Source: West China Strategy Team
Investment Highlights
, Federal Reserve Monetary policy hawks turn, A shares sentiment is disturbed by overseas stock markets.
This round of A-share market adjustments and declines, the main reasons are: 1) The market's expectations for Federal Reserve's interest rate hike have heated up, and the upward yield of US bond has led to increased volatility in global risk assets; 2) Under the general tone of "housing for living, not for speculation", the market has doubts about the relaxation of domestic monetary policy; 3) At the end of the year, some popular domestic public offering products have stopped or restricted subscription, resulting in misalignment of "supply and demand" on the A-share funds, insufficient motivation to enter the market, and A-shares are showing a stock game as a whole.
2. There is no need to be too pessimistic in the future market, and the conditions for A-shares to stabilize may be gradually met. 1) The current market expects the Federal Reserve to raise interest rates more fully. It is expected that will raise interest rates 54-6 times this year, and the probability of hiking interest rates 7 times is also increasing; 2) The shift in overseas policies will not restrict the orientation of domestic monetary policy, and the domestic market will still be in the "broad currency" window in the next 1-2 quarters; 3) public fund has started a self-purchase wave, and at the same time, the subscription restrictions for popular fund products are gradually relaxing, which is conducive to incremental funds flowing into A-shares and building a "market bottom" of A-shares; 4) "Lan credit" is the ultimate demand, infrastructure and real estate are important tools, and industrial policies such as new energy (vehicles), digital economy are relatively strong.
. If A-shares continue to stabilize, who will become the pioneer of rebound?
) Real estate and upstream and downstream industrial chain . Against the background of the demand for "stable growth" of the economy, it is expected that the subsequent real estate policy regulation in various places will still be adjusted marginally. Real estate and upstream and downstream industrial chains will benefit from the marginal improvement of policies, and sector valuations are expected to be restored. stocks focus on central enterprises whose market share has increased.
) New energy, new energy vehicle . Currently, new energy and new energy vehicles are in a stage of high prosperity development, and domestic policies still have strong certainty in the support of new energy and new energy vehicles in the fields of . On January 10, the National Development and Reform Commission of , the National Energy Administration of and other departments jointly issued the "Implementation Opinions on Further Improving the Service Guarantee Capacity of Electric Vehicle Charging Infrastructure"; on January 21, the National Development and Reform Commission and seven other departments jointly issued the "Implementation Plan for Promoting Green Consumption", proposing to vigorously promote new energy vehicles and gradually cancel restrictions on purchasing new energy vehicles in various places; local Two Sessions also steadily and orderly promote the local "dual carbon" system.
) Digital Economy. Since the beginning of this year, the digital economy field has continued to usher in policy catalysis. The State Council officially issued the "14th Five-Year Plan for Digital Economy Development", proposing that by 2025, the added value of the core industry in the digital economy will account for 10% of the proportion of GDP. Recently, the local two sessions have also intensively deployed the development of the digital economy, and many provinces have put forward specific development goals, and the digital economy field is expected to usher in accelerated development.
) Others: benefited from the policy-intensive catalysis of seed industry sector, pig breeding sector, which reversed the bottom of the pig cycle, etc.
■Risk warning: The epidemic situation at home and abroad has repeated; overseas markets have fluctuated significantly; corporate profits are lower than expected; overseas black swan events (political risks, sovereign rating downgrades), etc.
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main text
1 The Federal Reserve's monetary policy hawkish turn, and the sentiment of A-shares is disturbed by overseas stock markets
to the present (as of 2/4), the trend of A-shares is relatively weak, with the rise and fall of the Shanghai Composite Index , Shenzhen Component Index and ChiNext Index ranges: -7.65%, -10.29%, and -12.45% respectively; the adjustment ranges of military industry, power equipment, medicine, electronics and other tracks are relatively large. The main reasons for this round of A-share market adjustment decline:
1) The Federal Reserve's monetary policy is turning to hawkish, the market's expectations for the Federal Reserve's interest rate hikes have heated up, the rise in US Treasury yields has led to increased volatility in risky assets, and the sentiment of A-shares is disturbed by overseas stock markets. Since January, the Federal Reserve has almost unified the "hawkish" position. Due to this, volatility in the U.S. stock has increased. Since the beginning of the year (as of 2/4), the U.S. stock Nasdaq index , S&P 500 index , and Dow Jones Industrial Index have fallen by 9.89%, 5.57%, and 3.44%, respectively.The tone of the Federal Reserve's January interest rate meeting was biased, and the statement said: "As the inflation rate is far higher than 2% and the labor market is strong, the committee is expected to raise the target range of the federal funds interest rate soon." Powell said at a press conference after the interest rate resolution, "In view of the intensified inflation and the strong labor market, the Federal Reserve will continue to adjust its policies, and it is not ruled out that interest rates will be raised at every FOMC meeting."
