This week’s strategy:
Weekly strategy report: focus on two positive expectations
I. review of strategic perspective and market fluctuation: the response to internal and external pressure is relatively sufficient, the growth rebounds and the real estate sector callback
1. Strategic view: the pressure of stage adjustment is fully released, and there are structural opportunities for bargain hunting in the shock
1) the internal and external pressure that led to the rapid adjustment of overvalued growth stocks in this round was fully released. In last week’s strategy weekly, we analyzed and pointed out that the expected stage of China’s steady growth was fulfilled, but the effect was questionable, and the rhythm of the Fed’s interest rate rise and table contraction was higher than expected, which were the two main internal and external reasons for the rapid adjustment of this round of overvalued growth stocks. Looking forward to the future, combined with the evolution of market concerns, we believe that the pressure of stage adjustment is fully released. The main basis includes: China’s steady growth measures and policy correction have achieved initial results, and the transmission effect of wide currency → structural wide credit → stable economy is expected to be gradually verified; At the same time, the pressure of the Fed’s eagle policy has been fully released, and the downward revision of the valuation of the growth sector with the unchanged investment logic has been more sufficient. With the catalysis of the annual report performance forecast exceeding expectations, some stocks have stabilized and rebounded.
2) we believe that China’s macro environment is entering the stage of “economic slowdown in the middle and late stage and policy loosening in the middle of stability”. Considering that the stable growth policies are expected to be introduced one after another in the near future, the second comprehensive RRR reduction is expected to be implemented in the year, and the fiscal expenditure is expected to be accelerated ahead of schedule, all ministries and commissions actively introduce policies to stabilize investment, stimulate industry and promote consumption, and the implementation is steady, The recent “two new and one heavy” (large wind and new energy base, 5g + digital infrastructure, charging pile, UHV, high-speed rail, smart city and underground pipe network, affordable housing, etc.) investment chain may have relative benefits; In the medium term, “new infrastructure, new energy, new materials, advanced manufacturing” and other industries with stable price increases, as well as “middle and downstream pan consumption” may be the main structural opportunities for bargain hunting after the recent rapid shock correction. If the subsequent transmission effect of wide currency → wide credit → stable economy is gradually verified, the periodic upward opportunity of the index is expected to be opened.
In combination with the main variables such as the development of covid-19 epidemic and the change of prevention and control pressure, macro policy expectation and industry prosperity in 22 years, we focus on three main investment lines:
(1) bottoming out (difficulty relief) reversal: industries whose economic fundamentals are about to bottom out and improve, mainly including animal husbandry (pig prices have basically bottomed out, and the de industrialization of production capacity is about to start), modern seed industry, airports (the impact of covid-19 epidemic is gradually weakened, and international flights are expected to be gradually opened in the medium term), auto parts (driven by vehicle inventory replenishment) Smart small household appliances (the shortage of chip supply is gradually alleviated), insurance (the pain of agent reform is weakening, the drag of the real estate industry is bottoming out, and the assets and liabilities are gradually improved at both ends); And the valuation repair market of undervalued blue chips basically established at the end of the policy, mainly focusing on finance, real estate leaders and real estate industry chains (home decoration building materials and kitchen electricity).
(2) cycle crossing: mainly advanced manufacturing industries with sustained prosperity, including electric smart vehicles, semiconductor materials and production equipment, power semiconductor chip IGBT, wind and solar storage and UHV power grid, military equipment, carbon neutralization technology, etc; (3) performance improvement category: the middle and lower reaches industries, including “mass cost” and “middle price”, including high-end food and high-end Baijiu, and the manufacturing industry of lithium battery and Cecep Solar Energy Co.Ltd(000591) components.
2. Market Fluctuation: the internal and external pressure response is relatively sufficient, the growth rebounds and the real estate sector callback 1) the internal and external pressure response is relatively sufficient, the growth rebounds and the real estate sector callback. Market environment tracking: the total amount of social finance in December was slightly lower than expected, the structural quality is weak, and the process of interest rate increase and contraction of the Federal Reserve was accelerated. In terms of China’s environment, the newly released data on the total amount of credit and social finance in December is slightly lower than expected, and both short-term loans and medium and long-term loans for residents have shrunk year-on-year, or it indicates that the impact of the recent outbreak on service consumption has appeared again, and the loosening effect of the mortgage loan policy under the weakening trend of the real estate market is limited; At the same time, the medium and long-term loans of enterprises decreased year-on-year for six months, reflecting the weakening of financing demand of real enterprises since the second half of the 21st century.
In terms of the external environment, the minutes of the Federal Reserve’s interest rate meeting in mid December basically confirmed that the pace of the current round of the Federal Reserve’s exit from the super loose Trilogy “reducing the scale of bond purchases – raising interest rates – reducing the Federal Reserve’s balance sheet” may be significantly faster than the previous round, and the expectation of the Federal Reserve’s table contraction will rise rapidly during the year; Recently, it was announced that U.S. inflation continued to hit a new high of 7% in recent ten years. The testimony of the chairman of the Federal Reserve showed that the start time of interest rate increase may be near March, and the contraction table will be started at the end of the year. The overall hawkish position did not exceed expectations. However, since the middle and late December, the market has reacted to the Hawking of the Fed for one month, during which the US bond interest rate rose rapidly by about 40bp to a new high of 1.8% in recent two years; In the past week, with clear expectations, the 10Y US bond interest rate remained at the high point of nearly two years, and there is limited space from the current round of rising high of 2.0% expected by the market.
Market performance: emerging markets rebounded, A-share growth rebounded and the real estate sector rebounded. From December 10, 2001 to January 5, 22, under the impact of the Federal Reserve’s accelerated reduction of bond purchase and interest rate rise expectations, and the rapid spread of mutant strains, emerging markets adjusted one after another. During this period, A-Shares lagged behind and Hong Kong stocks led the decline. In the previous month, the market reaction was relatively sufficient. With the gradual clarity of the tightening rhythm of the Federal Reserve, emerging markets generally rebounded in stages. Since January 6, MSCI Emerging markets have rebounded by 2.8%, especially Hong Kong stocks that have been continuously adjusted for nearly a year and whose valuation has reached depression. During the period, the rebound range was the highest, with the Hang Seng Index and Hang Seng technology rebounding by 6.4% and 8.4% respectively.
A shares: fast rotation of style, rebound of growth and correction of real estate sector. Affected by the above internal and external pressures, the A-share technology growth sector led the correction from mid December to early January, while the real estate sector rebounded against the trend driven by the end of the real estate policy. With the full response to the above internal and external pressures, especially under the catalysis of the higher than expected performance forecast of the annual report, the scientific and technological growth sector led by new energy and intelligent driving stabilized and rebounded last week. However, in December, the total amount of social finance was weak and the structural quality was lower than expected, and the real estate department and financial sector both significantly corrected.
Specific index performance, gem index and Kechuang 50 rebounded by 0.7% and 0.5% respectively, while Shanghai Stock Exchange 50, China Stock Exchange 100 and Shanghai and Shenzhen 300 represented the correction of all blue chip indexes in the 2.6-2.0% range. In terms of industry sectors, pharmaceutical and biological, electrical equipment and new energy, non-ferrous metals (led by lithium and rare metals), automobiles and other sectors led the rise of 2.4-1.4%, while building materials, household appliances, construction, steel, real estate and other real estate sectors led the decline of 7.0-3.5%, and food and beverage, national defense and military industry, non bank finance and other sectors also fell weakly by 3.0%.
