market valuation / ERP further revised, ERP close to the top area 4 on April 26, the index was at a low point. All A-share PEs were in the historical quantile of 30% since 2010, close to the mean value - 1x standard deviation, and A-share ERP was in the historical quantile of 85%, exceeding the mean value + 1x standard deviation. Politburo meeting and A-share quarterly report further released policy and profit clues. The core concern of the market is how to treat this round of "policy bottom", "valuation bottom", "market bottom" and "profit bottom"?
this year's policy end should be the "composite policy end" of China + overseas. The relationship between the "composite policy end" and the "market end" at the end of 18 has formed enlightenment for the present our report on March 27th pointed out that this year is "the Fed is firmly tight and China maintains stable growth with a bottom line". Therefore, this round will form a "composite policy bottom" jointly by China and overseas. Looking back on Q4 in 18 to the beginning of 19: Q4 in 18 formed China's "policy bottom"; However, under the "compound policy bottom", China's "policy bottom" does not mean the market bottom, and overseas factors (global liquidity contraction) are still suppressed; In January 19, China and overseas (Federal Reserve) jointly established the "compound policy bottom", announcing the formal formation of the "market bottom" of a shares.
4 the Politburo meeting continued to consolidate China's "policy bottom", but the overseas "policy bottom" has not yet been formed following the meeting of the finance committee chaired by Vice Premier Liu He in March and the meeting of the Political Bureau in April, China's "policy bottom" was further consolidated. The meeting proposed the synergistic and non antagonistic relationship between dynamic zeroing and steady growth, which would help alleviate the market's concerns about the economy. The "dilemma reversal" of the Internet platform economy confirmed that it was conducive to the establishment of market-oriented confidence. However, the overseas "policy bottom" still needs to be observed. The Federal Reserve's interest rate meeting is imminent, and the 50bp interest rate increase and table reduction plan are expected to be implemented as scheduled.
a-share first quarter report points to this round of apparent "bottom profit" probability, which is formed in the interim report a-share quarterly earnings continued to slow down, turnover and profit margin dragged down roe, cash flow margin improved, Q1 credit margin expansion supported the improvement of enterprise financing environment, non-financial listed companies were still in the stage of destocking, and the structural capacity expansion cycle entered the second half. The highlights of the industry performance mainly lie in upstream resource products, some optional consumption / services and high-end manufacturing, It is predicted that the apparent "bottom profit" probability of this round will be formed in the interim report, and the annual profit growth rate of A-share non-financial is expected to be about 4%.
A-Shares still need to wait and are still dominated by value use the thinking of "compound policy bottom" to look at the relationship between the current round of policy bottom, market bottom and profit bottom. From the end of 18 to the beginning of 19, China and overseas gradually confirmed that the "policy bottom" was the condition for the final construction of the last round of "double market bottom" of a shares. This round of China's "policy bottom" has been gradually consolidated; But overseas "policy bottom" still needs to wait. Reiterate that the market value stocks are in the bottom area: 1 First, the relative prosperity advantage of the quarterly report shifted to the value sector; 2. In 2022, the direction of steady growth marginal credit is in traditional fields such as real estate and infrastructure; 3. There is still upward pressure on US bond interest rates. As the tightening of the Federal Reserve will still restrain the stocks with high valuation of a shares, it is suggested to use the rebound to continue to tangential to value stocks. Industry configuration: 1 High dividend value (thermal power / bank); 2. "Supply and demand gap" inflation benefiting resources / materials (coal / copper / potassium fertilizer); 3. "Old style" steady growth (real estate / consumer building materials / household appliances); 4. Consumption "steady growth" and post epidemic repair expectation (Internet media / leisure services).
risk warning: China's epidemic control is repeated, economic growth is lower than expected, and China US relations are uncertain.
