LPR this month, and the first quarter results of some enterprises in the new energy sector were significantly lower than expected, which became the reasons considered by the fund company.
Referring to the market, China Southern Fund said that the Fed has strong expectations of accelerating tightening, the US bond yield has soared, the pressure of RMB short-term depreciation has increased, the LPR has not been lowered this month, the market’s expectations for interest rate reduction have failed, which also led to concerns about the limited space of monetary policy, and the real estate industry is weak, although the central bank said at the end of last week that it would maintain reasonable and loose liquidity, However, it was also mentioned that “pay close attention to the adjustment of monetary policy in major developed economies and give consideration to internal and external balance”.
In addition, the inflection point of the epidemic appeared, boosting the consumer sector. In recent days, the number of newly confirmed and asymptomatic covid-19 infection cases in China began to decline, and the inflection point of the epidemic appeared. In addition, recently, the central bank and the State Administration of Foreign Exchange jointly issued the notice on doing a good job in epidemic prevention and control and financial services for economic and social development, proposing 23 specific measures to increase support for industries, enterprises and people damaged by the epidemic. The improvement of the epidemic situation superimposed the expectation of policy support, the market gradually laid out the post epidemic recovery sector, and the consumer industry suppressed by the epidemic situation rose against the trend in the early stage.
China Merchants Fund said that today’s negative factors came from many aspects: first, on April 19, the central government’s deep restructuring reiterated to strictly control the new local invisible debt, which affected the market’s confidence in steady growth; Second, on April 20, the central bank reiterated that “real estate is not fried”, and real estate stocks fell; Third, the expectation of RMB devaluation is fermented, and the outflow of foreign capital is accelerated; Fourth, the performance of some individual stocks in the photovoltaic sector was significantly lower than expected, resulting in the overall decline of the photovoltaic sector; At the same time, it is rumored that there is a risk of downward repair in the annual performance of some stocks in the electric vehicle sector, and the electric vehicle sector also made a significant adjustment today. Fifth, due to the deep restructuring of the central bank and the statement of the central bank, investors began to worry about the strength of stable growth in the future and the possibility of killing profits in the growth sector. Meanwhile, affected by the negative factors of photovoltaic and new energy vehicles, the growth sector was hit hard today.
Shen Chao, macro strategist of HSBC Jinxin fund, said that the main reason for the decline on Wednesday was that the first quarter results of some enterprises in the new energy sector were significantly lower than expected, which triggered concerns about the performance of the whole industry. Since the first quarter, commodity prices have continued to rise, resulting in pressure on the cost side of the industry. In addition, factors such as the Fed’s interest rate hike, the risk of shutdown caused by the epidemic, and continuous market adjustment have made investors’ confidence fragile and generally more sensitive to bad news, which eventually led to a sharp adjustment in the new energy sector and dragged down the whole gem.
In addition, Boshi Fund believes that, first of all, due to the impact of the Federal Reserve’s sharp tightening of monetary expectations, the recent US bond yield has risen rapidly, and the 10-year US bond yield approached 3% yesterday. Growth stocks that are more sensitive to liquidity are under pressure again; Secondly, the April LPR announced today remained unchanged, the “interest rate cut” previously expected by the market failed, and the market sentiment was low; Moreover, due to the epidemic and the rise in the price of upstream raw materials, the downward pressure on the profits of middle and downstream companies has increased, and the overall risk appetite is weak. From the latest economic and financial data released, China’s economy continued to recover its development trend in the first quarter, but also faced great downward pressure.
China Europe Fund said that the LPR quotation was released in April, and the interest rates of 1-year varieties and 5-year varieties were the same as those in the previous period. After the previous slight RRR reduction, the space for loose monetary policy has been further narrowed. However, under the background that the epidemic situation in China is significantly higher than expected and has a significant impact on economic growth, it is expected that the easing trend of structured monetary policy will not turn, but the follow-up space may be limited;
On Tuesday, the yield of U.S. Treasury bonds continued to rise, with the yield of 10-year Treasury bonds breaking through 2.9%, a new high since December 2018. The continuous return trend of the dollar is obvious. At the same time, the high inflation level in the United States and China may accelerate the process of interest rate hike by the Federal Reserve. Other economies in the world are facing the pressure of capital outflow, which has a negative effect on the valuation level of growth stocks.
