Industry core view
Q1 the proportion of fund positions in the chemical industry declined slightly, and the range of low allocation expanded: in the first quarter of 2022, under multiple factors such as repeated outbreaks in many places in China, the outbreak of conflicts between Ukraine and Russia, and the sharp rise in international oil and gas prices, the market was more pessimistic. During this period, although the overall price of chemicals remained high, there were short-term weak downstream demand and pressure on profitability in some fields. In 2022q1, the proportion of fund positions in the basic chemical industry decreased slightly to 3.35% month on month, down 0.22pct month on month and up 0.64pct year-on-year Compared with the proportion of the market value of the chemical industry in the total market value of a shares, the proportion of fund positions in the chemical industry is still in a low allocation state, with a low allocation range of 1.09pcts.
The positions of all sub sectors in 2022q1 generally decreased month on month, with more increase and less decrease year-on-year: in terms of the market value of fund positions in each sub sector and the proportion of fund position market value in free circulation market value, the fund positions in all sub sectors of 2022q1 SW basic chemical industry generally declined. On the one hand, the data disclosed by the fund in the quarterly report is incomplete; on the other hand, the chemical industry has strong cyclical attribute and more obvious fluctuation, When the market sentiment is pessimistic, the fund will usually reduce its position out of "seeking stability" or consider adjusting its position to a more stable sector. However, compared with the same period last year, the prosperity of the chemical industry is still in a high position. Therefore, the position of sub sectors in the reporting period has improved compared with 2021q1. In 2022q1, the positions of non-metallic materials II and agrochemical products with good downstream demand and continuous upward prosperity in some sub sectors improved most significantly; While the chemical fiber sector with pressure on the raw material end and compressed profit space has a large decline in positions.
Under the pessimistic mood, soundness has become the main tone of fund positions: from the perspective of fund heavy positions and position adjustment, different from the fund's preference for investment in growth targets in 2021, the fund mainly preferred to allocate or increase positions in the leading enterprises in the traditional chemical subdivision during the reporting period. We believe that the main reason for the change of market investment style is that during the reporting period, the epidemic has hindered the start-up of enterprises in many places, and the growth targets with large increase in stock price and valuation in the early stage are generally faced with the risk of short-term weakness of downstream demand and upward pressure on the cost side. Most leading enterprises in the traditional chemical industry have good fundamentals, have performance support under the background of Rising Chemical prices, and their valuation and stock price have been relatively low, The space to continue downward is limited, and the performance is expected to be more stable in the market pessimism, which is favored by the fund.
Investment strategy:
The main investment lines we suggest to pay attention to in the future are as follows: 1 With the effective control of the epidemic situation in various regions, the operating rate of downstream industries has been restored, the obstruction of freight logistics has been alleviated, and the subdivided fields of domestic and foreign trade need to be repaired, such as fluorine chemical industry; 2. Agrochemical segments that benefit from the global agricultural landscape, strong downstream demand and support at the cost side, such as phosphorus fertilizer and phosphorus chemical industry, potassium fertilizer and pesticide; 3. During the 14th Five Year Plan period, new materials with significant domestic substitution trend mainly involve 5g, semiconductors and relevant subdivisions of new energy industry chain; 4. Environmental protection materials whose demand is expected to increase gradually under the background of strengthening global awareness of environmental protection and low-carbon and China's "double carbon"; 5. Under the trend of devaluation of RMB and higher exchange rate of US dollar against RMB, leading enterprises in various sub sectors with high proportion of export business and mainly settled in US dollar.
Risk factors: the downstream demand is less than the expected risk; Risk of sharp fluctuations in international crude oil prices; Risk of sharp fluctuations in chemical prices; The stricter control of energy consumption leads to the risk that the commencement of the industry is less than expected.
