After combing the interest rate reduction cycles in China since 2008, it is found that the defensive sectors or real estate industry chain such as food and beverage, agriculture, forestry, animal husbandry and fishery and leisure services usually outperform the market, but at the same time, there will be sectors rising against the trend due to theme concepts, such as the electronic sector in 2018 and the media sector in 2022.
In 2008, due to the economic downturn, all sectors fell to varying degrees, including cyclical industries such as mining industry. Only the biomedical industry significantly outperformed the market. In 2011, due to the economic downturn, all sectors fell to varying degrees, including light industry manufacturing and electronic industries. The real estate industry chain and the household appliance industry chain, public utilities and leisure service industry driven by the real estate industry chain have relatively outperformed the market. If the stock market crash of that year is included in 2015, the sectors with the best performance from November 2014 to February 2016 are architectural decoration, real estate, textile and clothing. After the adjustment of the stock market, the whole sector fell, and the sectors that outperformed the market were textile and clothing, agriculture, forestry, animal husbandry and fishery and real estate. In 2019, due to the economic downturn, all sectors fell in varying degrees, including mining industry and building decoration industry. The defensive sectors such as food and beverage, medicine and biology relatively outperformed the market, and the electronic industry significantly outperformed the market due to the catalysis of independent innovation and independent controllable concepts. In 2020, due to the impact of the epidemic, all sectors fell to varying degrees, including mining industry, electronics and nonferrous metals. The defensive sectors such as agriculture, forestry, animal husbandry and fishery, food and beverage and leisure services significantly outperformed the market. This round of interest rate cut cycle was affected by style switching, and the electrical equipment, nonferrous metals, national defense and military industry and automobile sectors that rose more in the early stage fell greatly. Driven by the “steady growth”, the counter cyclical sectors such as building materials and building decoration performed well, and the undervalued sectors such as media and real estate also began valuation repair.
In the current period (January 19), the risk premium of A-Shares was 0.60%, 0.09% higher than that in the previous period. The overall profitability of A-Shares improved significantly, PE continued to revise downward, and the yield of 10-year Treasury bonds was 2.74% in the current period, which continued to maintain the investment value of A-share risk premium.
In the current period, semiconductor erp-1.02%, an increase of 0.01% over the previous period, in the allocation range with high risk premium; Pharmaceutical and biological erp0 26%, 0.17% higher than that in the previous period, in the neutral and high allocation range of risk premium; The national defense and military industry erp-1.19%, 0.09% higher than the previous period, is in the neutral normal allocation range of risk premium.
In this period, the overall risk premium of the cycle sector still maintained a high allocation value: in this period, chemical ERP2 44%, a change of 0.12% over the previous period, in the allocation range with high risk premium; Steel erp7 90%, a change of 0.38% over the previous period, which is in the neutral and high allocation range of risk premium; Nonferrous Metals erp0 88%, a change of 0.10% over the previous period, which is in the highest allocation range of risk premium.
In terms of large and medium disk rotation, the price ratio of Shanghai Stock Exchange 50 to China Stock Exchange 500 generally showed a downward trend from 1.13 in mid February to the end of April. After a short recovery in May, it continued to show a downward trend, and the ratio in this period decreased from 0.814 in the previous period to 0.810. The middle market continued to show stronger than the market. In terms of large and small disk rotation, the price ratio between CSI 300 and SSE 2000 has generally shown a downward trend since mid February (this year’s high of 0.85). After a short recovery in May, it has continued to show a downward trend, and the ratio in this period has decreased from 0.504 in the previous period to 0.501. Small cap continues to be stronger than the overall trend.
In the current period, the dividend yield of Wande quana changed from 1.46% in the previous period to 1.48% in the current period. The ten-year Treasury bond yield Wande quana dividend yield was 1.2546%, and the distance from the warning value of 2.5% (the highest point of the bull market in the past) changed from 116.43bp in the previous period to 124.54bp in the current period. The dividend yield of SSE 50 changed from 1.47% in the previous period to 1.48% in the current period. The yield of ten-year Treasury bonds – the dividend yield of SSE 50 was 0.1125%, and the distance from the warning value of 1.1% changed from 89.12bp in the previous period to 98.75bp in the current period. The dividend yield of Shanghai and Shenzhen 300 changed from 2.59% in the previous period to 2.62% in the current period. The yield of ten-year Treasury bonds – dividend yield of Shanghai and Shenzhen 300 was 0.7517%, and the distance from the warning value of 1.8% changed from 96.04bp in the previous period to 104.83bp in the current period. The dividend yield of China Securities 500 changed from 1.96% in the previous period to 1.98% in the current period. The yield of ten-year Treasury bonds – the dividend yield of China Securities 500 was 1.2487%, and the distance from the warning value of 3% changed from 167.04bp in the previous period to 175.13bp in the current period.
