Judging from the structural characteristics of transaction congestion, the recent capital outflow mainly comes from hot money and retail investors. Judging from the valuation, redemption application and position, the position adjustment and position reduction of institutional funds are in the end, and the market sentiment has dropped to the low point since 2018. The dynamic P / E ratio of the main indexes has also fallen below the 25% quantile since 2010, of which the main blue chip index is below the 10% quantile since 2018. The long-term fundamentals of China’s economy will not change. The medium and long-term allocation cost performance of the current index is prominent. It is expected that the steady growth target for the whole year will remain unchanged. With the weakening of the impact of the epidemic, the disclosure of quarterly reports, the three factors of interest rate increase of the US dollar as scheduled, and the three main lines of infrastructure, real estate and consumption are expected to usher in a synchronous recovery in May. The medium-term repair market is gradually approaching. It is suggested to continue to stick to the main line of steady growth and firmly layout the varieties with low valuation and expected low.
market sentiment has fallen to near the low point since 2018
1) investor sentiment has fallen to a low point, but the pressure of forced selling is limited mainly suppressed by fundamental expectations, the overall disclosure of the first quarterly report is weak, and investors’ risk appetite decreased significantly last week. On the one hand, the average daily turnover rate of A-Shares last week was 1.2%, which was at a low level since 2021; On the other hand, the average declining stocks accounted for 61%, accounting for 92% on Thursday, and the market sentiment was low. From the “market temperature index”, the Shanghai Stock Exchange 50 and Shanghai and Shenzhen 300 in the market style have rebounded from the freezing point in mid March, while the trading heat of small and medium-sized innovation style is still at a very low level, both of which are near the low point since 2018. At the same time, the balance of on-site financing fell slowly. The trading volume of two financing accounts for only 6.7% of the trading volume of A-Shares in the past week, which is at a historical low. As of April 22, the average maintenance guarantee ratio of Liangrong was maintained at a high position of 249%, and the market value balance of stock pledge in the whole market was 3338.7 billion yuan, significantly reducing the scale pressure compared with 4233.6 billion yuan at the end of 2018: it is expected that the risk of forced selling induced by the release of negative emotions is very low.
2) judging from the structural characteristics of transaction congestion, the recent capital outflow mainly comes from hot money and retail investors based on the proportion of the turnover of each industry index in a shares, we find that: first, the congestion of coal, real estate, construction, building materials and other cyclical and steady growth related sectors in the past three years was 99%, 98%, 92% and 20% respectively. Secondly, the transaction activity of the sector with defensive attributes has increased significantly recently. The transaction proportion of the banking industry and dividend index has exceeded their average value in the past year by about 2 standard deviations. However, compared with the transaction congestion in the past three years, they are still at a medium high level of 83% / 64%. Finally, the transaction congestion of traditional heavy position industries of public offering institutions has decreased significantly. The transaction congestion of food and beverage (13.4% of 4q21 public position), power equipment and new energy (13.3% of 4q21 public position) is in the historical quantile of 66% and 58% respectively this week. Institutional capital transactions are relatively inactive, and the recent capital outflow may mainly come from hot money and retail investors.
3) judging from the valuation, redemption application and position, the position adjustment and position reduction of institutional funds are in the end first of all, as of the closing on April 22, the dynamic P / E of the top 100 heavyweight stocks of position weighted public funds has been adjusted to 26.1x, and the dynamic P / E of the top 100 heavyweight stocks of northbound funds has also been adjusted to 23.7x, both of which are at a low level since 2010. Secondly, Citic Securities Company Limited(600030) channel research shows that the net application and redemption rate of products reached – 0.5% in the last week, which is still near the historical average. Thirdly, according to the calculation of the metalworking group of Citic Securities Company Limited(600030) research department, the public offering positions of common stock type, partial stock mixed type and flexible configuration type are 88% / 82% / 61% respectively, of which the partial stock mixed type products have fallen to a record low level. Finally, small and medium-sized private placement positions continued to decline rapidly by about 4 percentage points to around 65% in April, which has been at the lowest level since the beginning of 2019. In addition, under the pressure of RMB devaluation, North allocation funds did not flow out significantly, and the flow was basically balanced in the last week. The position adjustment and position reduction of institutional funds are in the end.
main index medium and long-term allocation cost performance highlights under the current valuation
1) longitudinal comparison shows that the medium and long-term allocation value of the main indexes under the low quantile of the current valuation is very high as of April 22, the dynamic P / E of SSE 50, CSI 300, CSI 500 and gem were in the lower quartile of 15%, 25%, 3% and 23% respectively since 2010; Of the 30 Citic Securities Company Limited(600030) primary industries, the valuation quantile of 24 industries has been lower than 30%. Among them, the valuation of CSI 300 has been equivalent to the level near February 2016, December 2018 and March 2020. Before February 2016, A-share oversold was affected by the circuit breaker mechanism. Macroscopically, it faced the characteristics of GDP slowdown, PPI deflation and bottom profit of industrial enterprises; In December 2018, the credit cycle declined under the guidance of severe differences between China and the United States and policy deleveraging; March 2020 was the first impact of the epidemic, and the market panicked because of lack of experience in preventing covid-19 epidemic. During these three periods, it is found that China’s current policy environment, credit cycle and external pressure are obviously better. Historical data show that at the current dynamic P / E valuation level of 8.8x, the expected rate of return of the long-term buy and hold strategy of CSI 300 has been very attractive. If its valuation is repaired to the valuation quantile of 40% since 2010, the corresponding valuation repair space is about 15%.
