Guide: embrace the dawn in May and realize the second wave of shock storage. The 5-year LPR5 period was cut by 15bp more than expected, and the wide credit expectation increased. After the social finance pulse, the real estate and infrastructure investment will be repaired rapidly after the epidemic in 2020. China’s economy is in the transitional stage of phase 1 countercyclical regulation and phase 2 recovery of the Pringle cycle. The economic bottom is expected to be found in May. The epidemic subsided, the Quartet went to steady growth, and grasped the four opportunities of steady growth (ranking from C to a), self-control, consumption recovery and strategic resources.
Policy: the five-year LPR5 period was lowered by 15bp, and the expectation of wide credit increased. On May 20, the five-year LPR was reduced by 15bp and remained unchanged for one year. Since 2020, the reduction range of one-year LPR has always been greater than that of five-year LPR. The 5-year LPR reduction is the highest in history, exceeding market expectations. Since June 2019, the average interest rate of loans has decreased significantly, but the average interest rate of housing loans has remained stable, leaving enough room for countercyclical policy adjustment in the stage of economic downturn. In addition, the market-oriented adjustment of deposit interest rate also opened the channel for the decline of bank asset side interest rate. Due to the impact of the epidemic, the credit was impacted again in April, and the real economy urgently needs to make renewed efforts on the policy side. This LPR reduction is the implementation of the spirit of the meeting of the Political Bureau of the CPC Central Committee, and the policy force promotes the widening of credit expectations, which will be waiting for the pulse of social finance.
Economy: the epidemic impacted the real economy in April. 1) The industrial added value decreased by 2.9% year-on-year and – 7.08% month on month. Among them, the high-tech industry was 4% year-on-year in April, the lowest since the data were available in September 2018. 2) The impact of employment and consumption is the most obvious, with the unemployment rate reaching 6.1%, second only to 6.2% in March 2020. The unemployment rate between 16 and 24 years old has reached a new high since 2018. In terms of consumption, the social zero has increased by – 11.1% year-on-year, with the previous value of – 3.53%. Among them, the consumption of catering has increased by – 22.7%, and the impact of compulsory consumption is relatively small (the cumulative total consumption of Chinese and Western medicines and cereals, Oils and foodstuffs in April has decreased by 1.1% and 1.3% respectively compared with the whole year of 2021). 3) The cumulative year-on-year growth rate of the overall investment in April was 6.8%, the previous value was 9.3%, the month on month ratio was -0.82%, and the previous value was 0.35%, indicating that the epidemic has affected the investment in April (there was no significant impact in March), and the investment in infrastructure, manufacturing and real estate has slowed down.
From 2020, the repair path of macro data. 1) Industrial production recovered rapidly. It became positive year-on-year in April 2020 and recovered to 6.9% in September, which is faster than the annual growth rate of the previous two years; 2) The nominal consumption will not become regular until August 2020; 3) Among the investment items, real estate and infrastructure projects are repaired the fastest. From the time point of cumulative positive year-on-year, real estate investment was in June, broad infrastructure in July and narrow infrastructure in September, while manufacturing investment was not positive throughout the year.
Overseas: mariubol has won and lost. Finland and Sweden seek to join NATO. The Ukrainian army and Ukrainian military personnel of the “Asian speed battalion” besieged in the mariubol Asian speed steel plant began to surrender on the 16th. The Russian foreign minister said that at present, Ukraine has actually withdrawn from the Russian Ukrainian negotiation process. In addition, Finland and Sweden applied to join NATO, and the Russian Foreign Ministry said “there will be surprises”.
Market: more than 10 billion yuan has flowed into the north in a single day, and the funds have a significant preference for banks. Financial funds continued to pick up this week, with a net inflow of more than 7 billion yuan, but it is still a rebound inflow after oversold in the early stage. The proportion of financing purchase is still less than 7%, and the willingness to buy leveraged funds is still not strong. The net inflow of funds from the North was 15.2 billion yuan, with a net inflow of more than 14 billion yuan on a single day on Friday, and the inflow intention has significantly warmed up. In the direction of the industry, it flows into banks significantly in the north, and the return of food and beverage is strong. According to the joint efforts of the two capital subjects, there are more inflows into banks, basic chemical industry, food and beverage, public utilities and power equipment. Under the background of market recovery, most industries show a net inflow.
Suggestions on industry allocation: the dawn will be fulfilled, the epidemic will subside, the Quartet will work towards steady growth, and grasp the four opportunities of steady growth (ranking from C to a), self-control, consumption recovery and strategic resources. a. Policy driven steady growth: 1) construction; 2) Consumption of building materials; 3) Real estate development; b. Self controlled long-term track: 1) wind power & Photovoltaic & nuclear power; 2) Semiconductor equipment and materials; 3) Military industry; c. Recovery of consumption after the epidemic: 1) household consumption; 2) Scene consumption; d. Strategic resources: 1) food security; 2) Energy security; 3) Metal resources.
Risk tip: the conflict between Russia and Ukraine exceeded expectations, the persistence of inflation exceeded expectations, the tightening of liquidity exceeded expectations, and the epidemic repeatedly exceeded expectations.
