Basic conclusion
Rebound Overture: emotional repair
This round of the market is in the prelude to the rebound, dominated by emotional repair, and the process of emotional repair may show twists and turns. 1) At the end of 2018, the sentiment of private equity funds was at a low level for three times, which was close to the current level of 56.5% at the end of May. The probability of market sentiment bottoming out is high; 2) Secondly, in order to hedge against the impact of the epidemic and changes in the overseas environment, the current policy is in the stage of intensive introduction, including real estate policy, promotion fee policy and so on. Intensive introduction of policies or further leading the recovery of market confidence; 3) Although the volatility of US stocks has increased recently, in fact, the A-share market presents an obvious independent market, and the impact of fluctuations in overseas markets is gradually passivated.
The process of market bottoming and recovery in the second half of 2018: in the second half of 2018, the market experienced the impact of factors such as credit risk, stock pledge risk and Huawei CFO event, and also experienced three obvious rapid adjustments. Then the market bottomed out and rebounded, showing two characteristics: first, the twists and turns rebounded, and then the trend turned. The process of twists and turns can be understood as emotional repair. The subsequent trend reversal is driven by the substantial expansion of credit and the stabilization or even exceeding expectations of the company’s fundamentals.
Reversal: Fundamentals reversal
In terms of profitability and valuation, the current market is at the bottom of the medium term. 1) In terms of profitability, with the subsequent incremental economic policies stabilizing the economy and the price rise of upstream resource products slowing down, the profit margin of the middle and lower reaches improves or supports the overall profitability to stabilize and recover. More importantly, the current performance is not the long-term inflection point of the boom growth sector, and the penetration rate and localization rate are still at a low stage; 2) In terms of valuation, compared with the extremely pessimistic situation in the market at the end of 2018, the current valuations of many sectors are close to the previous level, including some TMT sectors and Dianxin sectors.
The worst stage has passed, and the driving force of subsequent trend reversal comes from the reversal of fundamentals. As in early 2019, the reversal of the market trend is mainly due to the stabilization or even exceeding expectations of Tianliang credit and corporate fundamentals. The current credit environment is more relaxed than that in 2018, and the credit demand may recover gradually driven by the incremental policy. The bottom of the fundamentals of listed companies is in the second quarter. There is no need to worry too much about the fundamentals. The epidemic only changes the range, not the trend and rhythm. With the easing of the epidemic in the second half of the year, driven by incremental policies and the improvement of profit margins in the middle and lower reaches, the fundamentals of enterprises are likely to stabilize and recover.
Market view: the fundamentals are secure and the layout is active. Intensive policies have been introduced to stabilize market sentiment, medium-term fundamentals support the bottom range, and peripheral factors may also show positive changes. The subsequent market has changed from defensive to offensive. A shares may usher in a growth moment. The boom track and consumption dance together, which does not rule out the possibility of a new high in the market.
Industry configuration: the new energy sector rebounded, the layout of TMT hard technology, and pay attention to the marginal changes of the consumption sector
1) at present, there is no significant change in the fundamentals and policies of heavy positions of new energy and other institutions, which has stabilized and rebounded or is an event with high probability. Although the performance of some stocks was lower than expected, the overall sector performance remained high, the market performance expectation gradually became rational, and the medium and long-term prosperity was difficult to prove false.
2) TMT has a large expectation difference, especially in the hard technology sector, such as communication, computer and strong application semiconductor. First, the prosperity remained stable and upward; Secondly, the sector valuation is basically at the bottom of history; In addition, policies such as new infrastructure may become market catalytic factors. It is suggested to actively layout the core industrial chain: automotive intelligent industrial chain, 5gtob end application, strong application semiconductor, industrial digitization, etc.
3) the positive trend of the epidemic in the second half of the year deserves special attention. There is a big gap between the expectations of business consumption and durable consumption, such as high-end Baijiu and other sectors related to business banquets; Household appliances and other durable consumer goods under the expectation of loose real estate policy and stimulating consumption policy.
Risk tips: the economic recovery is not as expected, the macro liquidity contraction risk, and the overseas black swan event
