During the exchange with market investors this week, three issues of concern emerged: 1. Is there comparability between the current round of China’s epidemic impact and the beginning of 2020, and whether it has reference value for the subsequent market? 2. The RMB exchange rate fluctuated sharply this week. How do you view its impact on a shares? 3. Is it common that the leading performance of new energy this week is lower than expected, and the performance of the original high boom track stocks is lower than expected?
For the re outbreak of this round of China’s epidemic, the market began to compare the current market with the beginning of 2020, that is, the impact of the epidemic after the Spring Festival in 2020 (rebound after rapid decline) – the global spread of the epidemic in early March 2020 (decline) – the epidemic in China was controllable (stabilized and recovered) at the end of March 2020. Here, we observe and compare from the macro and market levels: it should be recognized that there are similarities between the current market level and the beginning of 2020, such as valuation level and bottom trading characteristics. However, there are obvious differences in the level of incremental funds. In early 2020, after a short outflow of foreign capital, the incremental funds have improved significantly with the recovery of public offering, while the issuance of public offering funds has been blocked and the negative feedback of redemption has not ended. The great pressure of foreign capital outflow is a major problem in the current capital. This will lead to the current market bottoming more inclined to the w bottom than the V bottom. At the macro level, the main focus is on the economic bottom and the amplitude and sustainability of the bottom rise. At the beginning of 2020, the economy began to repair rapidly after being hit hard in the first quarter, and the month on month growth trend continued until the middle of 2021. At present, there will be a “deep pit” in China’s economic data from March to April. If the steady growth policy can be successfully implemented (waiting for the Political Bureau meeting in April to implement the policy overweight), after the epidemic is effectively controlled, the promotion of resumption of work and production will lead to the recovery of fundamentals, then it is expected to see the inflection point of China’s molecular profit expectation in the second quarter, and the A-share market is “or leaping into the abyss”.
For the exchange rate issue, generally speaking, monetary policy remains unchanged to deal with the current round of tightening cycle of the Federal Reserve at the cost of devaluation of the domestic currency. According to the exchange feedback with the market, the strength of the US dollar index reflects that the Federal Reserve basically confirmed the 50bp interest rate increase at the May meeting. The main reason for the depreciation of the RMB against the US dollar this week is still the dislocation of China US monetary policy. According to the exchange and feedback with the market, the importance of external negative factors for the current institutional allocation is ranked as follows: global inflation (mainly disturbing fundamental expectations) exchange rate changes (US dollar index) upside down of China US interest rate spread interest rate hike by the Federal Reserve local war conflict. For the exchange rate issue, generally speaking, monetary policy remains unchanged to deal with the current round of tightening cycle of the Federal Reserve at the cost of devaluation of the domestic currency. If the interest rate meeting in May continues to send a radical interest rate increase signal to the market and the foreign exchange market sets prices in advance, if the central bank does not follow the interest rate increase at that time, there will continue to be devaluation pressure on the RMB. From the performance of A-share market during the previous devaluation of RMB, the market outperformed the small market, and the value outperformed the growth. In terms of growth, SSE 50 CSI 300 CSI 500 CSI 1000. In the first quarterly report of the fund, we found that despite the sharp decline in the return on investment of the original high boom track in Q1, the institutions not only did not significantly reduce their holdings, but still showed the trend of increasing positions as a whole, and made more internal structural adjustments. It can be seen that in 2022q1, compared with 2021q4, public funds increased their holdings in high prosperity tertiary industries: Cecep Solar Energy Co.Ltd(000591) (+ 0.49pct), lithium electrochemical chemicals (+ 0.48pct), CXO medical services (+ 0.45pct), biomedicine (+ 0.21pct), lithium battery (+ 0.20pct), semiconductor materials (+ 0.09pct). At the same time, northbound funds also increased their positions in the electrical equipment industry in the process of a sharp decline in the market, with the purchase of electrical equipment reaching 10 billion in the past month. It is not difficult to see that the key for institutional investors to judge the high boom growth track is still the support strength of the profit side and the degree of achievement expected by the market. In fact, during our exchanges with investors, we did find that many people’s doubts about the realization of high boom fundamentals have spread to the second half of this year. From the current quarterly performance forecast, although a few high boom track stocks have fallen short of expectations to a certain extent, we believe that the performance fulfillment of most high boom varieties is still high. In the future, we still maintain the previous view of the original wind power high boom track: the boom is expected to shrink from multiple industrial chains and links in 2021 to a few industrial chains and links in 2022. In the evaluation of high prosperity, we have been taking the field of digital intelligence as a new direction. At present, in terms of structure, our proposed configuration is steady growth (real estate chain, infrastructure, banking, food and beverage) global inflation (coal, agriculture and animal husbandry, petrochemical) post epidemic repair (Hotel, aviation, catering, tourism, etc.) high prosperity (digital intelligence, photovoltaic, military industry, semiconductor, wind power, new energy vehicles).
Risk tip: the spread of the epidemic exceeded expectations, the policy was less than expected, the Sino US relations deteriorated again, and the overseas monetary policy changed