According to the analysis of Qianhai open source, firstly, from the perspective of the industry’s own factors, the core reason for the adjustment of upstream resource products such as coal, petroleum and petrochemical is that OPEC + production increase expectation led to the sharp drop in the price of crude oil at night. Second, in terms of real estate, the main reason is that there has been an obvious rise before, which is compounded by the fact that the recent policy relaxation is less than expected, and the fear of real estate credit risk has heated up again under the pressure of debt repayment. Third, for new energy, sunshine energy, one of the leading stocks, released its annual report and first quarter results last night, which were significantly lower than expected. Coupled with the previous rumors that the market’s performance of Contemporary Amperex Technology Co.Limited(300750) first quarter was lower than expected, the volume of relevant targets and sectors fell sharply.
Secondly, from the perspective of the market as a whole, on the one hand, the game characteristics of capital stock are obvious, and the market risk preference is still weak. On the other hand, the previous RRR reduction was implemented as scheduled, but the range was relatively restrained, resulting in the failure of the high relaxation expectation of the market. In addition, the US bond interest rate continued to rise, which had been close to 3% before. The upside down of China US interest rate spread intensified, resulting in the outflow of foreign capital and restraining the market.
Wu Shangwei, chief research officer and fund manager of Huian fund, said that there are three reasons for the market weakening again today. The first is the performance concern of the new energy industry: the first quarterly report of the leading photovoltaic inverter Sungrow Power Supply Co.Ltd(300274) annual report fell by 20% less than expected, and the share price has halved since this year. Investors significantly lowered the expectations of the photovoltaic industry in the fourth quarter of last year and the first quarter of this year, and began to game the industry boom in the second quarter of this year. Looking back, the disclosure period of the annual report and the first quarterly report still has 10 days, and the problem of performance explosion may affect the market at any time.
Second, the rise in US bond yields and the pressure of RMB devaluation: the yield of us 10-year Treasury bonds once rose to 2.98% today, and the 10-year real interest rate has changed from negative to positive for the first time since the epidemic. This suppresses the valuation of growth stocks and limits China’s current easing space. The offshore exchange rate of RMB has been significantly devalued for two consecutive days.
Third, the expectation of strong easing failed. After the “half reduction of reserve requirement” last Friday, LRP failed to be lowered today. The expectation of strong easing failed last week, and the infrastructure and real estate sectors fell sharply.
One of the current concerns of the market is that if the Politburo meeting at the end of April reduces the growth target of “about 5.5”, will it seriously undermine the logical basis of the stable growth sector?
reasons for the sharp decline of new energy
On April 20, the market focused on the sharp decline in the field of new energy, and the power equipment index fell 4.08%.
The market is concerned that Contemporary Amperex Technology Co.Limited(300750) fell all the way to close down by 7.55% and the market value fell below trillion to the latest 948.7 billion yuan under the rumor that the performance in the first quarter did not meet the expectations.
Turning to the reasons for the sharp decline in the new energy sector, Harvest Fund said that this was because the performance of leading enterprises in other segments of the new energy sector was lower than expected, and the market paid more attention to the short-term performance, especially the situation of the leading targets of electric vehicles under some uncertain factors, which triggered today’s adjustment.
Harvest Fund said that first of all, it is necessary to emphasize that there are great differences between the position of the industry life cycle and the prosperity of the industry in different segments of the new energy sector. The penetration rate of electric vehicles was 15% last year and more than 25% in the latest month of this year. Its growth rate and growth state are obviously stronger than other segments.
Secondly, from the historical data disclosed in the past, the leading battery enterprises have shown a strong gross profit margin advantage compared with the world’s top competitors and China’s second-line players. According to the data of the previous three quarters, basically all other players in the world are on the edge of loss or profit and loss.
Third, even if the short-term raw material cost has an impact, it is only phased. Under the guarantee of super competitive advantage, the long-term expectation is still stable.
At present, the valuation and cost performance of new energy have significantly improved. The middle reaches of electric vehicles have disclosed the leading target of the first quarterly report, and the valuation is at the lowest point under the impact of the epidemic in March 20. It is believed that with the gradual control of the epidemic, the gradual care of policies and the gradual establishment of the endogenous industry trend of electric vehicles, it is believed that the development trend of China’s economy and large-scale industry trend will eventually match the performance of the capital market.
For the recently adjusted new energy sector, Wang Yang, fund manager of Cathay Pacific intelligent automobile and Cathay Pacific intelligent equipment, believes that considering the fundamentals and valuation, after the adjustment since this year, the overall valuation of the industry has been in a relatively reasonable position. However, the uncertainty of the short-term external environment and the impact of frequent outbreaks in China have led to the decline of the performance of some enterprises, resulting in increased overall volatility.
