review: since November 2021, the judgment style has switched to the direction of steady growth such as financial real estate, and the real estate of state-owned enterprises has been the first promotion. So far, the excess return has been significant. To what extent is the pessimistic expectation reflected in the weekly report of April 24, 2022 It is judged that the follow-up market will shift from systematic adjustment to structural differentiation.
Outlook: at present, we have come to a stage where price is more important than time. High quality assets with valuation adjustment in place and profit expectation correction in place will take the lead from the bottom.
the current market is already at the bottom 1) pessimistic expectations have been reflected and released to a great extent previously, the market adjusted significantly, mainly due to the impact of China's epidemic fermentation + exchange rate depreciation + tightening of overseas Federal Reserve. At present, on the one hand, the epidemic situation in China has been gradually improved. At the same time, the decision-making level has repeatedly asked for the stability of the industrial chain supply chain, the resumption of work and production of enterprises has been continuously promoted, and the supply chain impact from the epidemic situation will also be mitigated. On the other hand, the recent rise in US bond interest rates has slowed down. After the Fed meeting in early May, the market may further "boot landing". In addition, despite the depreciation of the exchange rate, it did not bring a significant outflow of foreign capital 2) the decision-making level has continuously increased "steady growth" and stabilized market expectations on many important occasions, and constantly consolidated the "policy bottom" from the two sessions, to the meeting of the finance committee, to the recent meeting of the Political Bureau, the decision-making level's determination to "stabilize growth" has been repeatedly confirmed. Subsequent monetary and credit policies are expected to be further relaxed. At the same time, the decision-making level also repeatedly stressed "maintaining the smooth operation of the capital market" and made clear arrangements for key issues such as supply chain, real estate and Internet supervision concerned by the market 3) in combination with the 11 bottom characteristic indicators we have built exclusively, most of the indicators have reached or close to the bottom level of the historical market: among them, the indicators such as credit pulse, decline rate, valuation, net breaking rate, risk premium, stock bond yield difference and issuance scale of partial stock funds have reached the bottom level of the historical market.
in terms of time, the current market is still in the stage of consumption, shock and consolidation. The construction of a complex bottom is difficult to achieve overnight 1) overseas tail risk remains to be released on the one hand, the second quarter will be the peak of Fed tightening. Recently, US Federal Reserve Chairman Powell repeatedly said that he would raise interest rates by 50bp in May According to the data of federal interest rate futures, the market expects the Federal Reserve to raise interest rates by 50bp in May, June and July, and the Federal Reserve will probably start to shrink the table in June. On the other hand, the ECB also said on April 22 that it might end its bond purchase plan at the beginning of the third quarter and raise interest rates before the end of the year. Under the tightening of liquidity, overseas markets may still fluctuate, which also inhibits China's risk appetite 2) the drag of China's epidemic on the national economy and enterprise profits has not yet fully emerged In 3 months, the total retail sales of social consumer goods grew by - 3.5% year-on-year, down sharply from 6.7% of the previous value. At the same time, on the production side, the year-on-year growth rate of industrial added value in March was 5%, down 2.5 percentage points from the previous value of 7.5%. Under the drag of the epidemic, production activities were limited and the trend of continuous improvement in production was interrupted. On the investment side, with the support of steady growth, infrastructure investment has become the main support, but the growth rate of manufacturing investment has fallen sharply, and the growth rate of real estate investment has turned negative again. Moreover, considering that the adoption of more strict control measures actually began in late March, the March data have not fully reflected the impact of the epidemic on the economy. In the context of China's rebound in the epidemic and adherence to dynamic zeroing, although the policy environment such as monetary policy and fiscal policy is expected to remain loose, the effect of steady growth is affected, and the economic and interim report performance in the second quarter will still be under pressure 3) referring to the history, after the crash, unless the policy is systematically relaxed, the market usually needs to go through a process of consumption and consolidation in the bottom area for this round of decline, although the direction of policy relaxation has been clear, it is more moderate hedging and force, so the probability will build a complex bottom therefore, price is more important than time. High quality assets with valuation adjustment in place and profit expectation correction in place will be the first to stand out from the bottom
combined with the first quarterly report and the prospect of future prosperity, it focuses on the following three directions: 1) consumption of core assets (alcohol, duty-free, aviation, scenic spots and hotels): on the one hand, it benefits from the gradual improvement of China's epidemic situation. On the other hand, the share price and valuation of the sector have been at a low level, and the internal and external uncertainties can be attacked and retreated 2) "steady growth" sector (infrastructure, real estate, banking, etc.): the meeting of the Chinese Finance Committee called for "comprehensively strengthening infrastructure construction", the meeting of the Political Bureau stressed "striving to achieve the expected objectives of economic and social development throughout the year", and the policy continued to increase. At the same time, the global market is still in a mess of high volatility and low risk appetite. Infrastructure, real estate, banking and other sectors are both security and policy driven 3) in the "new half army", the direction of strong immunity and maintaining high prosperity (new military materials, photovoltaic modules, wind turbine, semiconductor materials, 5g optical fiber and cable, UHV): combined with the valuation and performance certainty, as well as the judgment of the leading indicators of our "new half army" timing framework, we believe that the science and technology growth sector is expected to usher in a wave of repair window in May.
risk tips: focus on the unexpected return of global capital to the United States and the game between China and the United States.