2) Under the general tone of "housing for living, not for speculation", the market has doubts about the relaxation of domestic monetary policy. In the fourth quarter of 2021, the "policy bottom" of real estate has emerged, and the real estate industry policies have undergone marginal adjustments. In December, Central Economic Work Conference added "Promote the construction of affordable housing to support the commercial housing market to better meet the reasonable housing needs of home buyers, and implement policies based on the city to promote the virtuous cycle and healthy development of the real estate industry." However, the weaker expectations of residents' real estate market have made home purchase behavior more cautious, and the demand for medium- and long-term loans is relatively weak. Financial data in December showed that new credit was lower than expected. In December, new residents' medium- and long-term loans were 5355.8 billion yuan, while increased by 83.4 billion yuan year-on-year compared with , weaker than seasonal laws.
3) Inadequate motivation for incremental funds to enter the market, and A-shares are showing a stock game as a whole. At the end of the year, some popular domestic public offering products controlled the growth of scale, and stopped or restricted subscription, resulting in misalignment of "supply and demand" on the A-share funds; in terms of issuance of funds, the issuance of new funds at the beginning of this year was relatively dull, with 94.1 billion shares issued by stock + mixed funds, lower than the same period in the past two years, indicating that some off-market funds are still waiting and watching.
2A shares may gradually meet the conditions for stabilization of A-shares. There is no need to be too pessimistic in the future. A-shares fell rapidly in the early stage. Even if they are in the process of adjustment, there will be a " oversold rebound " at a certain stage, and the conditions for stabilization of A-shares may be gradually met:
) The tone of the Federal Reserve's January interest rate meeting in the Federal Reserve is relatively "eagle", but the current market expects the Federal Reserve's interest rate hikes are relatively sufficient.
In the context of the continued rise in U.S. inflation and the unemployment rate is at a low level, the contraction of this round of Federal Reserve's monetary policy may be faster in the early stage. Judging from the latest CME Federal Reserve observations, after the Fed's January interest rate agenda meeting statement was released, the market has fully expected interest rate hikes 4-6 times this year, and the probability of hikes 7 times (i.e., hikes interest rates at every FOMC meeting) is also increasing.
) The shift in overseas policies will not restrict the domestic monetary policy orientation, and the domestic market will still be in the "loose currency" window in the next 1-2 quarters.
At the Central Economic Work Conference in December 2021, it has been confirmed that "stability" is the general tone of this year's policy. Facing the triple pressure of "demand contraction, supply shock, and weakening expectations", the meeting clearly mentioned that "all regions and departments must shoulder the responsibility of stabilizing the macroeconomic , and all parties should actively introduce policies that are conducive to economic stability, and make appropriate efforts to advance." Since December, the central bank's reserve requirement ratio cuts and interest rates have been implemented: in December, the central bank lowered the reserve requirement ratio by 0.5 percentage points, lowered the interest rate for 4 small re-lending support for agriculture by 0.25 percentage points, guiding the 1-year LPR to decline by 5 basis points, and transforming the two direct tools into market-oriented policy tools to support small and micro enterprises; in January, the MLF, OMO, and SLF interest rates were all lowered by 10BP, the 1-year LPR was lowered by 10BP, and the 5-year LPR was lowered by 5BP. At the 2021 financial statistics press conference, Liu Guoqiang, deputy governor of the People's Bank of China, said that the current focus is "stability", and the policy requirements are to make efforts, one is to make sufficient efforts, two is to make precise efforts, and three is to make efforts from the front and take the lead in the market curve. The central bank's interest rate cut in January aims to drive down the cost of the capital side, reduce the costs of the real economy sector, stabilize and improve expectations. Combined with the statements at the central bank's financial data press conference, the central bank's demand for stabilizing growth has been very clear. From the guidance of broad currency to broad credit time period, the market will still be in the "wide currency" window in the next 1-2 quarters, and domestic macro liquidity is expected to remain relatively abundant.
) Public funds have started a wave of self-purchasing, and at the same time, the subscription restrictions for popular fund products are gradually relaxed, which is conducive to the inflow of incremental funds into A-shares, demonstrating institutional confidence, and building a "market bottom" for A-shares.
