Core conclusions:
Look at the new pattern of cattle and bears from a long-term perspective. From the perspective of valuation changes, the previous bear market model of A-Shares is "fast bear → calf → Slow Bear", and the whole model will last for about five years. The reason for this phenomenon is that when a new round of bear market begins, the departure of individual investors will last for about three years, while institutional investors tend to sharply reduce their positions and quickly price negative factors in the bear market period. However, at the beginning of this bear market, the valuation was not expensive, and the number of absolute return investors increased, resulting in a faster reduction of positions than in 2018, so it may end earlier.
The risk of roe decline is gradually released. At the initial stage of roe decline, A-Shares are very prone to bear market. However, as the decline of roe enters the later stage, the stock market valuation may have priced most of the negative factors of roe, and the stock market often bottoms out half a year or even longer in advance of roe. When U.S. stocks face cyclical roe decline in history, there will be only 1-2 quarters of adjustment in many cases.
Condition 1 of reversal: interest rates restart the downward trend. The impact of stagflation on A-Shares is usually negative. After stagflation, the probability is recession. Even for the commodity super cycle, referring to the situation in the 1970s, the commodity super cycle will not destroy the law of stagflation to recession. The US economic recession is bad for A-Shares in the short term, but it may reopen the space for interest rate decline in the medium term.
Reversal condition 2: real estate sales pick up. Historically, the rhythm of steady growth is usually infrastructure first and then real estate. The reversal of the economic downward trend usually requires the stability of real estate. The rise of the stock market after setting the tone of previous steady growth policies is usually accompanied by the stabilization and recovery of real estate sales.
Condition 3 of reversal: the valuation is low enough to attract allocation funds. From the transaction level, the formation of "market bottom" depends on the balance between the entry of allocated funds and the departure of trend funds. When the risk premium of stock assets reaches a historically high value, allocated funds will have sufficient inflow power. So far, the equity risk premium of Wande all a has been close to the average + 2 times the standard deviation, and the downside risk of all a limit has been less than 10%.
Consumption growth will show in the second half of the year. (1) Long term style has been biased towards value. The high-level style switching of growth and value style may occur synchronously with the roe inflection point, which is up to half a year ahead of or behind the roe inflection point. (2) The annual prosperity of the manufacturing industry may peak. From the perspective of capacity cycle, the tight supply and demand situation may be alleviated in 2022, but this time, the weakening of supply and demand relationship may exist in both traditional energy and new energy. From the performance of U.S. stocks, the technology cycle is the core that affects the dominant growth style.
Absolute value in the first half of the year and moderate diffusion in the second half of the year. (1) Between the bottom of credit and the bottom of economy, growth consumption will show. (2) Historically, the performance of the sector in the bear market is strong in the initial period of the bear market, strong in the middle and late period of the bear market, and strong in the late period of the bear market if accompanied by a wide currency. (3) Allocation order during the year: soft growth Finance consumption cycle hard technology
Risk tip: the economic downturn exceeded expectations, the real estate market downturn exceeded expectations, and the steady growth policy was less than expected.
