Expectations are repeated, and the market is still waiting for a "new consensus". This week (2022-01-10 to 01-14), the A-share market as a whole remained downward, the gem rebounded slightly compared with last week, and the trend of value outperforming growth has been repeated since the beginning of the year. This may reflect the market's doubts about the strength of "steady growth" after the release of some economic data in December 2021. Previously, we focused on the risk that the short-term fluctuation of the market will continue. At the same time, we also stressed that the current steady growth is still in the "expected deduction" stage. The cohesion of the "new consensus" of the market takes time, and the style switching has definite direction, but it needs to be completed gradually. Investors in the whole market are waiting for new marginal changes, but the difference lies in: wide currency pushes up Valuation vs wide credit brings boom recovery.
Pure broad money is the risk of the market, and broad credit is the opportunity. Some investors bet their future investment opportunities on the high prosperity under loose liquidity, but there is an empirical and logical fallacy: Historically, the stock market under simple broad currency actually performs poorly (including the growth sector), unless there is a significant easing of liquidity and the entry of lever funds into the market (such as 2014-2015), However, under the "learning effect" of supervision, 2015 is difficult to be used as the benchmark scenario assumption; At the same time, the state of China's broad currency has actually lasted for a long time, and M2 social finance has reached the level of April 2020 (the last high point) year-on-year; Some investors believe that the Central Bank of China should cut interest rates before the Fed increases interest rates, which means that "the faster the landing, the greater the range, the faster the expected cash, and the earlier the time when the broad currency is strongest is confirmed". What is more troublesome is that historical experience indicates that during the deviation of monetary policy between China and the United States, the degree of overseas impact on the fluctuation of A-Shares is increasing rather than decreasing. In contrast, the arrival of wide credit is worth looking forward to: Historically, wide credit will eventually affect the improvement of corporate profits, and the intermediate time lag is generally 2-3 quarters. The current round of social finance has fallen no faster than in 2018, and the absolute value has been at a very low level in history. The stabilization of social finance will lead to the recovery of profit expectations, and more suppressed industries will usher in opportunities. In the process of wide credit transmission, it will also be accompanied by the year-on-year recovery of M1 (related to real estate). Historically, M1 has an obvious positive correlation with the scale of equity new development funds year-on-year. Further, real estate sales and prices and the issuance of public funds are in the same direction at least in a short cycle. The internal logic is actually well understood: as an important tool derived from credit, real estate will bring the expansion of short-term residents' balance sheet. Only in the long-term when the fluctuation of credit cycle weakens, the relationship between real estate and stock market is competitive liquidity. The stabilization of real estate sales is even conducive to the improvement of the micro liquidity of the stock market that depends on the issuance of public funds.
Potential market risks remain to be released: Redemption of fixed open-end funds and withdrawal of strong stocks. In a highly volatile market, the study of trading structure can be helpful to judge the short-term trend from the perspective of fundamentals. At present, there are two concerns at the transaction level: on the one hand, the redemption pressure faced by fixed open-end funds will disturb the market. According to our calculation, February and March of 2022 may be the months with high potential redemption pressure throughout the year (RMB 36.420 billion and RMB 31.129 billion are due and opened respectively, most of which are located in the yield range with high redemption probability), This pressure is mainly concentrated in food and beverage, electronics, power equipment, new energy, medicine and other growth sectors; On the other hand, historically, after the decline of similar strong stocks, the overall pullback range (median / mean is - 36.80% / - 38.60%), while the pullback of strong stocks has not reached this level since December (mean / median is - 17.40% / - 16.59%).
Complete the switch in the market fluctuation: the value will eventually return. The real opportunities and turning points of the market are at several key nodes: the confirmation of wide credit (non wide currency), the confirmation of fund liability side disturbance and the return of strong stocks to the historical average level. It should be noted that there is no "perfect bottom" in the market, which means that when some of the above factors are available, it should be a good time to intervene. Investors who need to stay in the market should gradually carry out structural adjustment and grasp a more certain path in demand recovery (inflation itself). We believe more in the scenario that inflation certainty will be stronger than demand itself when demand stabilizes and picks up, and the two will jointly drive the return of value. Recommended layout: nonferrous metals (aluminum, copper, gold), crude oil chain (oil service, oil transportation), real estate, banking, coal and electricity. The theme recommends Rural Revitalization and county consumption (brand clothing, digital government).
Risk tip: China's liquidity is looser than expected; The implementation of steady growth policy is less than expected; Measurement error.