Although the market risk preference has been sluggish recently, based on its confidence in the long-term and stable development of the A-share market, many public funds have announced the subscription of their funds with their own funds. From January 26 to January 28 alone, 22 public funds announced their own purchases, with a scale of over 1.4 billion yuan. In addition, recently, many popular fund products under Ruiyuan Fund, E Fund Fund and Fuguo Fund have gradually relaxed subscription restrictions.
The increase in the scale of self-purchase of public funds is not equivalent to a buying signal, but when the market falls to a certain extent or continues for a period of time, the start of self-purchase of public funds is often one of the signals that the market builds a bottom. For example, from June to August 2015, public funds had large net subscriptions, and the A-share market rebounded in September; from February to April 2020, public funds had large net subscriptions, and the A-share market rebounded in April. large-scale self-purchase of public funds will inject incremental funds into A-shares, which also shows the institutions' confidence in the long-term healthy and stable development of China's capital market, which will help stabilize market sentiment.
) "Let the credit" is the ultimate demand, infrastructure and real estate are important tools, and industrial policies such as new energy (vehicles), digital economy are still relatively strong.
Director Han Wenxiu of the Central Financial Office previously mentioned that "actively introduce policies that are conducive to economic stability and cautiously introduce policies with contraction effects." On January 20, the Ministry of Housing and Urban-Rural Development held a meeting to deploy work for 2022, expressing that it has added "full release of the potential for residents' housing demand", and the press conference of the People's Bank of China also mentioned that "policies are implemented according to the city to promote the virtuous cycle and healthy development of the real estate industry". It is expected that in the future, the real estate regulation policies in various places will be adjusted marginally; in 2022, the meeting also mentioned that "promote the construction of affordable housing, implement urban renewal actions, promote the construction of new urban infrastructure , and accelerate the transformation and upgrading of the construction industry". With the efforts of new and old infrastructure in various places and marginal adjustments in real estate policies according to cities, domestic economic growth is expected to gradually stabilize.
In terms of industrial policies, the support for industrial policies such as new energy (vehicles), digital economy, etc. is still relatively strong. Recently, the National Development and Reform Commission and seven other departments jointly issued the "Implementation Plan for Promoting Green Consumption", proposing support measures such as "vigorously promote new energy vehicles and gradually cancel restrictions on purchasing new energy vehicles in various places" and "government agencies will take the lead in purchasing"; the State Council issued the "14th Five-Year Plan for Digital Economy Development", proposing that by 2025, the digital economy will enter a period of comprehensive expansion, and the added value of the core industries of the digital economy will account for 10% of GDP.
3 If A-shares continue to stabilize, who will become the pioneer of the rebound?
.1. Real estate and upstream and downstream industrial chain
Compared with the previous strict real estate policies, real estate policies are in the process of fine-tuning. At the Central Economic Work Conference in December 2021, we continued to adhere to the positioning of "houses are for living, not for speculation". At the same time, compared with previous economic meetings, new "promoting the construction of affordable housing, supporting the commercial housing market to better meet the reasonable housing needs of home buyers, and implementing policies based on cities to promote the virtuous cycle and healthy development of the real estate industry."
htmlOn January 20, the Ministry of Housing and Urban-Rural Development held a meeting to deploy the work for 2022, expressing the addition of "full release of the potential for residents' housing demand"; the 2021 financial statistics press conference also mentioned "taking policies based on cities to promote the virtuous cycle and healthy development of the real estate industry." Real estate financing has also shown some signs of improvement recently. For example: On January 13, the status of the project of the public issuance of corporate bonds to professional investors in 2022 was updated to "accepted"; on January 14, China Overseas Enterprise Development Group successfully issued 3 billion yuan of medium-term notes; on January 27, Vanke issued 3 billion yuan of medium-term notes, intending to be used for the construction of in the commercial housing project.Under the background of the economic demand for "stable growth", it is expected that the subsequent real estate policy regulation in various places will still be adjusted marginally. Real estate and upstream and downstream industrial chains will benefit from the marginal improvement of policies, sector valuations are expected to be restored, and individual stocks focus on central enterprises with increased market share.
