Omicron epidemic in the United States may reach its peak
The central bank announced that the LPR over one-year and five-year terms were reduced by 10 and 5 basis points respectively
Many ministries and commissions interviewed Internet platforms to protect the rights and interests of workers and prevent unfair competition
New highlights: 1) covid-19 epidemic update: the number of infected people in the United States has a downward trend. As of January 23, the number of new cases per million population in the United States (7-day moving average) was 2046 (January 16: 2406). In Europe, the number of infections in the UK, Italy and Spain may have reached a peak. On January 23, the number of new cases per million population (7-day moving average) was 1350, 2879 and 2697 respectively (January 16: 1562, 3005 and 2836). The number of infections in Germany and France continued to rise. On January 23, the number of new cases per million population (7-day moving average) was 1280 and 5343 respectively, up 61% and 22% respectively from January 16. 2) China’s monetary policy: on January 20, the central bank announced that the one-year LPR was reduced by 10 basis points to 3.70%, and the five-year LPR was reduced by 5 basis points to 4.60%. On January 21, the central bank lowered the overnight, seven day and one month standing lending facility (SLF) interest rates by 10 basis points to 2.95%, 3.10% and 3.45%. 3) China US Relations: on January 19, US President Joe Biden said it was too early to make a commitment to abolish US tariffs on Chinese goods because China failed to fulfill its procurement commitments in the first phase of the trade agreement. On January 20, a bipartisan group composed of more than 140 members of the house of representatives sent a letter to us trade representative Dai Qi, urging the latter to expand the scope of tariff exemption for Chinese goods exported to the United States and extend the retroactive period to protect us manufacturing workers. The joint letter said that the scope of the exemption procedure announced in October last year was too narrow, only 1% of the scope of application of the earlier exemption procedure. On January 21, the US State Department announced sanctions against three Chinese enterprises on the grounds of “engaging in missile technology proliferation activities”. China criticized the sanctions imposed by the United States as a typical act of bullying. 4) Internet regulation: on January 20, the communique of the Sixth Plenary Session of the 19th Central Commission for Discipline Inspection of the Communist Party of China was released, saying that it was necessary to “focus on investigating and dealing with the corruption behind the disorderly expansion of capital and platform monopoly, and cut off the link between power and capital”. On January 20, the Ministry of communications and others interviewed the four Internet road freight platform companies and reminded the four online car Hailing platforms, which mainly involved the problems intensively reflected by truck drivers recently, including randomly adjusting pricing rules and inducing vicious low-cost competition, and required the platform companies to make rectification. On January 21, the Ministry of human resources and social security and other four departments jointly carried out administrative guidance to 11 head platform enterprises on safeguarding the labor security rights and interests of workers in the new employment form, and required to strengthen the supervision of labor cooperation enterprises to protect the rights and interests of workers.
Macroeconomic data: China: 1) the National Bureau of Statistics announced the year-on-year growth rate of GDP in different industries in the fourth quarter of 2021. Among them, the GDP of construction industry and real estate industry decreased by 2.1% and 2.9% respectively year-on-year, and the GDP of information transmission, software and information technology services increased by 11.5% year-on-year. Us: 1) sales of existing homes fell 4.6% month on month in December, lower than expected (November: 2.2%). 2) Housing starts rose 1.4% month on month (MOM) in December, exceeding expectations (November: 8.1%). 3) Construction permits increased by 9.1% month on month in December, exceeding expectations (November: 3.9%).
Stock Market Overview: the Hang Seng, MSCI China and CSI 300 index rose 2.4%, 1.5% and 1.1% respectively in the past week. MSCI China Index: the real estate (+ 9.2%) and insurance (+ 5.9%) sectors outperformed the market, while the healthcare (- 2.6%) and public utilities (- 1.2%) sectors performed poorly. The valuation of Hang Seng / MSCI China / CSI 300 index is 11.7 times / 12.9 times / 14.4 times forward-looking P / E ratio respectively (the median level in the past three years is 11.2 times / 13.3 times / 13.1 times). We reiterate our view that Hong Kong stocks are expected to come out of the bottom and usher in a rising market in 2022. We are optimistic about the pro cyclical sector, offline consumption targets, some real estate targets with stable balance sheets, etc. Main risks: 1) the economic recovery is weak and the policy strength is less than expected; 2) Sino US relations; 3) US stocks callback.
