Daily theme strategy discussion, summarize the views of the eight securities companies, reveal the current situation of the industry, observe the market trend, and feel the pulse of A-Shares for you in advance.
BOC International Securities: the further impact of exchange rate depreciation on current A shares is generally controllable
The initial panic of RMB devaluation should ease quickly and there will be no cross market risk. More importantly, as the policy has shifted to steady growth, orderly resumption of work and production and the demand for the health and stability of the capital market, a series of risks and uncertain events affecting A-Shares are expected to be confirmed and mitigated in the near future, and A-Shares are also expected to usher in the best allocation time point of the year.
The depreciation of exchange rate is generally controllable for the further impact of current A shares. We divide the A-share market into four stages from the two dimensions of A-share profit and exchange rate. At present, the A-share market is in phase III in the short term: since the beginning of the year, the A-share market has been weak under the concerns of weak domestic demand and the return of the US dollar, and the undervalued defense strategy has become the first choice, which is also in line with the historical experience mentioned above and the prediction of our annual strategy. Since 2022, there has been a phased deviation between the exchange rate and the short-term trend of a shares. Overseas tightening and pessimistic expectations of Chinese demand are the main factors leading to the large decline of a shares. The current market is worried about the potential impact of rapid and substantial depreciation of exchange rate on A-Shares in the future. We calculate the impact of earnings and exchange rate framework on A-share earnings. Under the condition that the current profit expectation is not further deteriorated, the further impact of exchange rate depreciation on the current A-share is generally controllable.
Zhongtai Securities Co.Ltd(600918) : the stock market pays attention to the main line of benefits! The impact of exchange rate depreciation on the capital market is mainly in two ways
The adjustment pressure of the bond market remains unchanged, and the stock market pays attention to the main line of benefits. The impact of exchange rate depreciation on the capital market is mainly in two ways: first, the behavior changes of foreign institutions are directly reflected in the capital flow, which has occurred when the expectation of exchange rate depreciation is formed; The second is to indirectly affect asset prices through monetary policy adjustment. We believe that the monetary easing represented by the reduction of reserve requirements and interest rates may have come to an end. On the one hand, the adjustment pressure of the bond market remains unchanged, and the only way to resist capital outflow may be to expand the interest rate gap between China and the United States as much as possible; On the other hand, for the equity market, the impact of depreciation is relatively weaker than that of the bond market. Due attention can be paid to the price rise caused by the rise of import prices and the profit improvement opportunities of some export industries.
Possible reasons for exchange rate adjustment
From the perspective of market participants, the trend of the stock market still mainly depends on China’s economic fundamentals. After the exchange rate adjustment, the stock trend does not necessarily continue to decline: after June 2018, the CSI 300 continued to decline unilaterally; However, after August 2019, the CSI 300 rebounded to some extent. This is mainly related to the economic fundamentals at that time. In the nine months after June 2018, the manufacturing PMI declined and the economic boom weakened; However, between August 2019 and the outbreak of the epidemic in 2020, the manufacturing PMI shows that China’s economic boom is in the process of repair. To sum up, the exchange rate adjustment may not be the reason for the stock market adjustment. We expect that the implementation of subsequent fiscal policies will be accelerated, the downward trend of economic fundamentals may be gradually curbed, and market sentiment may be marginally improved.
Huachuang Securities: what is the focus of exchange rate in the future? Short term focus countercyclical factor
How to understand the recent exchange rate changes? Offshore concentrated compensation + disturbance of some trading factors. This round of decline began from offshore, mainly due to the strong rise of the US dollar during the closure of the Hong Kong market and the offshore concentrated compensation after the opening of the festival. The earliest change was that the offshore RMB suddenly began to depreciate on April 19, mainly because the US dollar rose strongly by about 1.1% during the closure of the Hong Kong market, and the offshore concentrated to make up for the decline after the festival. In addition, there are also some trading factors. The cross exchange rates of the euro, the Japanese yen and the British pound against the offshore RMB have fallen to historical lows, and the demand for buying these currencies has also increased, bringing some depreciation pressure to the RMB.
What are the future concerns? First, focus on the counter cyclical factor in the short term. This time is different from the past. We observed the counter cyclical factor in the early stage of exchange rate depreciation. At present, we still control the range from last Friday, but do not involve the direction. This requires observing the subsequent counter cyclical factors, so as to more accurately understand the possible policy intention of the central bank. Secondly, this time, due to offshore, offshore is also devalued more than onshore. It remains to be seen whether there are some measures to tighten the liquidity of RMB offshore. Finally, due to the backlog of foreign exchange to be settled, the basic price of the exchange rate is still inside – the progress of the epidemic and the strength of steady growth are still the most important factors in the medium-term trend of the exchange rate in the future.
