Key investment points:
With the convening of the meeting of the Political Bureau of the CPC Central Committee on April 29, the risk of economic hard landing dissipated, and the quarterly economic growth rate will not be less than 3%, but the economic growth rate is still in the downward channel. In May, the A-share market is expected to fluctuate at the bottom, and the market has limited room for sharp decline.
External environment: through the worst pressure, but there is still a big test in June. ① We observe that the biggest pressure of overseas capital selling Chinese stocks has passed, but the pressure of bond selling caused by the upside down of interest rate spread between China and the United States will continue for some time. ② The June exam is around the corner. If the Fed raises interest rates by 50 BPs in May and shrinks the table at the same time. Then the expectation of economic recession in the United States in the next 12 months may rise sharply in June, and the expectation of recession may cause the decline of US stocks and drag down the performance of Chinese stocks.
Internal environment: also passed the worst scenario expectations. It is reasonable to speculate that there will be no large-scale and long-term closure of extremely important cities such as Shanghai in the future. However, it is estimated that the Guangdong practice of "early detection of cases and closure of appropriate areas as soon as possible" will be popularized throughout the country. The market cannot accurately estimate the impact of the strategy on the economy and enterprises, and the uncertainty still exists. The market can only guess. From the feedback of the first quarterly report, investors generally adjusted the corporate profit to negative growth in 2022.
The logical basis for the introduction of various economic policies in the future should be risk prevention and bottom line thinking. If you are cautious about future economic growth, you may pay attention to the policies that may be issued in the future from the bottom line thinking perspective of never breaking out major risks. Three directions deserve attention: ① ensuring employment, preventing social unrest, encouraging private economy, especially platform economy, to actively absorb employment; ② Support local government land finance and avoid large-scale default of local government debt, resulting in systemic financial risks; ③ Flexibly adjust the strategy of fighting the epidemic and continue to adopt the policy of closing cities for sporadic cases, but adjust the time and space of the blockade to minimize the impact on economic life and ensure the smooth production, manufacturing and supply.
Asset allocation: emphasis on "production and manufacturing" and light on "consumer services". The strategy of "dynamic clearing" will run through the whole year and will not encourage agglomeration and large-scale personnel mobility. Consumption and services will be hit hard. Under the bottom line thinking, we suggest giving priority to the Internet, private economy and real estate, followed by machinery manufacturing related fields.