However, from a long-term perspective, we still firmly believe that the upgrading of manufacturing industry is the future of China’s economy, and China’s transformation from a large manufacturing country to a powerful manufacturing country is imperative. Therefore, short-term disturbances will not change our long-term direction. In terms of investment, we believe that the opportunity of beta attribute of the industry in 2022 will be much smaller than before. It is more to tap the alpha opportunities of high-quality stocks. In the follow-up, we also need to observe the overseas environment and the resumption of work and production after the Chinese epidemic.
From the perspective of macro strategy, China’s RRR reduction came as promised. The meetings of the national Standing Committee and the financial committee also showed the care of the real economy and capital market. The effect of the policy will gradually appear in the right direction, and the monetary policy will be stable and abundant. Overseas, the Fed’s interest rate hike has been price in and the path is clear. The worst time of the Russian Ukrainian war, Chinese stocks and China’s epidemic is also gradually passing. Therefore, at this stage, we still think it is the last darkness before dawn. Be patient. At present, the stock debt ratio has been above 0.8, and the stock market is attractive in the long run.
In addition, Qi Teng, the equity investment director of Hang Seng Qianhai, also said that today, the gem hit a new low in the year, in which the new energy sector retreated greatly, mainly for the following two reasons:
First, the external risk factors are still. Affected by the repeated epidemic and the situation in Russia and Ukraine, the market liquidity continues to be tight, the risk appetite is still difficult to improve, and the market risk aversion is strong. The focus of the market is still the undervalued sector, and the short-term hot spots are concentrated in consumption and other links, while the growth sector dominated by new energy and chips is still relatively depressed due to the external situation.
Second, the leading performance of photovoltaic inverter is less than expected, which is significantly different from the market’s perception of the photovoltaic industry, resulting in further pessimistic market sentiment. Superimposed with the rumors that the performance of other leading enterprises in the first quarter is less than expected, investors are worried about the performance of Listed Companies in the new energy sector. Since the beginning of the year, under the influence of terminal price increase, lack of core, epidemic spread and other factors, the market has remained pessimistic about the new energy sector, especially under the background of strong risk aversion in the market, the fear of performance falling short of expectations has been further amplified, resulting in a sharp decline in the sector.
QiTeng said that the current market rising momentum is still insufficient, the trading volume of the two cities continues to shrink and remain low, and the characteristics of the stock game are more significant. Under the background of shrinking trading volume in the short term, the market may further enlarge the interpretation of the performance news, and the volatility of the A-share market may increase in the short term, or it will still be in a volatile situation.
However, on the whole, we believe that although the market still has repeated risks in the short term, there is no need to be overly pessimistic about the future performance of a shares. There have been a series of positive changes in China’s policies, including the first reduction of the reserve requirement in the year and the gradual mitigation of the impact of China’s supply chain. With the continuous adjustment of the market since this year, the investment cost performance of the high boom track represented by new energy vehicles and photovoltaic has gradually improved.
The investment logic of the new energy industry under the background of maintaining national energy security and achieving the dual carbon goal is relatively uncertain, such as photovoltaic, wind power, nuclear energy and other directions. These industries will probably continue to grow in China. At the same time, they will continue to consolidate their comprehensive competitiveness of the industrial chain globally and have long-term investment logic. When the valuation is adjusted back to a reasonable range, they will have good investment value in the long run.
short term A-share market is still under pressure
medium and long dimension contains opportunities
In the short term, there may be some pressure in the market, and the medium and long-term investment value is being bred.
For the future, Wang Jing, chief strategist of ChuangJin Hexin fund, said that encouraged by the sharp drop in oil prices and easing inflation expectations, U.S. stocks closed higher overnight. However, the optimism did not spread to a shares, because LPR also stood still today after MLF failed to cut interest rates, and there was no room for monetary policy, which disappointed the market. At the same time, the performance of inverter leader and medical device big white horse is much lower than expected, which also puts pressure on the performance of gem. The market began to worry about the performance of other companies in relevant sectors and chose to leave the scene. In the short term, A-Shares face the dual pressure of downward profit and blocked liquidity easing. Risk appetite and investor sentiment are weak, and the market may still find a bottom further.
