One week perspective:
The characteristics of macroeconomic bottom are gradually clear. Under the impact of the epidemic, China’s main economic data in April showed weak performance. The unilateral reduction of the five-year LPR exceeded expectations. On the one hand, it reflected the medium and long-term loan support for residents and enterprise sectors to improve the credit structure. On the other hand, it also highlighted that in the early RMB devaluation environment, China still adhered to the independence of monetary policy and created a moderately abundant Chinese economic environment to hedge the downward pressure on the economy. At the same time, in a more relaxed environment, we observed the rise of the RMB exchange rate against the United States this week, which verified the repair after the release of RMB pressure in the early stage and the beneficial support of China’s economic fundamentals hitting the bottom or marginal improvement for the RMB. In the future, the improvement of China’s macroeconomic environment provides time and space support for the counterattack and valuation repair of a shares. The still water flows deep. Behind the weak data, the resumption of work and production brought by the gradual improvement of the epidemic in East China is expected to drive the repair of enterprise profits. At the same time, we should also pay attention to the marginal changes in market logic, residents’ consumption and savings habits and enterprise profit model after the impact of the epidemic for three years.
In terms of the market, this week, the A-share market went out of the independent market against the background that the three major stock indexes of US stocks fell by 3%, continuing the rebound trend last week. The main broad-based index closed up in an all-round way, and the growth and cycle style rose by 4%, showing a very strong performance. Energy stocks (including new energy sector and coal sector) led the gains, while concept sectors such as photovoltaic, lithium battery, photovoltaic, industrial metals and coal mining all closed up sharply. Looking back, we believe that the bottom grinding market of A-Shares may usher in a reversal. Although the regional epidemic development may still lead to periodic fluctuations in a shares, generally speaking, the emotional “freezing point” has passed. Under the differentiation of valuation levels of Chinese and American shares and the dislocation between the bottom and top of the economic cycle, the A-share market appears more resilient and attractive. Of course, we also need to see the large market fluctuations that may occur in the environment of relatively weak economy. Large cap stocks have stronger defensive power than small and medium cap stocks, so they are relatively dominant. At the same time, the prosperity of the growth sector is still. After the centralized release of the early valuation pressure, the allocation cost performance began to highlight. It is recommended to pay attention to it.
Industry configuration:
We are still optimistic about: (1) upstream resources (coal, petroleum and petrochemical, industrial metals, lithium); (2) Physical consumption sector (food and beverage, agriculture, household appliances); (3) Growth sector supported by high prosperity (military industry and new energy); (4) Market adjustment in micro supply contraction logic (real estate, Internet).
