Core conclusion: after steady growth, why did the index adjust instead? This is because: (1) since the second half of 2020, the previous rise of the stock market has been accompanied by the fact that the current profits of some sectors have greatly exceeded expectations, and the sales volume and price of the industry have exceeded expectations. In the rise since November 2021, most of the leading sectors are valuation repair, and there is no significant improvement in short-term Fundamentals (sales volume or price), which leads to the lack of position confidence of some investors. (2) The fund issuance in the stock market at the beginning of the year was not ideal. Looking forward to the future, strategically, 2022 will be a compressed version of 2018-2019, with the first half similar to 2018 and the second half similar to 2019. The tactical rebound will occur after the Spring Festival. The improvement of credit data and the active residents' funds after the festival are worth looking forward to. The undervalued sector related to steady growth will continue to generate excess returns. Looking back on q2-q4 in 2014 and q3-q4 in 2018, regardless of the effect of steady growth, infrastructure, real estate and banks have excess returns within half a year after steady growth.
(1) credit data is the most important variable from January to February, which directly affects the elasticity of the index. The time for steady growth to take effect should consider policy determination on the one hand and the downward stage of the real economy on the other. If it is at the end of the economic downturn and has a strong determination to stabilize growth, it will generally bear fruit quickly. The stable growth probability from the end of 2021 will take effect at a moderate time. It is likely that credit and social finance will improve in the first half of 2022. Generally, there is no need to worry about the data in December, and it is still possible to exceed expectations from January to February.
(2) relative return: it is unnecessary to consider the strength of steady growth, and the excess return of the main line of steady growth can generally last for half a year. Regardless of whether credit and social finance recover more than expected, the undervalued sector related to steady growth will continue to generate excess returns. Looking back on q2-q4 in 2014 and q3-q4 in 2018, even if the steady growth does not bring about the improvement of credit data soon, the infrastructure, real estate, banking and other sectors will continue to generate excess returns within six months after the steady growth.
The important reason behind this is that when the steady growth policy was established, it was mostly the stage when the profit decline pressure of industrial enterprises was the greatest. In the stock market, it is difficult to select sectors with better performance than expected. At this time, whether the steady growth can see the effect or not, the style of the market will favor undervalued stocks.
(3) why did the index adjust after steady growth. After steady growth, why the index has adjusted instead is not because the steady growth is less than expected. The first reason is the change in the logic of stock market rise since Q4 in 2021. Since the second half of 2020, the previous rise of the stock market has been accompanied by the fact that the current profits of some sectors have greatly exceeded expectations, and the sales volume and price of the industry have exceeded expectations. In the rise since November 2021, most of the leading sectors are valuation repair, and there is no significant improvement in short-term Fundamentals (sales volume or price), which leads to the lack of position confidence of some investors. The second reason is that the fund issuance in the stock market at the beginning of the year is not ideal. This basically means that the overall capital pattern of the stock market in 2022 will be weaker than that in 2021. We expect that the easing of the capital situation will wait after the Spring Festival.
Risk factors: the real estate market fell more than expected, and US stocks fluctuated sharply.