Gf Securities Co.Ltd(000776) : depreciation of RMB exchange rate benefits textile manufacturing sector
The devaluation of RMB is good for the textile manufacturing sector. The devaluation of RMB is conducive to improving the competitiveness of export products of enterprises in the sector, enabling enterprises to get more orders and driving the growth of exports, especially under the background of the gradual reduction of order return with the improvement of the epidemic in Southeast Asia. In addition, it helps to delay the textile manufacturing sector to a certain extent. Before the epidemic, due to the continuous rise of China’s labor, environment and other production costs, including the continuous slowdown of export growth, Even negative growth.
China Industrial Securities Co.Ltd(601377) : Although the exchange rate is still under depreciation pressure, the overall range is controllable at present
The recent rapid depreciation of the RMB exchange rate has aroused market concerns. For the recent rapid depreciation of the exchange rate, we further analyze as follows: the weakening of market expectations for China’s economy, or the main reason for the “make-up decline” of the exchange rate. Since March, when overseas interest rate hikes are expected to rise and the US dollar index rises, there is little pressure on exchange rate depreciation; The recent weakening of China’s economy and export expectations affected by the epidemic, or the main reason for the “make-up decline” of the exchange rate. Although there is still depreciation pressure on the exchange rate, at present, the overall range is controllable.
Under the background of export return + fed interest rate hike, the subsequent RMB exchange rate will still face depreciation pressure; Although the exchange rate has depreciated rapidly recently, the remote exchange rate is expected to be stable, there is no significant outflow of foreign capital from land stock connect, and the domestic foreign exchange liquidity buffer is also abundant. In addition, exchange rate fluctuation is also the proper meaning of balancing internal and external balance. At present, the overall range is controllable.
The impact of exchange rate depreciation on a shares: the expected disturbance is greater than the actual impact. At the level of capital flow, under the background of the recent rapid depreciation of exchange rate, there is no significant outflow of foreign capital in the stock market; When the performance of A-Shares is weak, the expected disturbance of exchange rate depreciation to A-Shares is greater than the actual impact. Follow up policy: under the background of external uncertainty, the core of stabilizing the exchange rate is still stabilizing the economic market.
Tianfeng Securities Co.Ltd(601162) : two factors of RMB exchange rate depreciation range affecting industry performance
The depreciation range of RMB exchange rate has two factors affecting the performance of the industry: one is the prosperity (whether it has been greatly improved) and the other is the fluctuation of foreign capital.
In terms of recovery, the performance of the industry during the depreciation period is different. The industries with significant excess returns in the first round are concentrated in the consumption and real estate chain, the second round is mainly concentrated in financial and cyclical resource products, the third round is concentrated in consumption and high-end manufacturing, and the fourth round is concentrated in consumption.
(1) prosperity is an important support for the industry’s excess returns in each round of depreciation: for example, the first round of the monetization of the medium shed reform drives the real estate chain, the second round benefited from the high-end manufacturing of the resource product price rise, the third round benefited from the high-end manufacturing of the science and technology industry cycle and the agriculture, forestry, animal husbandry and fishery of the new pig cycle, and the fourth round benefited from the consumption of demand recovery after the impact of the epidemic.
(2) under the general trend of large-scale additional allocation of A-Shares by foreign capital, foreign capital does not necessarily flow out continuously and on a large scale in the whole exchange rate depreciation range, and may even form a significant support for the industry in turn. However, in the first 1-2 months before the falling range of the exchange rate, there may be a continuous outflow of foreign capital, which may have an impact on the sectors with a high proportion of foreign capital holdings.
Ping An Securities: Prospect of RMB exchange rate in the next step! Optimistic about the prospect that China’s economy will complete the “bottom building” in the second quarter
The next step is the prospect of RMB exchange rate. First, the adjustment of the RMB exchange rate at a higher level may not be a bad thing. Since August 2021, the nominal effective exchange rate of RMB has broken through the previous high, and the negative impact of its continuous rise on exports can not be ignored. As another form of monetary easing, the RMB exchange rate also helps to alleviate the pressure of enterprise cash flow.
Secondly, monetary policy should pay attention to the loose rhythm and avoid the overshoot of RMB exchange rate. In the past monetary policy operation of the people’s Bank of China, we can see that it has different responses to different situations of RMB exchange rate depreciation. At present, the hidden worries of China’s capital outflow reappear. Monetary policy can “focus on me”, but we need to pay attention to the loose rhythm and avoid the overshoot of RMB exchange rate.
Thirdly, the regulatory authorities should pay attention to maintaining the rhythm of foreign capital allocation of RMB assets. Actively communicate with overseas regulatory authorities, form a consensus basis for rules and systems, maintain the rhythm of stable allocation of RMB assets by foreign capital, and reduce the unexpected impact caused by non economic factors.
Finally, efforts to stabilize the macroeconomic market are the most fundamental guarantee for exchange rate stability. Under the background that the external conflict intensifies the risk of global “stagflation”, if China can make greater progress in ensuring supply and price stability, it will also become a strong backing for the RMB exchange rate. We are optimistic about the prospect that China’s economy will finish “bottoming” in the second quarter, which will be the foundation for the stability of the RMB exchange rate.