China Southern Fund believes that in the short term, with the rise of U.S. bond yield, the interest rate spread between China and the United States may still be further upside down, which still disturbs the market risk appetite. The rise of U.S. bonds mainly reflects the market’s expectation that the Federal Reserve will raise interest rates and start the table contraction in May. If the expectation is fulfilled at that time, the U.S. bond yield is expected to fall. In China, the growth rate of new social finance in China has accelerated and improved. As the epidemic eases, production and consumption are expected to normalize. If the obstacles to the force of steady growth policies can be removed, the pessimistic expectations of the market will be gradually reversed.
Morgan Stanley Huaxin Fund said that in the short term, under the influence of factors such as coping with the challenge of the epidemic, the fermentation of overseas stagflation risk and the stalemate of the conflict between Russia and Ukraine, the A-share market is still under pressure and may maintain a volatile trend. However, considering that the current overall market valuation has returned to the historically low position, there is no need to worry too much about the future performance. The medium and long-term market still contains opportunities.
China Europe Fund believes that A-share core growth stocks have weakened under the depletion of sentiment and the intensification of the downward pressure on the economy caused by the epidemic.
As the downward pressure on the economy is further increased with the spread of the epidemic in China, market expectations for various stimulus policies are also rising. Compared with the application of monetary policy tools such as reducing reserve requirements and interest rates with sufficient market expectations and limited space, the use of multiple policy means to slow down the run on economic activities in multiple cities by the current epidemic prevention policy may be a stimulus policy to alleviate market concerns;
From historical experience, the emotional venting of A-Shares often brings better buying opportunities. However, the digestion of emotions often takes a certain time, and there is still the possibility of repeated shocks in the follow-up market. However, from the perspective of medium and long-term allocation, A-Shares have good investment opportunities. For risk averse investors, undervalued varieties often provide better defense in the process of previous market adjustment.
Shen Chao, macro strategist of HSBC Jinxin fund, said that in the short term, there are still many uncertain factors in the market, and it is understandable for investors to guard against risks. However, if we focus on the dimension of one year or more, the current market risk premium has been at a historically high level and has relatively high investment value. At the same time, the growth sectors represented by new energy, semiconductor and medicine have good long-term development space and growth, and after adjustment, both valuation and investment value are highly attractive. At the same time, the short-term factors perplexing the market and industry, such as rising costs, are also expected to be alleviated in the second quarter or the second half of the year. Therefore, while paying attention to short-term risks, investors can also start to pay attention to medium – and long-term opportunities.
China Merchants Fund also said that it will put more emphasis on certainty for the current stock investment in the A-share market. There is no shortage of opportunities in the market: under the economic background of the transition period, the dependence on traditional growth sectors increases in the short term, and the tail risk of real estate and platform economy decreases; On the contrary, the dual control of supply side and energy consumption improves the return on assets of companies with physical assets and stable cash flow. In the current environment of less credit than expected and accelerated tightening of overseas liquidity, the growth style will still face great pressure in the future, and the value will continue to be better than growth.
China Merchants Fund said that it should be emphasized that in the future, although the style of the A-share market is in the value sector, the share price of value stocks will not advance unilaterally under the stock game. It is more likely to be the rotation within the value rather than the switching rotation between growth and value. At this stage, the focus of investment is still on stocks with low-risk characteristics. The thinking of stock selection should still focus on sectors and individual stocks with undervalued value, performance and high certainty of performance growth, as well as marginal changes.
YONGYING Fund said that in the short term, the epidemic prevention work is advancing, and it is expected that it may be alleviated in the middle and later part of the second quarter, while the overseas risk disturbance also needs to wait for the substantial decline of U.S. inflation from May to June. At the same time, it takes time for China to broaden credit, that is, it takes a process from the end of the policy to the end of the market, and it is necessary to see the policy signal transformed into real measures, during which the market may fluctuate and consolidate; In the medium term, after the full release of overseas risks and the gradual implementation of Chinese policies after the second quarter, the market may return to the upward channel.
Strategically speaking, it may have reached the time point of medium-term layout. Judging from the price performance index (ERP) of the stock market, the overall price performance of the current market is close to the historical bottom (2016, 2018 and 2020), or it means that there is very limited room for further decline. In terms of style, the effect of epidemic prevention and control in China is beginning to appear, and consumption and other epidemic damaged sectors may take the lead in ushering in the left layout opportunity; Before the effect of the steady growth policy is not fully apparent, the relevant sectors such as finance, real estate and infrastructure chain may still be the focus of the market at different stages; After the second quarter, when market sentiment stabilizes and picks up, the growth track with gradually prominent cost performance is expected to return to the main line of the market.
