1. What are the constraints of this round of market decline?
Since 2022, the market has mainly experienced three main adjustment ranges: 1) the first stage (2022 / 01 / 15-01 / 28): the valuation of growth stocks after the confirmation of the interest rate increase cycle of the Federal Reserve. 2) The second stage (2022 / 3 / 1-3 / 15): the chain reaction of the conflict between Russia and Ukraine and the regulatory impact of China concept shares caused the rapid outflow of foreign capital in the short term, resulting in the decline of the market at this stage. 3) The third stage (from April to now): the epidemic situation and prevention and control in China continued to exceed market expectations, which exacerbated concerns about economic growth, and the rapid depreciation of RMB exacerbated the adjustment of the whole market.
Since April, we have repeatedly stressed that "it is difficult for the market to replicate the 20-year V-shaped reversal", and the market has adjusted significantly recently. Although we cannot predict the lowest point in the ultra short term, and the "double bottom" of the market may have reached the lowest point of the market. However, we have repeatedly stressed that this year's absolute income should grasp the opportunity of "falling out". Therefore, at the current time point, we should not be overly pessimistic and panic. On the contrary, if the market continues to adjust again, we should dare to actively bargain hunting and layout the opportunity to rebound the market.
2. How to understand the "re adjustment" of the market after the golden stability meeting?
We believe that from the perspective of capital constraints, the meeting of the financial committee is the "bottom" of the market liquidity crisis, and the influencing factors of economic fundamentals have not reversed. The rebound represented by finance and real estate after the completion of this round of market adjustment is only the "ideal expectation" of the market for the inflection point of the fundamentals. Combined with the prevention and control of the unexpected outbreak in China and its impact, The basis for the establishment of the real market bottom is inseparable from the judgment of the inflection point of the epidemic and the change of liquidity trend. The trend inflection point of the epidemic in Shanghai (including the market's confidence in the zeroing policy to defeat Omicron and achieve orderly resumption of work and production) and the substantive rescue inflection point of real estate enterprises will be the core driving force of this round of rebound.
1) epidemic situation in Shanghai: the number of new infections in Shanghai has dropped to about 200. It is expected that this data will approach the zero target around 5.1. At this time, the zero target of social aspects will be completed, and the number of new infections every day will decline. The completion of social clearance in Shanghai and the previous completion of social clearance in Jilin will enhance the social confidence that the clearance policy will defeat Omikron and the expectation of returning to work and production in an orderly manner. The "worst moment" of the outbreak of the epidemic and pessimistic expectations for the economy has passed.
2) foreign capital flows: the US Federal Reserve strongly hawkish expectations further pricein, and the US Federal Reserve may be bearish after the interest rate meeting in early May. At the same time, China's high export growth in the past two years has supported the elastic change of the RMB exchange rate, and the impact on the market caused by its short-term rapid depreciation will also be weakened.
3) the financial supervision department issued supporting policies for the project acquisition and merger of 12 real estate enterprises, trying to effectively prevent and resolve real estate risks and stabilize market expectations. Recently, the meeting of the Ministry of housing and urban rural development stressed "conscientiously implement the decision and deployment of the CPC Central Committee on economic work from the perspective of politics and the overall situation", and deploy "the implementation of relevant policies such as tax rebate, tax reduction and fee reduction, issuance and use of special bonds, commencement of construction of key projects, support for enterprise job stabilization". This means that the turning point of multi sectoral coordinated real estate policy is about to appear. From the perspective of measures, it mainly focuses on the rescue of real estate enterprises. This means that different from the logic of the rebound of small market value real estate enterprises in March, the real estate sector behind may take the leader of private enterprises as the main line.
At the same time, the twists and turns of the Russian Ukrainian peace talks may "come to an end" after the battle of Donbas in the next week, and the suppression or periodic repair space brought by the continuous disturbance of geographical turbulence and anxiety to the global risk appetite.
