In 2022, A-Shares did not usher in the “good start” expected by the market. On the first trading day of the year, the three major stock indexes opened high and went low, and closed down collectively; In the first half of January, the gem index fell for six consecutive trading days, and the Shanghai index and Shenzhen Component Index also fell more or less.
In the view of institutions, the recent continuous adjustment of the A-share market is mainly due to the fact that the beginning of the year coincided with the node of institutional configuration adjustment, the superimposed market liquidity expectation changed, and the market structure began to switch from overvalued value to undervalued value.
However, the market still has certain expectations for the “restless spring” market. Meanwhile, looking at the whole year, foreign investors are generally optimistic about investment opportunities in China’s capital market. Fidelity International expects that monetary policy will remain relatively loose and independent in 2022, China’s stock and bond markets will remain attractive worldwide, and foreign positions will continue to rise.
The reporter of China business daily noted that in the past year, foreign capital was accelerating the layout of the A-share market. According to relevant data, in 2021, the annual turnover of northbound funds totaled 27.6 trillion yuan, an annual high; The total net purchase of A-Shares by northbound funds was 432.17 billion yuan, a record high, and the net purchase amount was twice that of 2020, including 193.73 billion yuan in Shanghai and 238.44 billion yuan in Shenzhen.
At the same time, the proportion of foreign capital holdings has also continued to increase. As of December 31, 2021, land stock connect holds a total of about RMB 2.74 trillion, accounting for 3.66% of the market value of circulating a shares. In terms of investment structure, in 2021, northward capital increased the allocation proportion of manufacturing industry.
China’s economy bottomed out in 2022
Head of equity investment of Fidelity International China Zhou wenqun, a fund manager, said in an interview: “in 2022, facing the triple pressure of shrinking demand, supply shock and weakening expectations, the central government has put stabilizing growth in a more important position. The intensive policy setting and corresponding leniency policies since December 2021 have made us more confident that the economy will bottom out and recover in 2022.” In contrast, in overseas markets, after two years of massive liquidity investment by global central banks, many countries will face the pressure of tightening monetary policy. The sharply expanded balance sheet of the central bank and the rising inflationary pressure have limited the possibility of European and American governments to launch loose monetary policy again.
Li Yili, investment director of Wellington investment management, said: “Although investors must pay attention to the direction of monetary policy caused by increased inflationary pressure, the Central Bank of China has been relatively cautious in controlling excess liquidity. At present, liquidity remains at a moderately safe level. If monetary policy remains stable in 2022, inflation should also be controlled. In addition, the valuation of A-share stocks has fallen back to an attractive level. MSCI China The forward P / E ratio of the index is about 13 times. Compared with the P / E ratio of more than 18 times for US stocks, the valuation allowance is particularly obvious. “
In 2021, the net purchase amount of northbound funds reached a record high. In the future, with the continuous opening of China’s capital market and the continuous improvement of industrial structure, foreign capital is expected to further embrace A-share core assets.
Looking forward to 2022, overseas asset management giants still have some confidence in the A-share market. Fidelity International believes that A-Shares are organic in danger and seek progress in stability, and the core assets of A-Shares are cost-effective in the global stock market.
Based on the expectation of policy easing, Zhou wenqun predicts that China’s economy will hit the bottom and rebound in 2022. From the perspective of performance growth and valuation, A-share core assets have strong attraction. This is also the reason for the continuous inflow of foreign capital since 2015. Meanwhile, in the field of growth stocks, investors may pay more attention to the safety margin of valuation in 2022. In terms of plate layout, she is more optimistic about consumption, building materials, real estate chain and other plates.
Zhou wenqun judged that the long-term growth trend of the consumer industry is relatively certain. On the one hand, with the narrowing of PPI / CPI, the profitability of consumer enterprises with strong bargaining power will recover; On the other hand, with the implementation of interest rate and reserve requirement reduction since December 2021, it provides more abundant liquidity. Generally, during the credit period, the investment value of sectors closely related to macro, such as consumption, is also more prominent.
Li Yili is optimistic about the prospects of consumption upgrading, Internet and localization. “In the coming decades, consumption will remain a structural trend. Especially considering the drive of China’s latest \’common prosperity\’ strategy and the rise of the middle class in rural areas, the consumption upgrading trend will still be an important growth area. In the Internet field, the regulatory actions against Internet enterprises have led to a sharp decline in the share prices of some enterprises. However, the shares of these companies The price has reflected the negative risk, so this field is a very attractive investment target. China has long been a leader in the global digital economy. In the long run, the business model of China’s Internet industry is still intact. In addition, the localization trend of many industries is particularly good for advanced technology companies, such as enterprises in the semiconductor industry. “
In addition, Li Yili pointed out that China’s commitment to achieve carbon neutrality by 2060 has brought some investment opportunities related to environment, society and corporate governance (ESG), from which renewable energy and natural gas suppliers will benefit.
highlights the investment value of core urban investment
Foreign institutions are also optimistic about investment opportunities in China’s bond market.
Cheng Hao, manager of fidelity international fixed income fund, analyzed that in the overseas market, with the gradual disclosure of the hawkish attitude of the Federal Reserve, the pace of global interest rate hike is imminent. Under the influence of structural inflation drivers such as the epidemic, anti globalization and environmental factors, overseas markets will continue to face higher than expected inflation pressure.
“Under the policy goal of China’s stability, it is expected that China’s monetary policy will remain relatively loose and independent. At the same time, the strong financial discipline and the limited financing of the real estate industry also determine that the credit expansion will be relatively moderate, so the interest rate of government bonds will fluctuate at a low level.” He pointed out.
Cheng Hao believes that in 2022, in view of the attractive yield of Chinese bonds and the inclusion of the world’s three major bond indexes, international investors’ attention to China’s bond market will be further increased, which will promote international capital to continue to overweight China’s bond market.
On the one hand, the stock scale of the bond market reached 130 trillion yuan in December 2021, and the scale of medium and long-term pure debt funds has also shown a growing trend in recent years. On the other hand, due to the low correlation between Chinese bonds and other asset classes, it provides better defensive. Therefore, Chinese bonds still have allocation value.
When it comes to credit bonds, Cheng Hao said: “in 2022, risk aversion is still high, market risk appetite is difficult to sink, and credit spreads will remain high.” He said that since the second half of 2021, there has been a significant differentiation in credit spreads, and the total issuance and proportion of low rated credit bonds have also begun to decline.
By sector, fidelity will look for investment opportunities in local government financing platforms. The reason is that due to the high credit spreads of many financing platforms, it is necessary to increase the intensity of infrastructure investment under the environment of stable growth policy. In addition, many local governments have successively introduced measures to orderly regulate and resolve local debts in recent years. Cheng Hao believes that there are exploitable opportunities for local financing platforms.
He further explained: “we will analyze and judge from the equity, income structure and the sources of various debts (Urban Investment) The status of the platform to make investment judgments. For some core urban investment, we pay more attention to the support willingness of local governments. Since the end of 2019, the willingness and measures of local governments to support CIC have been continuously strengthened. This is also the reason why we believe that the core urban investment in some regions has investment value. “
In addition, Cheng Hao believes that China’s green bond market has broad development prospects, and investors should strengthen the allocation of China’s green bonds.
