this week shifted from "global recession trading" to "US recession trading" this week, LPR was lowered by 15bp, which strengthened China's policy expectation of "wide credit" and further eased the "China recession transaction". The fall of US dollar and US bond interest rates shows that the expectation of "US recession" in market transactions continues to heat up, and the performance of US retail business is thunderous, superimposed with market concerns that the Federal Reserve cannot achieve a "soft economic landing". The recent fall of US bond interest rate can improve the logic of the denominator of the growth of A-share market, but we judge that the overall environment of overseas "stagflation + tightening" has not changed, and the "recession transaction" will return to "tightening transaction" in June.
"steady growth" T2 stage ending: value first, followed by small cap growth stocks market is at the end of stage T2, with value first. "Two conditions for the rebound of growth style" have been triggered - (1) can there be periodic breathing in US bond interest rates? (the interest rate of 10-year US Treasury bonds has dropped 40bp since the high point on May 9). (2) Can the prosperity expectation of the growth track reverse the repair? (restoration after resumption of work and production / falling prices in the upstream of the emerging industrial chain to improve the prosperity expectation of the growth track). The implied risk compensation of small cap growth stocks (less than 50 billion market value) is higher. We are in 5.20 "how to optimize small cap growth stocks in strategy?" Tips: the two core determinants of Small Cap Growth and stock price have been met.
"large cap value stocks usher in the journey of absolute return, and the strategy is bullish on small cap growth stocks" does not conflict (1) value first: the signal of "macro leverage ratio will rise" is clear. We believe that the starting point is to increase leverage in real estate infrastructure, special national debt and low-carbon transformation of traditional state-owned enterprises. (2) Strategic focus on small cap growth stocks: the upward interest rate of US bonds has a relatively limited negative impact on A-share value stocks and small cap growth stocks. The decisive factor of small cap growth stocks is China's credit environment. The credit environment of private enterprises will be improved. Small cap growth stocks have been cleared after the small liquidity impact in late April, and the valuation has bottomed out.
"steady growth" plus leverage: real estate + low-carbon transformation + private enterprise rescue (1) large cap value stocks: Recently, the "steady growth" policy of real estate has been intensively implemented; (2) The "low-carbon transformation" of traditional production capacity of state-owned enterprises and leverage can release about 15 trillion new credit space in total; (3) Small cap growth stocks: photovoltaic / energy storage / silicon material, silicon wafer, etc., which are in good operation and can be "leveraged".
actively preferred small cap growth stocks we suggested the investment clues of small cap growth stocks in 5.17 "four clues of small cap growth stocks" - (1) periodic downward benefits of US bond interest rate (medicine / new infrastructure / new materials). (2) Repair of supply and demand structure after resumption of work and production (semiconductor / medicine / new energy vehicles). (3) Potential benefits from "steady growth" of new energy consumption chain / tariff expiration (photovoltaic module / Internet media). (4) The price of materials in the upstream of the emerging industrial chain fell periodically to benefit (wind power / new energy vehicles).
a shares are neither humble nor arrogant, value first, and strategy is more focused on small cap growth stocks we judge that the market will shift from a muddy situation to one with abundant structural opportunities (see 5.15 "not humble but not arrogant, value first"). We suggest that we should first focus on value stocks, and then focus on small cap growth stocks that benefit from the improvement of the credit environment of private enterprises, are limited by the tightening of the Federal Reserve, have a non crowded trading structure and oversold in the early stage. Industry configuration: 1 "Old style" steady growth force (real estate / consumer building materials / household appliances / banks); 2. "Supply and demand gap" inflation benefiting resources / materials (coal / copper / potassium fertilizer); 3. Small cap growth stocks (photovoltaic cell modules / semiconductor equipment) benefiting from the gradual improvement of private credit environment and more attractive odds.
risk warning: epidemic control is repeated, the global economic downturn exceeds expectations, and overseas uncertainty.
