Key investment points:
China Policy
The epidemic spread in many places, impacting the supply chain in some regions, and the macro policy remained loose and moderately intensified. On the one hand, under the background of double uncertainty of economic growth and inflation trend, the weight of price stability target in policy concerns has increased. On April 22, Yi Gang, governor of the central bank, stressed in the Boao Forum that the primary task of China's monetary policy is to maintain price stability, with emphasis on food production and energy supply. On the other hand, the central bank's monetary policy is more cautious against the background of the Fed's tightening than expected, the upside down of China US interest rate spread and the continuous depreciation of the RMB. Considering that the main contradiction of the current economy focuses on the service industry seriously impacted by the epidemic, the depressed real estate sales on the demand side and the developers whose debts are concentrated and due, it is expected that the starting point of the follow-up policy will focus on the fields of retail, catering, logistics and so on.
Two way progress was made in epidemic prevention and control and resumption of work and production. Recently, Shanghai, Jilin and other provinces have actively promoted the resumption of work and production. First, give priority to the resumption of work and production in key industries such as construction, transportation and logistics, integrated circuit and automobile manufacturing. Second, the main responsibility of enterprises. The policies for resumption of work and production launched in Shanghai, Jilin, Changchun, Shenyang and other places clearly point out that "one enterprise and one policy" to ensure the flexibility of control measures and promote the production enthusiasm of enterprises. Third, focus on promoting smooth logistics and opening up logistics blocking points. On April 18, the national teleconference on ensuring smooth logistics and promoting the stability of industrial chain and supply chain was held. The meeting pointed out that the work of ensuring smooth logistics should be placed in an important position of the overall work to ensure the stability of industrial chain and supply chain. Shanghai, Jilin, Shandong and other places have also launched corresponding policies, such as setting up special lines for living materials, canceling epidemic prevention inspection stations, and improving the handling efficiency of vehicle passes for key materials for epidemic prevention and control. It is expected that in the next step, all localities will continue to increase policy support, focus on enterprise demand, and steadily and orderly promote the resumption of work and production.
The policy is concentrated and the logistics blocking points are gradually opened up. The recent epidemic prevention and control overweight has led to multiple logistics problems such as inadequate material distribution. Considering that the poor logistics supply will hinder the resumption of work and production, interrupt its production and supply links, and further may cause downward pressure on the economy. Recently, the state has repeatedly mentioned dredging the blocking points of logistics and transportation. At the national level, the State Council has held several meetings to require joint efforts to rectify the problem of excessive prevention and control, make every effort to ensure the smooth and orderly traffic network, deploy ten important measures, and issue documents such as the notice on doing a good job in ensuring the smooth traffic of freight logistics. The national development and Reform Commission, the Ministry of industry and information technology and the Ministry of transport have said that they will organize production according to "one enterprise, one policy" and "one park, one policy", actively, steadily and orderly promote the resumption of work and production of key enterprises, and strive to promote smooth logistics. On April 22, the central bank and the safe issued 23 measures to do a good job in epidemic prevention and control and financial services for economic and social development, and increase financial support for the smooth circulation of logistics and shipping. At the local level, Fujian, Shanghai, Jilin, Hubei and other places have held meetings and press conferences to ensure smooth logistics and promote the stability of the industrial chain supply chain. Relevant regulations have been issued, covering the implementation of "one interruption and three continuity", resolutely blocking the transmission channels of the virus, requiring local prevention and control headquarters to implement accurate policies, steadily and orderly promote the resumption of work and production, and issuing ten measures to care for truck drivers, Issuing "pass" and other requirements and measures for freight vehicles of key materials.
