Review: on January 3, 2022, "it's the turn of big finance" began. The whole market developed its own style and recommended "big finance" (banks and real estate), on January 16, "retreat or attack, rely on big finance", on February 6, "big finance, continue to cut", and on March 6, "a new round of upward attack of big finance". It continued to emphasize that "big finance" was the winner and loser of 2022 investment. It seemed to be defensive, but in fact it was the best attack. In the first quarter, real estate and banks, Ranked among the top three gainers, the latest changes in fund positions once again confirm the foresight and correctness of our views.
The Politburo meeting was very timely and responded to market concerns. Aiming at the economy, the 5.5% target was achieved to alleviate market concerns and make the main line of steady growth clearer. Including the relaxation of both ends of real estate supply and demand, the relaxation of more than 10 cities during holidays, the continuous output of policies such as consumption, supply chain and infrastructure, and the introduction of "consumption vouchers" in many places, which can boost market sentiment and usher in a rare warm season. The follow-up focuses on the stage from the introduction of policies to data verification. In this stage, it may be disturbed by the external pressure from the adjustment of growth stocks in US stocks. However, on the whole, the "policy bottom" is consolidated, the structure is given priority, and the opportunities of "big finance" (bank and real estate) and "big consumption" (three main lines of service consumption, post real estate cycle and mass consumption) are grasped.
Looking forward to the next 1-2 quarters, the market is getting better and better. Cherish the "cheap time" in the current bottom area, and A-Shares are expected to meet the counter offensive moment of "Normandy landing" and "infinite scenery in dangerous peaks".
First, in terms of economic fundamentals, the comparative advantage of China's economy will return. At present, China's fundamentals are hovering at the bottom and Europe and the United States are at the peak. If China's epidemic improves in the second half of the year, the supply chain recovers, and overseas crosses the recovery peak, China's economy will run upward, while overseas will run downward, and our comparative advantage is expected to return.
Second, corporate profits are expected to gradually stabilize and recover. From the perspective of the past 20 years, the downward cycle of A-share earnings is 6-8 quarters. In the second and third quarters of this year or at the end of A-share performance, it will gradually improve in the fourth quarter.
Third, at the liquidity level, the market liquidity in the first half of the year was poor for two reasons: 1) the Federal Reserve raised interest rates and funds returned to the United States; 2) The market decline since the beginning of the year has put pressure on the issuance of public funds, and some absolute income products have also reduced their positions. In the case of less incremental funds, the market showed the trend of stock game in the whole first half of the year. Looking back, if the Fed does not make a more "Eagle" statement in the follow-up, with the prominent comparative advantages of China's economy, overseas funds may return to emerging markets again, especially the Chinese market with significant medium and long-term allocation value.
At present, more overseas risks have shifted from US debt risk to US stock risk. In April this year, the S & P 500 index and Nasdaq index fell by 8.8% and 13.3% respectively, recording the second worst performance since 1980, second only to the foam in 2000. April is the disclosure period of the annual report and the first quarterly report of US stocks. Poor market performance often means that corporate profits are less than expected, and the turning point of the decline of US stock profits in history is also the turning point of US stocks turning into bears. In the past month, we have seen that the performance of US technology companies represented by Naifei and Amazon is significantly lower than market expectations, with a decline of 35% and 14% respectively on the day of announcement. Recalling the bursting of the foam of the science and technology network in 2000, at that time, the dividends of personal computers and Internet penetration were excessively included in the market expectations, while the Fed collected water, the U.S. economy peaked and fell, and the high valuations of technology enterprises were killed in the interest rate hike, which finally led to the end of the last round of technology wave; In this round, the user growth and e-commerce business of mainstream technology enterprises are also close to the bottleneck. After the water release in March 20, the valuation of technology companies is generally at an all-time high. Therefore, it is worth paying attention to the pressure of technology leading enterprises in the follow-up interest rate increase.
For the overseas economy, especially the U.S. economy, the market consensus believes that it is at the high point of recovery, but there are great differences on the rhythm and extent of the subsequent decline in fundamentals. If the Federal Reserve can ensure a "soft landing", the market pressure will be small, otherwise the situation most worried by the market will appear: the economy and profit "hard landing", and the U.S. debt risk will turn to the U.S. stock risk. We suggest that investors continue to pay attention to four high-frequency signals: US bond term spread, implied interest rate growth and inflation expectations, crude oil and PMI, and EPS adjustment in line with expectations. (see the report enlightenment from the fourth round of global capital flows)
Investment suggestion: gradually welcome the "big consumption" buying point. At present, it has entered the comfortable area of cost performance, odds and winning rate. We can pay attention to three levels of large consumption: ① post real estate cycle (household appliances, household appliances, and consumer building materials), ② service consumption (social services, airports, medical services, and media Internet), and ③ traditional consumer goods (mass consumer goods, Baijiu, pigs, etc.).
For "big finance" (real estate and banks): the steady growth policy will be strengthened, and the "big finance" market is still expected to use the high-quality target of adjusting the layout fundamentals. Real Estate focuses on the high-quality real estate enterprises that can "survive" and benefit from the supply side reform, focusing on the core allocation idea of "the leftover is the king". Urban commercial banks and rural commercial banks with good performance growth in Chengdu Chongqing economic circle and Yangtze River Delta economic circle with excellent bank fundamentals, as well as some joint-stock banks and large banks with good quality.
2022q1 fund positions show that: 1) Dianxin and nonferrous metals 22q1 positions + 2 times variance, which is difficult to exceed compared with CSI 300. 2) Consumption, science and technology, medicine and new energy funds are added to medicine, household appliances and pigs. 3) From the perspective of three-level industries, the position structure changes. Science and technology funds increase their positions in CXO and biological products, new energy funds increase their positions in batteries and auxiliary materials in the new energy vehicle chain, consumer funds increase their positions in other Baijiu in food and beverage, reduce their positions in "Mao Wu Lu" in Baijiu, and pharmaceutical funds increase their positions in traditional Chinese medicine and biological products.
The performance of 2021q4 and 2022q1 shows that coal, non-ferrous metals, banking and transportation perform well in terms of gross profit margin, roe and growth rate of net profit attributable to parent company. In the past three quarters, the gross profit margin and roettm of the four primary industries have continued to improve, the profitability has shown an upward trend, and the net profit attributable to the parent company has also maintained positive growth. In other industries, basic chemical industry, textile and clothing also have bright spots. Basic chemical industry meets the two indicators of continuous improvement of roe and continuous growth of net profit attributable to parent company, but the margin of gross profit margin decreased in 22q1 due to the decline of product price. The two profitability indicators of the textile and clothing industry have improved continuously, but the net profit attributable to the parent is only positive growth in 21q4, and the profitability growth is unstable. In terms of meso prosperity, it is suggested to pay attention to the prosperity directions such as nitrogen fertilizer, potassium fertilizer and pig and chicken breeding. See the text for detailed data and analysis.
Risk tips: the conflict between Russia and Ukraine escalated, overseas interest rate hikes exceeded expectations, and the spread of the epidemic exceeded expectations
