General trend study and judgment: red may continues to repair
Despite the weak performance of the peripheral stock market this week, A-Shares showed relative resilience, walked out of the independent rebound market, and the Shanghai and Shenzhen stock index rose in an all-round way, which is in line with our judgment that "the core influencing factor of A-Shares is still the internal cause". At present, the intention of policy to protect the real economy and support the development of capital market is obvious. We believe that A-Shares have been in the second half of the transmission from "policy bottom" to "market bottom". The most pessimistic moment has passed, and market confidence has gradually rebounded.
In terms of macro economy, the impact of the epidemic began to appear in April. This week, the National Bureau of statistics released the economic data of April. Production, consumption, real estate, import and export and employment all weakened, and only infrastructure and manufacturing investment remained strong. At the same time, the year-on-year growth rate of new loans and social finance in the financial data also fell sharply, and the downward pressure on the economy remained, but the strength of policy support was further strengthened With the gradual digestion of external disturbance factors and the gradual improvement of the epidemic situation, taking into account the base effect, the GDP was at a low point in the second quarter or the whole year.
In terms of policy, the central bank announced on the 20th that the one-year LPR was 3.7% lower than that of the previous month, and the five-year LPR was 4.45%, down 15 basis points from the previous month, exceeding market expectations, indicating that the current countercyclical regulation of monetary policy continues to increase, which helps to reduce social financing costs, stimulate medium and long-term financing demand, benefit the real economy and real estate market, and effectively boost market confidence. At the same time, the government's structural directional regulation and control measures for real estate are also continuously promoted. On May 15, the central bank and the CBRC lowered the lower limit of the first house mortgage interest rate to the quoted interest rate in the loan market by 20 basis points, releasing a clear signal of stabilizing the real estate market. Recently, the regulators have repeatedly issued strong signals of steady growth. In the Symposium on stabilizing growth and stabilizing employment of market players on May 18, the senior management proposed that "the policies that have been issued should be put in place as soon as possible, and the policies determined by the central economic work conference and the government work report should be basically implemented in the first half of the year". The steady growth measures in February and may should be "used up and paid out", which reflects the government's determination to stabilize the economy and real estate. Under the current economic pressure in the second quarter, the policy of steady growth is expected to be further improved and accelerate the repair of market expectations.
At present, the market is in the second half of the transmission from the end of the policy to the end of the market. The economic data weakened in April. This week, the policy level repeatedly expressed its determination to vigorously promote steady growth, and proposed that "the policies that have been issued should be put in place as soon as possible" and "they can be released in May". The market confidence began to recover gradually, and A-Shares are expected to get out of the independent shock and repair the market. It is suggested to pay attention to the following three main investment lines:
1) large consumption sector that is expected to recover after the epidemic eases: with the gradual easing of the epidemic, the resumption of work and production in Shanghai has achieved initial results, and the pressure on relevant industries is expected to gradually ease. At the same time, local consumption promotion measures in terms of policies continue to be vigorously promoted. It is suggested to pay attention to the performance recovery opportunities of large consumption sector, and its performance in the first quarter has shown a marginal improvement trend, Including the mandatory consumption with toughness and the optional consumption expected to improve significantly after the epidemic, food and beverage, agriculture, animal husbandry and fishery, automobile and household appliances.
2) the main line of sustained steady growth: at present, the economy is still facing triple pressures of demand contraction, supply shock and weakening expectation. The regulatory level has frequently issued positive signals in the near future, and the strength of steady growth policy is expected to be further strengthened. Superimposed with the more than expected interest rate cut this week, it will help to reduce the cost of social credit, stimulate medium and long-term financing demand, and take care of the stabilization of the real economy. It is suggested to continue to pay attention to the big finance, which benefit from counter cyclical regulation Infrastructure and related chain sectors.
3) high boom track with oversold rebound expectation: referring to the performance of the first quarter of 2022, photovoltaic equipment and semiconductors in high-end equipment related industries have maintained a high boom, and the year-on-year growth rate of net profit attributable to parent company in 22q1 is as high as 115% and 59% respectively. From January to April, China's wind power and photovoltaic power generation increased year-on-year, and the proportion of power generation increased. It is suggested to pay attention to the boom track that can maintain the high boom in the first quarter and realize the performance, such as new energy, semiconductor, military industry and other sectors.
Review the impact of previous interest rate cuts that exceeded expectations on the market
On May 20, the central bank announced that the quoted interest rate (LPR) of one-year loan market in May was 3.7%, which was not the same as that of the previous month, and the five-year LPR was 4.45%, which was sharply reduced by 15 basis points, exceeding the general expectation of the market, which was the largest decline since the LPR reform in August 2019.
The interest rate cut will drive financial institutions to transfer profits to the real economy. The reduction of LPR will directly reduce the social comprehensive financing cost, and then stimulate the medium and long-term financing demand, indicating that the current countercyclical regulation of monetary policy continues to increase, release the clear signal of steady growth, promote the release of the demand for financing and expansion of real enterprises, and effectively boost market confidence. At the same time, the five-year LPR reduction combined with the central bank's reduction of the lower limit of the first house mortgage interest rate on May 15 can effectively stimulate the demand for housing loans and the improvement of real estate sales, indicating the determination to stabilize the real estate market.
In the past ten years, there have been three rounds of reserve requirement and interest rate reduction cycles, namely, 20112012, 20142016 and 20182019. We review the cycle of reducing the benchmark interest rate of loans for more than five years in history, and select the data in the same economic cycle in the operation of reducing the reserve requirement and interest rate according to the current economic cycle of two stagflation and the superposition of loose monetary policy, which is of more reference significance to the current round of interest rate reduction.
Through the statistics of the rise and fall of the main A-share indexes after the previous sharp interest rate cuts in the stagflation cycle from 2011 to 2019, the interest rate cuts can effectively boost market confidence, and all indexes have risen in the next two weeks and the next month. The overall rising probability of gem is the highest, with a large increase. One week after the interest rate cut, the stable and cyclical style is relatively dominant, and the financial style performance is poor. However, one month after the interest rate cut, with the remarkable effect of the policy, the financial style performance is more prominent. From the perspective of the industry, the performance of some large consumption with high winning rate and high odds and the infrastructure real estate chain benefiting from the steady growth policy are relatively dominant.
Risk tips: the policy promotion is not as expected, the resumption of work and production after the epidemic is not as expected, and geopolitical risks