.2. New energy and new energy vehicles
14th Five-Year Plan proposes that during the 14th Five-Year Plan, we should "build modern energy system ", the proportion of non-fossil energy in total energy consumption will increase to about 20%, and the energy consumption per unit of GDP and carbon dioxide emissions will be reduced by 13.5% and 18% respectively. Since 2021, my country's "dual carbon" 1+N policy system has been gradually implemented. On October 24, 2021, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Complete, Accurate and Comprehensive Implementing the New Development Concept to Do a Good Job in Carbon Peak and Carbon Neutrality". On October 26, the State Council officially issued the "Action Plan for Carbon Peak before 2030". The "Opinions" and the "Plan" together constitute the top-level design throughout the two stages of carbon peak and carbon neutrality , and clarified the roadmap from 10 aspects and 31 key tasks.
Under the background of "dual carbon", new energy and new energy vehicles have broad room for development, and the local two sessions have also steadily and orderly promoted the local "dual carbon" system. At present, new energy and new energy vehicles are in a stage of high prosperity development, and domestic policies still have strong certainty in support of new energy and new energy vehicles.
On January 10, 2022, the National Development and Reform Commission, the National Energy Administration and other departments jointly issued the "Implementation Opinions on Further Improving the Service Guarantee Capacity of Electric Vehicle Charging Infrastructure". The requirements for the formulation of provincial and municipal charging infrastructure layout planning are put forward, and the construction requirements for various charging infrastructure such as urban public, county towns and townships, highways, units and parks are clarified, providing target guidance for accelerating the formation of a moderately advanced, balanced layout, intelligent and efficient charging infrastructure system during the "14th Five-Year Plan" period.
On January 21, 2022, the National Development and Reform Commission and seven other major departments jointly issued the "Implementation Plan for Promoting Green Consumption". It is proposed to vigorously promote new energy vehicles, gradually cancel restrictions on purchasing new energy vehicles in various places, promote the implementation of support policies such as traffic restrictions and road rights , strengthen the construction of supporting infrastructure such as charging and swapping, new energy storage, and hydrogen refueling, and actively promote the development of vehicle and ship LNG; promote the pilot application of new energy vehicle battery swapping mode, and orderly carry out fuel cell vehicle demonstration application; carry out in-depth activities of new energy vehicle going to the countryside.
.3. Digital Economy
Since this year, the digital economy field has continued to usher in policy catalysis. On January 12, 2022, the State Council officially issued the "14th Five-Year Plan for Digital Economy Development" and proposed specific quantitative indicators for the development of the digital economy in 2025. proposes that by 2025, the digital economy will enter a period of comprehensive expansion, with the added value of the core industries of the digital economy accounting for 10% of GDP, the scale of the software and information technology service industry reaching 14 trillion yuan, and the penetration rate of industrial Internet platform applications exceeding 45%. By 2035, the digital economy will enter a period of prosperity and maturity, and strive to form a unified, fair, competitive, orderly, mature and complete modern digital economy market system, and ranks among the forefront of the world in the development foundation and industrial system development level.
htmlOn January 15, General Secretary Xi Jinping published "Continuously Strengthen, Improve and Enlarge my country's Digital Economy" in the magazine Qiushi, proposing: We must stand at the height of coordinating the overall strategic situation of the great rejuvenation of the Chinese nation and the great changes in the world that have not been seen in a century,... Promote the deep integration of digital technology and the real economy, empower the transformation and upgrading of traditional industries, give birth to new industries, new business forms and new models, and continuously strengthen, improve and expand my country's digital economy. We must strengthen the research and development of key core technologies, accelerate the construction of new infrastructure, focus on breaking through key software, promote the integrated development of the digital economy and the real economy, and promote the development of digital industries in key areas. htmlOn January 16, the National Development and Reform Commission issued a document "Vigorally Promote the Healthy Development of my country's Digital Economy", proposing to concentrate efforts on promoting key core technologies, accelerate the realization of high-level self-reliance and self-improvement; moderately advance the construction of new infrastructure, consolidate the foundation for the development of the digital economy; deepen the digital transformation of traditional industries, and accelerate the deep integration of digital technology and the real economy.Local two sessions intensively deploy the development of the digital economy, and many provinces have put forward specific development goals, and the digital economy field is expected to usher in accelerated development. For example: Tibet proposes to strive for a 10% growth in the scale of the digital economy; Henan Province proposes to strive for a 15% growth in the digital economy; Shanghai proposes to build 30 digital empowerment platforms for manufacturing and build 40 new demonstration smart factories; Zhejiang Province proposes to increase the added value of the core industries of the digital economy by 12%, and Hubei Province proposes to increase the added value of the core industries of the digital economy by more than 20%.
4 Risk warning
The epidemic situation at home and abroad has repeated; overseas markets fluctuated sharply; corporate profits are lower than expected; overseas black swan events (political risks, sovereign rating downgrades), etc.
