After the crash: risk or opportunity. Monday's decline itself was expected by investors, but it still exceeded the expectations of major investors: the decline of CSI 300 on that day ranked 52nd in history. The decline of the same level is rare in the past five years. The only two times are the Sino US trade friction in 2019 and the impact of the epidemic in 2020, both of which occur in the event of retreat during the sharp rise in the market in the early stage. After four months of correction and short-term rebound in the whole market, this is undoubtedly a collective catharsis of panic. After Monday's decline, the market was difficult to stabilize, and some investors were entangled in the answers to the rebound and reversal questions. In December, we used "wait and buy" to indicate the risk of "spring agitation", and most recently, we released "fight back" in the market crash on March 15 , in the subsequent sharp rise, it is emphasized that it is better than easy to win, and look for a more definite inflation main line after the rebound. Compared with the last judgment on the technical rebound, we believe that after the fierce mood swing in the market, a more important issue is in front of us: how China will deal with the economic growth under the repeated epidemic in the future, and whether the current market prices of overall and local assets are ready for us to meet the above uncertainty.
Market status: chasing risk requires sufficient return. From the current point of view, if we believe that the valuation of the lowest point in early 2019 and early March 2020 implies the broad impact of industrial tightening policy and the pessimistic impact brought by the epidemic, the Shanghai stock exchange point (28 Hes Technology Group Co.Ltd(002963) ) corresponding to its valuation is indeed the area at the bottom of a shares. However, if we want to call it a "golden pit" or think of it as a "big rebound", it means that the future economy needs to have the general "China miracle" in 2020: the resonance upward driven by the demand of China's easing and overseas fiscal stimulus. It is noteworthy that some internal assets of A-Shares still do not have sufficient risk return performance price ratio. The gem is now between the points corresponding to the valuation in early 2019 and early March 2020 (15012691), while the CSI 300 focused on core assets is more than 15% more expensive than the main historical bottom. The above sectors are the heavy positions of mainstream institutions. We found that the proportion of public funds held by individual investors in 2021h2 is 81.2% (a five-year high) and the scale is close to 5 trillion (a historical high). The liquidity of heavy positions of mainstream institutions is closely related to the balance sheet of residents. No matter whether the fundamentals are independent of the economy itself and where the valuation is anchored, the liability side has been affected by social stability than at any time in the past.
Uncertain arrangements and definite inflation. The fundamental scenario in the future should be the "American mirror image" in 2020. No matter what the epidemic prevention policy is, it is difficult for us to reverse part of the impact of the epidemic on the economy, but we can improve it: compensate the loss of the service industry with more physical investment and consumption. In the face of the impact of the epidemic on future economic growth, we still look forward to a package of solutions, but we believe that it will be known in the final meeting, which is a reason for optimism. In the process of resuming work, resuming production and stabilizing the economy, the inflation change under the demand recovery path is worth discussing: at present, after the downturn of China's economic cycle, the absolute inventory level and inventory growth rate of the main middle and downstream industries are in the historical high position, but the inventory of related products in the upstream industries is at the historical low level, and the perspective of industrial products is also established; At the same time, the capacity utilization rate of major upstream industries is still high, and there is no more redundancy. In the future, when the impact of the epidemic falls from the peak, the performance of the middle and lower reaches driven by resumption of work and production, consumption encouragement and infrastructure can be expected in the short term, but after the digestion of downstream inventory, the contradiction between supply and demand will shift to the upstream. At the same time, the pressure on the RMB will form a sustained imported inflationary pressure on the previously historically high overseas China price difference. Then the inflation brought by the upstream price will become the main factor restricting the economic recovery, and the resource side is still the most important bottleneck. China's economic growth needs more policy arrangements to end the downward trend. Whether the economy can show obvious upward elasticity needs to solve the problem of inflation, which puts forward a certain test for the value and growth of middle and downstream industries that depend on volume growth. Growth stocks in emerging industries are still not fully prepared for the above uncertainties in valuation. When the above scenario leads to the rebound of relevant sectors, our suggestion is to go ahead of the market and bravely switch the combination. When inflation is unstoppable, the best way is still to face it.
What is more important than when. Judging the short-term top and bottom of the market is an important responsibility of strategic analysts. But now we are deeply aware that finding new consensus is the more important mission in the future. Entangled in the "golden pit" or big rebound, it is just like that we are still studying the bottom and periodic rebound of the market at the end of 2012, ignoring the opportunities of TMT and gem; In the circuit breaker at the end of 2016, we judged when the bottom was reached and missed the rise of core assets represented by Baijiu; And the double bottom entangled in the market at the end of 2018, but ignoring the general layout of new energy and semiconductors. At that time, none of the above sectors was on the list of institutional heavy positions, and the proportion of heavy positions was very small. The market was not even biased, but ignored. It also requires us to be more patient to find its unique opportunities. The biggest opportunity and risk in the current market may lie in the arrogance of investors in the secondary market in their cognition of Entrepreneurs: while investors drive the influx of funds into emerging industries with a short-term enthusiasm to bring high valuations, they believe that entrepreneurs cannot bring capacity expansion with capital expenditure in the medium term, and finally significantly reduce the average profit; When investors think that high profits in some industries are unsustainable with indifference, they believe that entrepreneurs will blindly spend capital because of short-term high profits, so as to alleviate the shortage of supply.
Leaving the pursuit of demand, the answer becomes clear. Although there are many concerns about the demand of upstream resource products, in fact, it is almost as difficult to judge the decline of the U.S. economy as to judge the rebound of China's economy. However, when we leave the perspective of demand and understand the industrial relationship from the pattern of supply and industrial chain, it is an indisputable fact that the upstream enterprises obtain a higher proportion of profits in the economy. Even if the economic demand is weak, the relative pattern of the upstream is the last fortress, and if the economic demand rebounds, it is a greater opportunity. In the past 10 years, due to overcapacity, the proportion of profits of upstream enterprises in the economy has been declining, which has also led to the downward trend of their market value. At present, the proportion of upstream net profit has rebounded to 18%, and the proportion of market value is only 10.9%, which has not rebounded in proportion. The recovery of market value driven by the recovery of profit proportion appeared in the 1970s and 2000s in the United States. Before the above scenario, commodities also experienced a downward price cycle similar to that since 2011. The opportunities for resource stocks (metals, energy, oil transportation and fertilizer) and value stocks (real estate and Banking) have just begun. What investors need to do is to adjust to the most certain place in the future market twists and turns and short-term style rotation.
Risk tip: the economic recovery is less than expected, and the pressure on the RMB is more than expected.
