Key investment points
Last week (1.4-1.7), the stock index opened higher, the Shanghai index fell 1.65% to close at 3579.5 points, the Shenzhen Component Index fell 3.46% to close at 14343.65 points, the small and medium-sized 100 fell 4.13%, and the gem index fell 6.80%; In terms of industry sector, real estate, household appliances and architectural decoration ranked first in terms of growth; In terms of theme concept, Lianban index, beating index and turnaround index were among the top gainers; The average daily turnover of Shanghai and Shenzhen stock markets was 1228.828 billion, up 21.60% over the previous week, including 22.12% in Shanghai and 21.23% in Shenzhen; In terms of style, large cap stocks have a comparative advantage, of which Shanghai Stock Exchange 50 fell 1.56% and China Stock Exchange 500 fell 2.50%; In terms of exchange rate, the closing point of US dollar against RMB (CFETS) was 6.3739, up 0.01%; In terms of commodities, icewti crude oil rose 3.84%, Comex gold fell 0.20%, Nanhua iron ore index rose 5.74% and DCE coking coal rose 2.98%.
Track stocks collectively went down and the market style switched. Last week, the market style switched. The collective decline of track stocks such as new energy, military industry, CXO and semiconductor shows that the market style switching is not driven by individual industry events. The return of valuation to steady state and institutional position adjustment may be the root cause behind the market. Compared with the downward trend of Mao index from February to March 2021, due to the market learning effect, the downward start time of track stocks in this round is about 2 months ahead of schedule, and the duration and extent of the downward trend are expected to be less than those from February to March 2021. In February 2021, marked by the decline of institutional group stocks, the A-share market showed two characteristics of “sinking market value and style overflow”. Referring to the market performance of the -3 index after the February 2021 index, the two or three line Baijiu and CXO enterprises will be better than the first line Baijiu and CXO enterprises. After the current round of track stocks go down, it is expected that the internal differentiation of track stocks will accelerate, and the market style may further shift from mainstream track stocks to marginal track stocks.
Global liquidity margins tightened. In December, the Federal Reserve accelerated the pace of taper. The yield of 10-year US bonds rose from 1.34% in early December to the current 1.77%, which is close to the high level from March to April 2021, and the market liquidity margin tightened. The minutes of the December meeting show that the Fed may raise interest rates earlier and faster than expected, and the contraction may follow. The overnight index swap market shows that the probability of raising interest rates by 25 basis points in March is 80%. Low interest rate environment is an important source of this round of global bull market. In 2022, if the Federal Reserve officially starts the interest rate increase cycle, the trend of overvalued technology stocks and track stocks will inevitably be under pressure. The overall performance of the global market in 2022 may not be as good as that in 2021, and the impact on emerging market countries is particularly obvious. Although the global liquidity margin is tightened in 2022, the interest rate gap between China and the United States is at a high level, and the RMB exchange rate is also at a high level. China’s monetary policy has more room for operation. It is expected that China’s monetary policy will be “self dominated and reasonably abundant” next year, with limited interference from external markets. Next year, China’s policies will support small and micro enterprises, science and technology enterprises and green enterprises. In the third quarter of 2021, the net profit attributable to the parent company of all A-Shares was – 0.18% year-on-year. Generally, it takes 5-7 quarters for performance growth to get out of negative growth. It is expected that there will still be some pressure on the performance of A-share listed companies next year. It is suggested to avoid the performance disclosure period for investment next year. Liquidity and sentiment (favorable policies) may be the sources of excess returns.
Investment advice. It is expected that in 2022, China’s asset allocation will move from the “stagflation like” stage (economic downturn + upward inflation) to the “recession” stage of Merrill Lynch clock (economic downturn + lower inflation). The recommended asset allocation order is: bonds > stocks > commodities. It is expected that the A-share market will still achieve positive returns in 2022, but the performance of the index may not be as good as that in 2021. We are optimistic about the following four sectors in turn: (1) the sectors with booming production and sales. In the next 1-3 quarters, the performance improvement expectations from strong to weak are: national defense and military industry, household appliances, transportation, communication and computer; (2) New energy and other track stocks. It is expected that the differentiation of new energy track stocks will intensify, the stocks with confirmed performance will still grow high, and the stocks with false performance will be corrected; (3) Downstream consumer segment. In November, China’s PPI rose 12.9% year-on-year, CPI rose 2.3% year-on-year, and the scissors gap was at an all-time high. It is expected that the convergence period of this round of ppi-cpi will continue from November 2021 to August 2022. The consumer sector will probably achieve excess returns in the first half of next year, and attention can be paid to the food, beverage and home appliance industries; (4) Epidemic damaged plate. At present, the epidemic has spread to India, Africa and other places with the weakest vaccination, which may mean that the global anti epidemic process has come to an end. In 2022, with the global epidemic situation under control, there is a momentum for valuation and repair in the epidemic damaged plate, which can be paid attention to: aviation, airport, tourism, hotel, cinema, etc.
Risk tip: macroeconomic downturn, recurrence of the epidemic, fluctuations in overseas markets, deterioration of China US relations and risks in emerging market countries.