2) in horizontal comparison, the valuation discount of A-Shares relative to major global indexes has been very obvious under the influence of the landing of the Fed’s interest rate hike and the rise of the long-term yield of US bonds, the valuations of major global indexes have been reduced to varying degrees since this year. As of April 21, except that the dynamic P / E of the S & P 500 of the US stock market remains at a high level of 85%, the rest of the world’s major indexes have returned to below the 30-40% quantile after adjustment this year. Among them, the Stoxx 600 in Europe, DAX 30 in Germany, CAC 40 in France, FT100 in the UK and Topix 100 in Japan are at the 37%, 39%, 33%, 24% and 34% quantiles respectively. In contrast, the Hang Seng Index of Hong Kong stock market and CSI 300 of a stock market are at the 13% and 23% relative discount quantiles respectively. With the impact of the conflict between Russia and Ukraine becoming clearer, the regulatory coordination between China and Ukraine is gradually promoted, and the pressure on China’s real estate and epidemic situation is gradually alleviated. Under the combination of current undervaluation, low inflation and policy driven fundamental improvement, the long-term allocation value of A-Shares is significant, and its valuation discount relative to the world will be gradually repaired.
annual steady growth target remains unchanged. It is expected that the three main lines of infrastructure, real estate and consumption will recover simultaneously in May
1) the impact of the epidemic is weakened, the quarterly report disclosure is over, and the three factors of US dollar interest rate increase on schedule will be gradually implemented in terms of economy, the current round of epidemic has a great impact, and it is difficult for economic growth to return to the target level in the first half of the year, but the steady growth target of the whole year remains unchanged. It is expected that the policies related to expanding investment in the second quarter will be strengthened and accelerated, the supply chain dredging and consumption stimulation will be carried out at the same time, and the fundamentals are expected to improve gradually. In terms of quarterly reports, as of April 22, the disclosure rates of 2021 annual report of A-Shares and the first quarterly report of 2022 were 67% and 14% respectively. It has been disclosed that the year-on-year growth rate of the company’s single quarter net profit in 2021q4 and 2022q1 was 23% and 18% respectively. Structurally, the upstream resource products maintained a high growth rate, and the midstream was suppressed relatively significantly. In terms of the US dollar, the Fed is expected to raise interest rates by 50bps in May, and it is possible to announce table reduction measures.
2) it is expected that the three main lines of real estate, infrastructure and consumption will gradually recover synchronously in May this round of China’s epidemic has disrupted the recovery rhythm of several fundamental main lines. At present, the epidemic in Shanghai has entered the stage of social zeroing. With the gradual easing of the epidemic disturbance and the secondary implementation of the steady growth policy, it is expected that the three main lines of infrastructure, real estate and consumption will enter the stage of resonance recovery after May. First of all, there are abundant infrastructure orders and guaranteed funds, and the growth rate is expected to remain stable in the future. Secondly, the real estate policy is expected to continue to relax, the impact of the epidemic on transactions will be weakened, and the growth rate of real estate sales is expected to usher in an inflection point in the second quarter. Thirdly, the consumption sector is most directly affected by the epidemic, but the logic of the marginal improvement trend of the travel industry chain (hotels, duty-free, scenic spots, catering, etc.) has not changed.
3) continue to stick to the main line of steady growth and firmly lay out varieties with low valuation and low expectation specifically includes: varieties with relatively low valuation, it is recommended to pay attention to high-quality developers, property management and building materials enterprises, cash flow significantly improved communication operators , A new infrastructure field in the new infrastructure field 123 of a new infrastructure field 6 fine chemical enterprise with the ability to develop new businesses such as new materials. For the varieties whose fundamentals are expected to be relatively low, focus on the configuration opportunities of midstream manufacturing suppressed by the supply chain and cost after the suppression factors are relieved, such as smart cars and parts , photovoltaic wind power equipment, etc., and Airlines, hotels and department store supermarkets whose fundamentals are expected to be still low. In addition, the recent focus can be focused on a quarterly expected to exceed the expected variety, and it is recommended to focus on photovoltaic, semiconductor, Baijiu, Chinese medicine and construction sector .
risk factors
Global epidemic recurrence; The friction between China and the United States in the field of science and technology trade has intensified; The implementation of China’s policies and the progress of economic recovery are not as expected; Macro liquidity at home and abroad has tightened more than expected; The conflict between Russia and Ukraine further escalated.
