Recently, the style of large and small disks has been switched repeatedly
Since February 2021, the style of small market value has obviously dominated, but after September, the style of large and small discs began to switch repeatedly. Since February 2021, with the sharp decline of “conglomerates” such as Kweichow Moutai Co.Ltd(600519) , the market style has gradually changed from large cap stocks to small cap stocks. However, after September, the relative performance of large cap stocks rebounded to some extent. The frequent style switching since the second half of the year shows that the market has not reached a consensus. How will the style of large and small cap markets be interpreted in 2022?
What are the core factors that determine the style of large and small discs?
Through our research, we found that there are three important factors affecting the size and style of macro-economy. From a long-term perspective, after large market fluctuations, the styles of large and small stocks tend to change; In terms of annual dimension, the relative prosperity of large and small plates has an important impact on style; In addition, when the relative turnover rate of large and small discs exceeds the extreme value, small-level style conversion often occurs.
After large market fluctuations, large-scale style conversion often occurs. Since 2006, there have been two large-scale market style changes, respectively after the large market fluctuations in October 2007 and June 2015. After the market fluctuation in October 2007, the small market style was obviously dominant, while after the fluctuation in June 2015, the large market style was relatively dominant.
Relative performance has an important impact on the size and style of the year. From the annual dimension, the sectors with high performance growth usually perform better. In the 14 years from 2008 to 2021, the performance growth difference of large and small markets and the relative rise and fall are in the same direction most of the time. The main deviation occurs around 2015, which is related to the extreme market style at that time and the style swing back after the sharp market fluctuation.
In addition, the relative turnover rate has a certain impact on the short-term large and small disc style. We use the turnover rate of CSI 300 minus the turnover rate of CSI 500 to measure the relative turnover rate of large and small plates. When the relative turnover rate reaches the extreme value, short-term style conversion often occurs. Among them, when the relative turnover rate is higher than the 99% quantile, the style tends to change to the small market, while when the relative turnover rate is lower than the 1% quantile, the style tends to change to the large market. It is expected that the performance of large cap stocks will be more advantageous in 22 years, the performance of large and small cap stocks will be reversed, and the style of the market is expected to be dominant
It is expected that the performance growth of large cap stocks will lead small cap stocks in 22 years, and the style of large cap stocks is expected to be dominant. Compared with large cap stocks, small cap stocks have greater performance flexibility and are more vulnerable to base effect and changes in overall market profits. Under the background of the high base of performance growth of small cap stocks in 21 years and the downward trend of A-share profit growth rate in 22 years, it is expected that the profit growth of small and medium cap stocks will decline significantly in 2022. At the same time, it is expected that small cap stocks will face greater downward pressure on profits as a whole, and the market style is expected to be relatively dominant.
It is expected that “spring agitation” will still arrive as scheduled. Under the short-term optimistic profit growth, strong policy momentum and positive inflow of overseas funds, it is expected that the market will still perform well in the future, and the “spring agitation” will still arrive as scheduled.
In terms of industry configuration, it is suggested to continue to pay attention to the two main lines of consumption and steady growth. The first main line is the consumption sector, including food and beverage, medicine, household appliances, automobiles, etc; The second main line is the steady growth sector, including traditional infrastructure such as building materials and new infrastructure such as wind power and photovoltaic.
Risk analysis: the epidemic situation worsened beyond expectations, and consumer demand was significantly lower than expected.
