Market changes
On April 20, the market fell sharply, of which the Shanghai index fell 1.35% and the gem index fell 3.66%. At the industry level, the steady growth sector, including infrastructure, real estate and new energy related chains, led the decline.
Restricted by the performance of some representative enterprises falling short of expectations, the failure of interest rate reduction expectations and the intensification of concerns about the future economic prospects, the market continued to adjust significantly
The main reasons for the sharp decline in the market include: ① the performance of representative photovoltaic enterprises is lower than expected, and the market has revised down the performance expectation of the new energy sector, resulting in a large decline in the new energy sector Sungrow Power Supply Co.Ltd(300274) released the performance announcement. The performance in 2021q4 and 2022q1 was lower than the market expectation. Among them, the net profit attributable to the parent company in 2021q4 decreased by 90% year-on-year, and the net profit attributable to the parent company in 2022q1 increased by only 6% year-on-year. Despite the continuous high growth of installed capacity, the performance is still lower than expected, which makes the market revise the performance expectation of the new energy sector, which directly leads to the sharp decline of Sungrow Power Supply Co.Ltd(300274) , Jiangsu Goodwe Power Supply Technology Co.Ltd(688390) , Contemporary Amperex Technology Co.Limited(300750) and other representative stocks and the sharp decline of the new energy sector; ② The LPR quotation remained unchanged for three consecutive months, and the expectation of interest rate reduction failed. In April, the LPR quotation fell to the ground, and the 1-year and 5-year interest rates remained unchanged for three consecutive months. The interest rate cut expected by the market failed, further curbing risk appetite on the basis of the continuous weakness of the recent market; ③ The market’s concern about the future economic outlook has intensified, and the steady growth sector, especially real estate, continued to decline. At the moment when the economic data in the first quarter is weak and the current policy has not yet taken sufficient measures, the market is generally worried about the future economic outlook, and even the market is skeptical about whether to adhere to the annual economic growth target. Investors are more pessimistic about the future economic growth as a whole. Such sentiment has also directly led to the continuous correction of the recent steady growth sector. It is worth mentioning that after a short-term sharp rise in the real estate sector after March 16 (up 33% in half a month), the expected policy easing behind the huge increase has not been fulfilled and the fundamentals are still weak, the real estate sector has been continuously adjusted recently.
Before the obvious shift of domestic and foreign policies, it is expected that the market will still be dominated by weak bottoming in the short term, but there is no need to be overly pessimistic in the medium and long term
So far, the two core factors restricting the market have not changed significantly, and even the constraints are still strengthening. Therefore, in the short term, the market is expected to remain in the stage of weak shock and bottom grinding: one of the core factors is that the monetary tightening expectation of the Federal Reserve is still in the process of strengthening. Recently, Fed officials’ speeches have become more and more hawkish, driving the market’s expectations of monetary tightening. In May, the interest rate meeting raised interest rates sharply and the table reduction is about to be launched. The US bond yield continues to soar rapidly and even caused the inversion of the interest rate gap between China and the United States. On the one hand, it causes the continuous decline of US stocks, thus curbing the risk appetite of a shares, on the other hand, it restricts the space for China’s short-term monetary policy easing; The second core factor is that the introduction time and strength of the steady growth policy are lower than market expectations, which is difficult to reverse the market’s pessimistic expectations of the future economic prospects. The epidemic has significantly inhibited consumption and even impacted some manufacturing industries. The real estate boom is still in a weak downward trend, and the impact on the economy has not yet fully appeared. With the combination of restrained standard cuts, failed interest rate cuts, slow wide credit rhythm, weak credit demand and other pressures, economic expectations have become continuously pessimistic. Therefore, before at least one of these two core factors is significantly improved, the market risk appetite is expected to remain depressed in the short term, and the market will continue to be weak. The short-term weakness does not change the pattern of excellent performance price ratio in the medium and long term of the market. The valuation of the main A-share index after deep and substantial adjustment has fallen sharply to the low position of the center, and even some industries have been absolutely underestimated.
The target of steady economic growth has not been given up or the market has not improved; After tracking the slowdown of overseas inhibitors, the growth sector may usher in the opportunity of oversold rebound
At present, the stable growth sector has been disturbed by the market’s phased concerns about the future economic outlook, the growth sector has been restrained by the expectation of monetary tightening of the Federal Reserve and the short-term constraints of China’s monetary policy, and the consumption sector has a phased advantage. However, we believe that before the economy improves significantly (far from fashion) or the growth target is confirmed to be abandoned, the cost performance advantage of the steady growth sector has not ended. The upcoming meeting of the Political Bureau of the CPC Central Committee at the end of April is an important observation time window. Once the policy tone continues or becomes more positive, the cost performance of the steady growth sector is expected to highlight again. The growth sector focuses on tracking and paying attention to the inflection point of US bond yield. Once the US bond yield starts the periodic downward inflection point, the decline of US stocks stops and picks up, and the growth sector is expected to usher in the opportunity of oversold rebound. The interest rate meeting of the Federal Reserve in early May will be an important observation time window.
At present, the market is in a period of rapid rotation and should be configured in a balanced manner. We should pay attention to three main lines and two major themes: first, the introduction of consumption promotion policies and the gradual easing of the epidemic in Shanghai. Consumption is expected to continue to usher in phased valuation restoration. We should pay attention to the valuation restoration of food and beverage, medicine and biology, the rise in the price of mandatory consumer goods (planting industry, chemical fertilizer, dairy products and condiments) and the recovery of service travel chain; Main line 2: the chain of steady growth is not over yet, and attention is paid to opportunities such as building materials, building decoration, steel, cement, real estate chain and banks; Main line 3: the scenery should be long-term and optimistic about the medium and long-term configuration value of the growth style. At present, the valuation of electronics and other industries has been at an absolute low level. In terms of theme, it is suggested to allocate around the digital economy and the reform of state-owned enterprises.
Risk tips
The development of Omicron mutant strain exceeded expectations; Risk Spillover of geopolitical conflict between Russia and Ukraine; The uncertainty of the Fed’s interest rate hike path has increased; China’s policy is not as strong as expected.
