The game has turned. This week (from January 17 to January 21, 2022), the A-share market as a whole is still down, with the market and value style leading, and the small and medium-sized growth style leading the market. The return of value is becoming a market consensus. We once pointed out in how long to wait that the short issuance cycle of public funds depends on the expansion of residents' balance sheet brought by real estate. A wide currency without wide credit is not a force driving the market upward, and wide credit may be an opportunity. On Monday, both MLF interest rate and reverse repo interest rate were lowered by 10bp. On Thursday, the five-year LPR interest rate was lowered by 5bp. The broad currency moved from expectation to reality, but the market did not respond positively. In addition to the falsification of the logic of "wide money brings scarce prosperity and upward asset valuation", we also found that some recent popular theme concept sectors that do not rely on the pricing power of public funds have also experienced significant pullbacks. On the contrary, the assets "related to macro economy" that the whole market is most reluctant to face have shown relative toughness: the pro cyclical sectors such as coal, banking, household appliances, construction, building materials and real estate have achieved positive returns.
Risks are linked and contagious, but hope is brewing. At present, two risks are already on the way of Pricing: first, the synergy of Chinese and American stock market styles is rising. We have explained the sources of the above risks in the "consensus" of gradual shift and "how long to wait" for two consecutive weeks: on the one hand, the financing cost of global transaction funds is linked to the real interest rate of the United States; On the other hand, the historical resumption shows that the range in which the linkage between China and the United States stock markets is enhanced often corresponds to the range in which China and the United States monetary policy deviates from. But in the fluctuation, the global undervalued style shows resilience together: in fact, the value style of China and the United States stock markets has begun to significantly outperform the growth style recently. Compared with A-Shares and Hong Kong shares, the cheaper Hong Kong shares in the A-H Share Premium perform better. When the cost of capital begins to rise, the "good price" begins to become important, and this "resilience" is not only relative income, But a considerable "absolute return". Second, in the process of market adjustment, the "contagion" between heavy positions may have begun to affect the market. In short, since the public fund holds a large number of stocks accounting for more than 9% of the net value, when the decline of heavy positions in one sector causes the heavy positions in another sector to rise to the upper limit, the fund can only choose to reduce its positions passively, resulting in the coordinated decline between heavy positions. Under our calculation, the industries with the risk of coordinated decline are: consumer services - Food and beverage, electronics - Food and beverage Dianxin - Food and beverage, electronics - Dianxin. The good news is: Historically, the withdrawal range of heavy stocks is 25% - 50%, while more than 30% of semiconductors, new energy vehicles and photovoltaic stocks have entered this range. In contrast, the value style abandoned by institutions in recent three years has become a safe haven.
Focus on inflation rather than the difference between nominal interest rates and the anchor switching of pricing. In the past research on the interest rate difference between China and the United States, monetary policy has almost become the only determinant: first, the inflation difference itself is small; second, the interest rate is also the cause of inflation under the general framework. A small increase in interest rate can suppress inflation. However, after the epidemic, we found that the center of inflation has increased significantly in both countries, and the differences and fluctuations are also expanding. Inflation is becoming a more important factor: under the framework driven by the classical demand cycle, interest rate is the cause of inflation; However, under the background of the change of labor structure, the long-term lack of capital expenditure in traditional industries and the reduction of short-term efficiency caused by carbon neutralization, the whole world will show the characteristics of supply driving inflation. Inflation is becoming the cause of interest rate, and the differential fluctuation of inflation is becoming a more important factor affecting real interest rate. If we understand the "Deviation" of monetary policy between China and the United States from the perspective of "Monetary Policy vs inflation", we will know the opportunity for the convergence of the differences between the two in the future: on the one hand, the interest rate cut will ease the past investors' concerns about the debt problems and sustainability of traditional industries, and also help China's demand rebound; On the other hand, the inflation level of the two countries may converge, which is conducive to the profit restoration of traditional industries.
If "dead", then War: the sharp withdrawal of the portfolio to avoid the problem of aggregate economy is forcing investors in the whole market to gather a new consensus, which indicates that new opportunities are being bred in the market. We can't expect the end of short-term fluctuations, but the market opportunities are already emerging. Investors should not only focus on the risks in the market, but rather think ahead rather than stop. Our suggestion is: pay attention to the recovery of credit, pay attention to the elasticity of inflation, and embrace the return of value. Recommended: nonferrous metals (copper, aluminum, gold), banks, coal, real estate, steel and crude oil (oil and gas exploitation, oil transportation). On the theme, Rural Revitalization (digital government, county consumption) is recommended.
Risk tip: China's liquidity is looser than expected; The implementation of steady growth policy is less than expected; Measurement error.
