market has entered the bottom seeking stage, and the configuration value is expected to gradually appear at present, the difficulty of stock pricing is that the uncertainty of economic growth and credit path leads to the ambiguity of profit expectation and the decline of risk preference. With the hawkish statement of the Federal Reserve, the slowdown of Global trade activities and the impact of the epidemic, the market has begun to enter a new bottom seeking stage. The pendulum of short-term trading is extremely difficult to grasp, but in the fog of consensus, we should be more optimistic. More pessimistic expectations have been included in the dynamic valuation of the A-share market. The valuation of Shanghai Stock Exchange is close to the limit of 2018, and the valuation is basically flat from the low point of the epidemic impact in 2020, indicating that the medium and long-term allocation value is beginning to appear with the adjustment of the market. Compared with the bottom of the previous two rounds of valuation, the value of national securities is deeply underestimated.
investment style is in the sector with low-risk characteristics some investors have some biases in their cognition of low-risk characteristics: first, some investors believe that undervalued value = low risk, but the instability of fundamental expectations will also make the undervalued value unsafe. Second, some investors believe that high prosperity = low risk, but ignore that the performance growth of high prosperity sector often needs the stability of macro environment and demand. Since the beginning of the year, the elasticity of the stock price of the coal sector is greater than that of the coal price itself (which is significantly different from that in August 2021), indicating that the “certainty of growth” of the current performance is better than the value of the “growth” of the performance itself, which is also an important premise for us to revalue the sector that holds physical assets and has stable cash flow. Due to the decline of profit expectation and the high fluctuation of discount rate, the low-risk characteristics should focus on the stocks with undervalued value, performance and definite performance. Those with good expectations may not become better, and those with poor expectations may not become worse. From the perspective of strategy, in the near future, the correction of short-term supply (such as the mitigation of the epidemic and the recovery of the supply chain) may lead to the rebound of the sharp contraction of the early valuation sector. However, the main line of the real low-risk characteristics in 2022 does not lie in the correction of supply, but the necessity of the recovery of economic demand and the inflation of physical assets.
layout cycle and consumption related to steady growth economic transformation + downward growth, and the dependence of growth on traditional sectors, especially investment and consumption, is increasing rather than decreasing. Therefore, the risk expectation of assets related to steady growth should converge with the gradual force of policies, which is an important source of certainty. However, it should be pointed out that the connotation and path of steady growth itself are different from those in the past, which means that the choice of internal stocks will also be different, and the leader will obtain more shares and profit elasticity. The new change is that the rise of US dollar interest rate began to widen the interest margin between US commercial paper and junk debt, and the slowdown of export growth in the “Canary” region is indicating that global trade activities begin to slow down, and the fluctuation of RMB value and imported inflationary pressure appear. This change will be transmitted to China’s stock market through foreign capital trading. Considering that Q1 Chinese institutional investors are still crowding and growing in the trading market and highly overlapping with overseas investors, the cyclical and consumer value stocks related to steady growth have better logic and trading structure.
stock selection idea: stocks with undervalued value, performance and definite performance industry recommendations: 1) the direction of holding physical assets with stable cash flow: coal, chemical resources, second tier central state-owned enterprises, real estate and banks; 2) Public investment direction dominated by government expenditure: construction, power grid, wind and solar power; 3) the reverse of the dilemma, the core concerns the supply side of the deep optimization: pig, Baijiu and consumer services, Q2 concerns about consumer building materials and steel investment opportunities.
