1. On Tuesday, the State Council Information Office held a press conference on financial statistics, which released a positive signal of steady growth:
1) the attitude towards stability is very positive: first, we should make sufficient efforts to set the tone policy (open the monetary policy toolbox a little bigger), second, we should take the initiative to find projects, and third, we should rely on the front force (if we don’t care, we’ll “mourn more than die”).
2) response to interest rate reduction: LPR will fully reflect the changes of market interest rate in a timely manner (basically affirming that it will be reduced on the 20th). Promote the steady decline of financing costs and give full play to the effectiveness of LPR reform (emphasizing the order of deposit market and maintaining the cost side of banks).
3) response to the contraction of developed countries: actively and steadily respond, enhance the flexibility of RMB exchange rate, guide market players to establish the concept of risk neutrality, strengthen the macro Prudential Management of cross-border capital flows, and strengthen the expectation management.
4) the two direct tools during the epidemic can be market-oriented and postponed.
5) for real estate: in the near future, sales, land purchase and financing have returned to normal (stable expectation), adhere to the principle of housing without speculation, and increase financial support for Housing leasing.
6) response to whether to increase leverage: the macro leverage ratio decreased in five quarters, creating space for future monetary policy. The lower the leverage, the greater the space. It is expected to be basically stable in 2022.
2. The yield difference of CSI 500 bonds is close to triggering the buying signal
On Tuesday, January 18, the interest rate of ten-year Treasury bonds fell 4bp to 2.74%, and the China Securities 500 index closed up slightly by 0.07%. The stock bond yield difference (1.27%) has approached the position of – 2x standard deviation (1.25%). Assuming that the yield of 10Y treasury bonds remains unchanged: at present, the stock bond yield difference of CSI 500 is only 0.9% lower than the – 2x standard deviation; If the stock bond yield difference is repaired to – 1x standard deviation, the corresponding index increase is + 18.8%.
The fall in the yield gap of CSI 500 stock bonds mainly comes from the decline of interest rates and the recent decline of share prices. The previous times were at the -2x standard deviation in late July 2021, April 2020, September 2019, December 2018 and February 2016 respectively, and then they all corresponded to the periodic rebound (or even reversal) of the CSI 500 index.
The last time the yield difference of CSI 500 bonds was close to – 2x standard deviation was at the end of July 2021, and then rebounded by + 15.5% (7 / 9-9 / 13). See important signal: the yield difference between CSI 500 shares and bonds is close to the extreme value for details.
3. Core conclusions:
(1) the press conference of the State Council Information Office has further strengthened the confidence in credit expansion. Therefore, our judgment remains unchanged in the two-dimensional framework of [credit profit]——
In the next six months: ① gradually expand credit; ② Profit decline; 3. The valuation of stocks and bonds is not cheap in the vicinity of the mean value, which corresponds to the early stage of credit expansion, the index range shocks, and the current adjustment will open the space for spring restlessness. The two quarter of spring may be readjust again after the agitation.
Look again in the middle of the year: ① credit continues to expand; ② Profits bottomed out and rebounded; ③ The stock bond yield difference may fall back to the extremely cheap position of – 2x standard deviation; ④ High risk appetite before the 20th National Congress – the index may have index level opportunities in the middle of the year, and positions may become winners and losers at this stage. (2) At present, the CSI 500 already has cost performance. Considering the five main weights of the CSI 500 (medicine, electronics, electronics, military industry and computer), we tend to think that the CSI 500 will rebound at least in stages, and the spring agitation of the growth sector in February is further confirmed. (3) To stabilize the growth direction, the most important thing is to stabilize the manufacturing industry. Two new directions are recommended: [nuclear power] and [5g + industrial Internet].
Risk tips: macroeconomic risk, epidemic risk outside China, risk of performance falling short of expectations, etc
