Key investment points:
According to the market review, in the past five trading days (from April 22 to April 28), important indexes fell to varying degrees. Among them, the Shanghai Composite Index fell 3.39%, the gem index fell 3.67%, the style level, the CSI 300 fell 1.87%, and the CSI 500 fell 5.92%. In terms of trading volume, the volume of transactions in the statistical range of the two cities was 4.25 trillion yuan, an increase of 101.3 billion yuan month on month; Among them, northward funds showed an inflow trend, with a net inflow of 7.634 billion yuan throughout the week. In terms of industry, building decoration, food and beverage and building materials received red; The computer, textile and clothing, media, agriculture, forestry, animal husbandry and fishery, light industry manufacturing and other sectors fell relatively large.
In terms of data, the profits of Industrial Enterprises above designated size increased by 8.5% year-on-year in March, up 3.5 percentage points from January to February. Under the background of weak production and demand, the sharp rise in profits mainly came from the rise in profit margins. Specifically, in March, the added value above Designated Size fell by 1.0 percentage points to 6.5% year-on-year. At the same time, the revenue of Industrial Enterprises above Designated Size fell by 1.2 percentage points to 12.7% year-on-year. Under the background of multi-point spread of China’s epidemic in March, the production demand of industrial enterprises was affected. Under the background of the continuous efforts of tax reduction and fee reduction and enterprise relief policies, the profit margin of industrial enterprises rebounded by 0.28 percentage points to 6.25%. From the operating conditions of different types of enterprises, with the continuous promotion of the policy of helping enterprises to rescue, the improvement of the operating conditions of private enterprises in March was stronger than that of state-owned enterprises. On the whole, although the operating efficiency of industrial enterprises in March was improved compared with that of the previous month, considering that the local epidemic was still fermenting in April, the production side of enterprises was affected by factors such as epidemic prevention and control, rising logistics costs and raw material costs, and the demand side was also suppressed by factors such as lack of residents’ consumption scenes and poor expectations, so the short-term operating pressure of enterprises remained unabated.
In terms of policy, the “steady growth” policy continues to increase. On the 26th, the State Council Office issued opinions on further releasing consumption potential and promoting the sustainable recovery of consumption, and deployed “measures to stabilize consumption” such as new energy vehicles and green smart appliances to the countryside. On the 27th, Xi Jinping presided over the 11th meeting of the central financial and Economic Commission, stressed the need to comprehensively strengthen infrastructure construction, especially pointed out the need to strengthen the construction of network infrastructure such as transportation, energy and water conservancy, and the policy of “steady growth” continues to increase. At this stage, the market’s concern about the fundamentals is mainly due to the impact of epidemic prevention policies on the economy and the “wide credit” structure still needs to be improved. At present, the epidemic situation in Shanghai has fallen, and the follow-up still needs to pay attention to the control of the epidemic situation in other regions. At the same time, it is also necessary to track whether the “wide credit” structure has been optimized under the frequent overweight of the “steady growth” policy. In addition to stabilizing the economy, the management also promoted the stability of market expectations by reducing the foreign exchange deposit reserve ratio and issuing medium – and long-term policies such as the high-quality development of individual pension accounts and public funds.
In terms of strategy, our judgment remains unchanged at the bottom of the market. The decline of the market on Tuesday made the risk premium of the Shanghai stock index reach 6.09%. The peaks of the previous two risk premiums were 6.07% of the market bottom in early 2019 and 6.08% in 2020 when the global epidemic superimposed the liquidity crisis. When this index reaches the extreme value, it also means that the bottom of the market is coming. After the extreme venting of market panic, the repair of market sentiment will gradually open. Whether we can realize the catalysis from rebound to reversal in the future depends on whether the economic expectation can be really boosted and whether the performance of listed companies can bring more solid support to the market. In terms of industry configuration, considering that the market is fully expected to raise interest rates by the Federal Reserve at this stage (the probability of raising interest rates by 50bp in May and 75bp in June and July respectively is high), the market pessimism is expected to be repaired to a certain extent after the Federal Reserve’s interest rate hike boots are put into effect in early May, and the partial relief of the pressure on the valuation side of the growth sector is expected to bring some rebound opportunities, which can be paid attention to after the festival.
Risk tip: overseas market fluctuation risk, economic downturn exceeding expectations, and global epidemic development exceeding expectations.
