Adjustment due to liquidity contraction

Key investment points

Core view: liquidity may be undergoing a contraction process

A shares continue to adjust. Last week, the main indexes of A-Shares generally fell; Among them, the growth enterprise market index rose 0.73% weekly, with better performance; SSE 180 rose by – 2.17%, the weakest performance. From the perspective of style classification, high price earnings ratio stocks are the only rising plate with the strongest performance. In terms of industries, most industries fell, and only 6 of the 31 Shenwan industries rose; Among them, medicine, biology, power equipment and non-ferrous metals ranked among the top three; Building decoration, household appliances and building materials ranked the last three. In terms of themes, in addition to the concept of beating the board, the themes such as in vitro diagnosis, antibiotics and pneumonia index ranked first; Baijiu, western cement and major infrastructure enterprises index are ranked behind. The turnover rate decreased; Among them, the turnover rate of large market value represented by Shanghai and Shenzhen 300 index last week was 0.53%, and the turnover rate of small and medium market value represented by China Securities 500 index was 1.48%, which were lower than that in previous trading weeks. The average turnover on Sunday was about 1075.14 billion, down 10.3% from the previous trading week, and the trading activity decreased significantly. Last week’s short-term style switching failed to last, and the growth of overvalued value obviously outperformed the undervalued blue chip this week.

The contraction of liquidity is actually multifaceted. On January 14, the people’s Bank of China and the China Banking and Insurance Regulatory Commission announced the administrative measures for acceptance, discount and rediscount of commercial bills (Draft for comments) and solicited opinions from the public. The measures intend to specify that the maximum acceptance balance of bank acceptance bills and acceptance bills of finance companies shall not exceed 15% of the acceptor’s total assets, and the margin balance shall not exceed 10% of the acceptor’s deposit scale. With the development of market economy and the diversification of creditor’s rights and debt relations among market subjects, the functions and nature of some bills have changed. Strengthening the management of bill acceptance and discount qualification, establishing and improving credit constraints and risk prevention and control mechanisms, protecting the rights and interests of small and medium-sized enterprises, promoting the standardized development of bill market, and contributing to the stability of the financial system, Avoid some enterprises pushing up enterprise leverage through commercial bills. Although the regulation of real estate has shown signs of easing recently, it may not mean continuous relaxation. More importantly, it is to avoid systemic financial risks. Since 2021, the capital chain of real estate enterprises has been too tight, which has put pressure on the liquidity of the real economy. At this time, the introduction of the measures will have a further negative impact on the market liquidity in the short term.

The Fed’s tightening expectations may have been transmitted to China. The unemployment rate in the United States fell to 3.9% in December last year, close to the low of 3.5% before the epidemic, and the CPI was as high as 7%. People from both parties in the United States expressed concern about the Fed’s plan to excessively stimulate the economy through low interest rates and bond purchases, because the current inflation rate is much higher than the official target of 2%. Since the Federal Reserve accelerated the reduction of bond purchase in December, the tightening expectation of global liquidity may have been transmitted to China. However, on the whole, although Fed officials, especially chairman Powell, were surprised by the continued inflation, they still hope to withstand the pressure of inflation without allowing economic growth to stagnate this year. Although the reduction of bond purchase is accelerating, there is no obvious interest rate increase intention, and the liquidity is still moderately shrinking.

Suggestions on industry configuration: in the medium and long term, we are still optimistic about the new energy industry chain, large science and technology, national defense and military industry and other sectors. A series of policy changes at the end of 2021 have had different effects on the short-term sentiment of the market, but generally speaking, the formulation of positive fiscal policy and prudent monetary policy has not changed. It is necessary to ensure the intensity of fiscal expenditure, implement new tax reduction and fee reduction policies, and moderately exceed the previous infrastructure investment. At the same time, we will strictly enforce financial discipline and resolutely curb the new implicit debts of local governments. Prudent monetary policy should be flexible and appropriate, and maintain reasonable and abundant liquidity. Overall, while stabilizing the economy, we will still pay attention to the stability, rationality and moderation of policies. The long-term logic of growth sectors such as new energy industry chain, large science and technology and national defense industry has not fundamentally changed.

Risk tips: interest rate fluctuates more than expected, overseas market fluctuates more than expected, economic growth is less than expected, enterprise performance does not meet expectations, other systemic risks, etc.

- Advertisment -