Yang Gang, chief economist and fund manager of Golden Eagle Fund and Jiangxi Jdl Environmental Protection Co.Ltd(688057) equity strategy researcher reminded that it is difficult to repair the stock index overnight, and the bottom area is not pessimistic. In the short term, the A-share market has entered a period of intensive release of financial reports. Recent measures such as the central bank’s reduction of reserve requirements and the guarantee of supply in the epidemic situation show that the policy side is continuing to work, and positive factors conducive to the market are accumulating. The improvement of investors’ risk appetite is subject to substantial changes in the direction of stabilizing China’s fundamentals and digesting the tightening expectations of overseas Federal Reserve.
Wu Shangwei, chief research officer and fund manager of Huian fund, said that he still adhered to the judgment that the second quarter is the “bottom grinding period” of the market: first, it is still the bottom grinding period at present, there is no big opportunity in the market, and the hot money style is dominant. Second, “Shanghai epidemic” has replaced “steady growth” as the core game point of the current market. The two key data of “social clearance” and “discharge new” in Shanghai we tracked have made significant improvements in the past two days. It is expected that the market will rotate in the direction of must consumption → optional consumption + supply chain recovery in the future. Third, in May, the rhythm of the Fed’s interest rate increase and table contraction will be further clarified, and the pressure of China US interest rate spread and exchange rate may change marginally.
The market is already in the bottom range. The second quarter is the stage of tamping the bottom and selecting individual stocks. Therefore, it will more actively study and track industries and high-quality companies. After the economy stabilizes in the second half of the year, the market will get out of a better rising market.
steady growth is the core idea
Turning to the future, Nanfang Fund said that in terms of industry allocation, steady growth is the core idea, and the demand brought by the acceleration of infrastructure investment is the most determined direction of the whole year. It is suggested to choose the sectors benefiting from the acceleration of new construction, such as cement, industrial metals, steel, etc. Taking into account the changes in the policies of the real estate industry, we can pay attention to the household and consumer building materials with reversal of difficulties.
In addition, China Southern Fund said that with high global inflation, CPI may rise moderately in the second and third quarters of this year, and pig prices are expected to pick up after the industry’s production capacity is cleared. It is suggested to pay attention to the pig breeding sector.
China Europe Fund believes that short-term defensive is still more important. It is suggested to pay attention to the beneficial stimulus policies and financial and real estate industries with advantages such as valuation and dividend yield. Continue to recommend new infrastructure areas with high growth and high certainty in the medium term, especially energy infrastructure, green power and digital infrastructure. It is suggested to continue to pay more attention to the main line of oversold growth. Based on the judgment that it often takes a long time to stabilize the market shock, the configurable window period of the above industries is still long, so there is no need to rush to “rebound”.
In terms of industry allocation, Golden Eagle Fund suggests maintaining a balanced allocation of “steady growth + underestimated technology + mass consumption”. Under the epidemic situation and external economic pressure, the steady growth policy will still work. Before the follow-up policies are implemented and effective, they can still participate in bargain hunting. In addition to real estate and banks, the main line of steady growth can gradually pay attention to the post cycle varieties of the real estate chain. At the same time, we can pay attention to the high-quality varieties in the science and technology sector with strong cost performance measured from the perspective of PEG from the bottom to the left. In addition, with the gradual control and improvement of this round of epidemic, the main line of post epidemic recovery previously suppressed by demand, as well as mass consumer goods with stable profit growth and inflation transmission during the economic downturn, also deserve continued attention.
Boshi Fund said that although the US Federal Reserve has accelerated the tightening of liquidity, China’s monetary policy still emphasizes “focus on me”, the tone of steadiness and looseness remains unchanged, and liquidity remains reasonably abundant; As there are still many uncertain factors at home and abroad, before there is no strong data to prove that the economy is improving, the capital probability will continue to wait and see, and the A-share market will continue to fluctuate and bottom in the short term. From the medium and long-term perspective, the trend of China’s economy to continue to improve remains unchanged, and the opportunities of A-Shares will still outweigh the risks. Industries benefiting from China’s economic transformation and upgrading still have good allocation value, such as new energy, science and technology, advanced manufacturing and other sectors.
In addition, Qianhai open source Fund said that looking back, the overall market in the second quarter was still in the state of index shock consolidation and capital stock game. Structurally, we will focus on and layout the investment opportunities after the improvement of the epidemic in stages. If the epidemic in China improves in the future, the sectors seriously dragged down by the epidemic, such as leisure services, food and beverage, commerce and retail, will be repaired.
