According to the market review, in the past five trading days (from April 15 to April 21), important indexes fell to varying degrees. Among them, the Shanghai Composite Index fell 4.52%, the gem index fell 6.24%, the style level, the CSI 300 fell 4.67%, and the CSI 500 fell 5.99%. In terms of trading volume, the volume contraction trend was maintained. The turnover in the statistical range of the two cities was 4.14 trillion yuan, a month on month decrease of 404.2 billion yuan; Among them, the northward capital showed an outflow trend, with a net outflow of 6.32 billion yuan throughout the week. In terms of industry, the decline of agriculture, forestry, animal husbandry and fishery, textile and clothing, food and beverage and automobile sectors was relatively small; Coal, non-ferrous metals, real estate and other sectors fell relatively large.
In terms of data, the economy achieved a 4.8% growth in the first quarter, with a stable start. However, affected by the epidemic and other factors, the downward pressure on the economic data in March was more obvious. The cumulative growth rate of industrial added value fell to 6.5% compared with the previous month, and fell to 0.39% month on month after the quarterly adjustment, lower than the level of the same period last year, indicating that the local spread of the epidemic in March had a certain impact on the production of industrial enterprises. On the demand side, the cumulative growth rate of fixed investment fell by 2.9 percentage points to 9.3%. Among them, the decline in the cumulative growth rate of manufacturing industry and real estate investment was the main drag factor, which fell by 5.3, 3.0 percentage points to 15.6% and 0.7% respectively. The investment growth rate of real estate turned negative in the current month, while the infrastructure increased by 0.4 percentage points to 8.5% under the background of the steady growth policy. On the consumer side, under the background of the multi-point spread of the epidemic, the lack of consumption scenes in some areas under the epidemic control policy and the obstruction of online consumption by logistics, the social zero significantly turned negative to – 3.5% year-on-year in the current month. On the whole, the multi-point spread of the epidemic has had a significant impact on enterprise production and residents’ consumption. Considering the further outbreak of the epidemic in Shanghai, Jilin and other places in April, the downward pressure on the economy is prominent, superimposed with the price rise of bulk commodities, and the operating pressure of middle and downstream enterprises is prominent.
In terms of monetary policy, after the RRR reduction was relatively restrained, although the adjustment expectation in the LPR window period failed again, the monetary policy is not stagnant and is still trying to balance the relationship between steady growth and risk prevention. At present, the RMB exchange rate has faced greater pressure with the RRR reduction and the rise of US bond yields. On this basis, the support of monetary policy to entities will be more structural. On the 18th of this week, the people’s Bank of China and the State Administration of foreign exchange issued 23 measures to do a good job in epidemic prevention and control and financial services for economic and social development. On the 20th, the people’s Bank of China and the China Banking and Insurance Regulatory Commission jointly held a symposium on financial support for the real economy. Continuous policy deployment means that financial support for the real economy is still increasing.
In terms of strategy, our judgment on the bottom of the A-share market in the medium and long term remains unchanged. There are more factors to be observed in the short term. On the one hand, the performance release has entered the final stage, and the pressure on investors to prevent the performance of listed companies from falling short of expectations has increased. On the other hand, a meeting of the Political Bureau of the CPC Central Committee will be held later in April. While analyzing the economic situation in the first quarter, it is necessary to make arrangements for the economic work in the next stage. The further clarification of the policy will constitute a reference for the development of the future market. Therefore, we should be patient in the allocation. The congestion of most of the short-term “stable growth” sectors has been at a high level in recent five years, and the risks are gradually accumulating, so we need to be cautious. Investors can tap opportunities for performance exceeding expectations around the first quarterly report. For the medium and long term, after the economy stabilizes, the growth sector is still expected to return to the main line, and the long-term allocation value will be more prominent.
Risk tip: overseas market fluctuation risk, economic downturn exceeding expectations, and global epidemic development exceeding expectations.
