The strong policy has been waiting for a long time, and the fear of epidemic situation has increased, so the stock market continues to adjust. The bond market is fully expected to cut interest rates, and the downward momentum of yield is insufficient, continuing the shock trend. Policy and epidemic situation are still key variables in the short term. Although the steady growth policy may be gradually strengthened, the deterioration of the epidemic situation is a risk factor worthy of attention.
The policy landing was less than expected, and A-Shares were weak and downward. Last week, the market continued to divide, A-Shares fell, commodities strengthened, bond yields fell, and the game of policy in the stock market is intensifying. Due to the high valuation of track stocks, the overvalued sector has a sharp correction with the upward trend of US bonds, and the undervalued stability maintenance sector is relatively strong. However, last week, the market began to have some differences on the government’s efforts to maintain stability, and the signals of wide credit and stable growth were not obvious. Therefore, the stability maintenance sector weakened and went down, and the Shanghai and Shenzhen 300 index broke through the lower edge of the shock range.
The scenery of Hong Kong stock market is unique. Since January, the Hong Kong stock market has significantly outperformed the world’s major stock indexes. In 2021, the focus of policy shifted to structural adjustment. Under the impact of policies such as double reduction and Internet antitrust, Hong Kong stocks were even more affected. Since the Spring Festival last year, Hong Kong stocks fell unilaterally, the Hang Seng Index fell by nearly 27%, and Hang Seng technology fell by more than 50%. Under the expectation of maintaining stability, policy uncertainty has decreased, industries such as the Internet are expected to usher in a certain return of valuation, and blue chips, which account for a large proportion, have also strengthened.
The short-term trend of the epidemic is still the key. The evolution of epidemic situation outside China continues to be the focus. The market has gradually formed a greater consensus on the possibility of rapid normalization of the European and American economy, but the tail risk still exists. The index of new cases in overseas countries increased; In China, the Omicron virus has not obviously caused more trouble, but its evolution still needs high attention. In 2022, the “local Chinese New Year” is expected to be relatively weak, and the growth rate of tertiary industry may be significantly repaired compared with that in the first quarter of 2021.
The second rush of external demand and the relay of emerging countries. The compound growth rate of China’s exports in December was 19.5%, suspending the upward trend for four consecutive months and falling by 1.8%; Exports peaked and fell twice since their first rise in February. In terms of terminal demand, US retail and food sales also peaked and declined in December; In terms of manufacturing, the price difference between China and the United States has accelerated convergence, and the high point of industrial and physical consumption in developed countries may be confirmed in the near future. Although the demand of developed countries has fallen, the demand of emerging markets is making up the pit. Therefore, the PMI of global manufacturing industry has not weakened. With the tightening of overseas monetary policy, the speed of making up the pit of demand in emerging market countries has slowed down, and foreign demand may face downward pressure.
From the medium-term perspective, we are still cautiously optimistic about the stock market, and Hong Kong stocks have greater opportunities from the index; A shares are more structural opportunities, and undervalued shares are better than overvalued shares. Treasury bond yields may pick up at the current point and remain low as a whole. However, in the short term, we need to worry about the risk of riskoff in China’s capital market caused by the fermentation of China’s epidemic.
Risk tip: the economic downturn exceeded expectations, and the epidemic situation exceeded expectations