Voice of overseas
All FOMC vote committees hold a "hawkish" attitude, and the Federal Reserve will further accelerate monetary tightening. The European central bank confirmed to reduce the bond purchase route, and the Bank of Japan remained loose. In the United States, all Fed officials spoke more "Eagle" recently. Brad believes that the Fed has the possibility of further accelerating austerity. In terms of raising interest rates, the US employment economic data is strong, and inflation has not yet shown an inflection point. Most officials believe that it is desirable to raise interest rates by 50bp at the next FOMC meeting, while "Hawk king" Brad's view is more radical. He believes that it is too early for the current market to talk about economic recession, and the current primary goal is to ease inflationary pressure. It is unrealistic for the Federal Reserve to try to ease inflation only by raising interest rates moderately, and inflation should be controlled by raising interest rates quickly, Said there would be a possibility of a single interest rate increase of 75bp at the May meeting. In terms of table reduction, since the release of the minutes of the FOMC meeting in March, most Fed officials agree to determine the table reduction path at the May meeting, officially start the table reduction plan in June, and the range of this round of table reduction will be much higher than that of the 20172019 tightening cycle. In Europe, the latest interest rate resolution shows that the interest rate in Europe remains unchanged. It is confirmed to accelerate the withdrawal from the bond purchase plan (APP), reduce the bond purchase speed from 40 billion euros in April to 20 billion euros in June, and stop bond purchase in the third quarter. In Japan, the yen continued to weaken due to the deviation of us and Japanese monetary policies, but the Bank of Japan still firmly maintained its "Dove" position and once again announced that it would buy bonds indefinitely within a fixed time at an interest rate of 0.25%.
At present, the world is facing multiple pressures such as the Russian Ukrainian war and commodity inflation. IMF and other institutions and organizations are pessimistic about the world economy. In terms of the global economy, based on the impact of the situation in Russia and Ukraine on the global economy, the IMF sharply lowered the global economic growth forecast again after January, and the forecast was lowered to 3.6%. The world bank, Bank of America, Goldman Sachs and other organizations and institutions are pessimistic about the global economy. In terms of global inflation, the IMF said that at present, most countries in the world are facing greater inflationary pressure, and the risk of runaway inflation expectations is gradually rising, and the inflation rate of developed economies, emerging economies and developing countries has been significantly increased. In terms of the US economy, the "turning Eagle" of all the voting committees of the Federal Reserve is likely to further accelerate the tightening cycle. The market is worried that too fast tightening monetary policy will impact the US economy. Deutsche Bank officials took the lead in publishing the view that the US is facing economic recession and predicted that the US economy will have negative growth and the unemployment rate will also rise from 2023 to 2024. After that, the Bank of America Analysts from Goldman Sachs and other institutions have predicted the possibility of the United States falling into recession next year. In terms of commodities, after the United States announced the release of the largest strategic oil reserve in history, mainstream institutions predicted that the oil price would be below $120 / barrel this year. At the same time, most institutions believe that gold, as the best safe haven asset under the background of the intensifying geopolitical crisis, may rise further. In terms of Fed policy, BlackRock believes that the Fed's aggressive interest rate hike in response to the rising cost of living may be counterproductive. He opposes most institutions' prediction that the Fed will raise interest rates to about 3%, and believes that the Fed will eventually raise interest rates to a level slightly higher than 2%.
In terms of global asset allocation, most overseas institutions are short of US stocks and believe that they should hold a defensive strategy and look at most commodities under the expectation of recession. In terms of the stock market, the Bank of America believes that the current market faces multiple risks, among which the global economic recession, the "Hawk" position of the Federal Reserve and the Russian Ukrainian war suppress the market risk appetite. It is expected that the S & P 500 will fall below 4000 points by the end of 2022. Morocco and Citigroup suggest adding defensive stocks with low correlation between profitability and economic activities, and the sectors such as public utilities and health care are relatively dominant. In addition, Morgan Stanley also proposed to allocate additional shares to the UK stock market, believing that the current profitability of the UK stock market is stable and the valuation is relatively low, which has the allocation cost performance. In terms of commodities, affected by Russia's sanctions, many institutions raised the predicted price of natural gas and bullish on the price of gold. Goldman Sachs predicted that the price of gold would exceed $2500 this year, and the allocation of gold in the portfolio would effectively alleviate the negative impact of macro challenges and current risks. In the bond market, BlackRock believes that the Fed will eventually accept inflation higher than the target value. It is expected that the inflation rate will remain at about 3% in the long term, so it holds a low allocation position on bonds. On the whole, most institutions are worried that the excessive tightening of the Federal Reserve will plunge the economy into recession, hold a pessimistic view on the future trend of US stocks, and tend to allocate defensive stocks and commodities benefiting from inflation.
Risk tip: China's epidemic situation is repeated, the policy is less than expected, and the external market policy is more than expected.
