Ping An View:
2022 is the third year of covid-19 epidemic. The current epidemic in Shanghai and the whole country still affects the macro-economy, policies and capital markets in 2022. The market expectation is still unclear, which is mainly reflected in the uncertainty of the spread of Omicron virus, the effect of prevention and control policies, the downward pressure on the economy under the background of the epidemic and the effect of macro hedging policies.
Let's turn the camera back to the Spring Festival in 2020. The outbreak of the epidemic in Wuhan and the rapid spread across the country make the Spring Festival in 2020 impressive. How did the market react at that time? After the extension of the Spring Festival holiday, the market took more than a day to release negative emotions. The market adjusted by about 10%, and then hit the bottom and rebounded. In the following February March, the epidemic spread rapidly overseas. The global epidemic caused the expectation of a great global recession. The US stock market was blown. The A-share market fell synchronously in early March and bottomed out twice in mid and late March. Then, with the gradual easing of the epidemic in China and the opening of quantitative easing in the United States, A-shares rebounded rapidly in the second quarter.
At the economic level, China's economic growth recorded a very low value of - 6.8% in the first quarter of 2020, but it still achieved a growth of 2.2% in the whole year. Especially since July 2020, China's export growth continued to exceed the expected period due to the good control of the epidemic and the better recovery of manufacturing industry than overseas economies. This unexpected performance continued until the end of 2021, and China's economic growth exceeded 8% in 2021. At the industrial level, in the first half of 2021, China launched a greater policy deployment of reform and transformation in the Internet, medical, education and other industries.
Let's move back to 2022. The market is facing greater uncertainty than 2020. The downward pressure on the economy is becoming more and more obvious. The weakness of consumption was observed in December 2021. At that time, there was no sign of the epidemic in Shenzhen, let alone the epidemic in Shanghai. Of course, the further decline in consumption from March 2022 is directly related to the epidemic. The rise of risks in the real estate industry and the decline of industry prosperity began to appear in the third quarter of 2021, but by March 2022, the decline rate of sales area of top 100 real estate enterprises had expanded from - 30% at the end of 2021 to nearly - 60%. At the end of 2021, the central government put forward the triple pressure, while the epidemic in 2022 further increased the three pressures. Of course, we should also see the positive side. From the end of 2021, fiscal and monetary policies have tended to be loose, industrial policies have accelerated the deployment in promoting consumption and stabilizing real estate, and the contractive policies have been fully withdrawn. The State Council is also making repeated orders for the logistics and other problems caused by the short-term epidemic to open up the blocking points as soon as possible.
In the logic of the capital market, the impact of short-term impact on the long-term pricing of enterprises is very small. Therefore, we can see that the impact of the epidemic in 2020 on the A-share market is not large, but we believe that the epidemic in 2022 has affected some long-term variables to some extent, such as how to exit the impact of the epidemic, how to adjust the global industrial chain, and the long-term impact of the situation in Russia and Ukraine on the global economic and political pattern, This impact will continue to be reflected in the future performance of the capital market.
Whenever long-term problems are intertwined with short-term shocks, the market will always show an overly pessimistic state. However, from the perspective of the current market adjustment range, valuation level and the profitability of listed companies, we believe that the market risk in 2022 is small. Among the sectors with the largest adjustment range since the end of 2021, there are also some overshoot sectors with upward medium and long-term prosperity; From the perspective of expected return, the cost performance of the current A-share market is much higher than that at the end of 2021. The stock bond return ratio of CSI 300 and gem is more than 90%. Therefore, we are optimistic that this pessimistic expectation will gradually fade with the easing of uncertainty.
Under many uncertainties, the capital market should look for areas of relative certainty as the focus of layout. We believe that under the tone of increasing internal circulation, the policy focus will be on expanding China's investment and consumption. It is certain to increase infrastructure investment in 2022. Stimulus policies in the field of consumption are likely to be introduced after the epidemic, and new energy, new energy vehicles, semiconductors, biomedicine and other industries still have long-term strategic value; Secondly, in the context of the sluggish global supply chain, energy security and food security have been raised to a more important position. In the future, energy and resource product security is also the main line that the market needs to pay attention to; In addition, the regulation of the policy on the platform economy has eased marginally, and the adjustment of leading Internet enterprises has come to an end.
Risk tips: 1) covid-19 epidemic spread beyond expectations; 2) China's economic downturn exceeded expectations; 3) The pace of policy promotion is less than expected; 4) The geopolitical environment has become more volatile.
