Key investment points:
I. overseas markets: the U.S. market traded “economic recession”, and the interest rates of U.S. stocks and U.S. bonds fell. Since April, the market has become more worried about the US economic recession. The Dow Jones industrial index has fallen for eight consecutive weeks, and the S & P 500 and Nasdaq have fallen for seven consecutive weeks. Under the risk aversion, the price of US bonds rose, and the yield of 10-year US bonds fell below 2.8%. Powell clearly proposed to raise interest rates by 50 basis points at the next two regular monetary policy meetings. At the same time, he believed that it was still challenging to achieve a soft landing of the economy. Citigroup’s US economic accident index turned negative this week, indicating that the actual economic situation was lower than people’s general expectations, and the sharp decline in the earnings of US retail giants also confirmed the market concerns.
2. The stage with the greatest impact of the epidemic in China is gradually passing, and steady growth is further increased. Different from overseas economic and policy trends, China is in an environment of “economic bottom + loose policy”. On the one hand, the impact of the epidemic is gradually weakening, and the resumption of work and production, business and market are advancing in an orderly manner; On the other hand, policies related to steady growth continued to be implemented. The recent adjustment of the lower limit of commercial loan interest rate for the first house and the 15 basis points reduction of five-year LPR mean that the lower limit of the first house loan interest rate can be reduced to 4.25%. Recently, some banks in Tianjin, Jinan, Wuxi and other cities have reduced the first house loan interest rate to a minimum of 4.4%. Before the stabilization and recovery of economic fundamentals are clear, the policy level will still increase care, and the structural and aggregate monetary policy tools will continue to increase their strength, so as to return the economy to the normal track.
III. The risk appetite of the A-share market has improved, but the improvement of corporate profits still needs time. Since the end of April, with the resumption of work and production in Shanghai, market sentiment has also been significantly boosted. From April 27 to May 20, the rebound rate of power equipment, automobile, national defense and military industry and non-ferrous metals has exceeded 20%, while the growth of banks, real estate and other stable growth related industries lags behind. Since May, leveraged funds have been net buying for three consecutive weeks, and the financing balance has rebounded slightly, indicating that the market risk appetite is continuing to repair. Since May, the daily turnover of the market has fluctuated around 800 billion yuan for most of the time, and the issuance of new funds is still low, indicating that the market is still dominated by stock game. The reversal of market trend needs to verify the improvement of fundamental data and the return of corporate profits. At present, the performance growth rate of A-share enterprises has not yet bottomed out, and the improvement of profitability still needs time.
IV. investment strategy: U-shaped market to avoid excessive optimism and pessimism. In the context of sharp fluctuations in the overseas market, A-Shares have stepped out of the independent market in recent two weeks, mainly due to the market risk appetite boosted under the expectation of Shanghai’s resumption of work and production and steady growth policy. In terms of the current market, under the pattern of capital stock game, the rebound cannot be achieved overnight. At present, the conditions from rebound to reversal are not available. While actively participating in this round of rebound, it is necessary to avoid excessive optimism and pessimism. The Shanghai composite index is at Jinlong Machinery & Electronic Co.Ltd(300032) 00 points, which are reasonable fluctuations in the “U” shaped rebound market. From the medium and long-term perspective, A-Shares are in the stage of tamping the bottom range and gradually moving the center upward. In terms of industry allocation, we should pay attention to two main investment lines: one is related to steady growth, such as “real estate, construction and building materials”; Second, it is related to post epidemic repair, such as “food and beverage, automobile”, etc.
Risk warning: repeated epidemic situation; Macroeconomic fluctuations exceeded expectations; The policy strength is less than expected; Overseas Black Swan incident, etc.
