1. Overseas Markets: The geopolitical tensions escalated, and the global market fluctuated greatly.Russia-Ukraine conflict escalates to FedcurrencyThe impact of the policy is both positive and negative: on the one hand, continued tension in geopolitical events mayoil priceGrid further pushes up global inflation and accelerates the process of raising interest rates in the United States and Europe. On the other hand, once the United States and the European Union launch economic sanctions against Russia, major countries such as Europe and the United States may be subject to the influence of cross-border industrial chains and delay economic recovery. A delay in the recovery will, in turn, reduce the probability of a Fed rate hike in March. According to CME’s observation, the market’s expectations for the Fed’s March interest rate meeting to raise interest rates have declined. The current market expects a 24% probability of a 50bp rate hike in March, compared with 49% two weeks ago.
2. The impact of geo-risk events on the equity market is usually short-lived. In the early stage of geopolitical events, global market volatility is mostly caused by the decline in investor risk appetite. Unless the event pushes the economy into recession, the escalation of the Russian-Ukrainian conflict may also be temporary for the volatility of the A-share market. First, once the United States and NATO members launch economic sanctions against Russia, the supply of the global industrial chain will be further frustrated. At that time, my country is expected to continue to enjoy a “double surplus” in foreign trade with a complete product supply chain; second, the current RMB assets have been given. The risk-averse attribute can be seen from the exchange rate between China and the United States; third, from the perspective of A-shares themselves, the current A-share risk premium is close to the historical average and double the standard deviation, and the A-share market is more cost-effective.
3. The core variable of domestic economic recovery is not external factors, but the timing of the credit easing effect. The National Standing Committee on January 10 pointed out that the current economic operation is at the juncture of climbing and crossing the threshold, and stable growth must be placed in a more prominent position.credit, Social finance data exceeded expectations also confirmed that the current “steady growth” policy is gradually strengthening. Recently, a number of ministries and commissions have made intensive voices, and meetings have been held from the central to the local level to set priorities for this year’s economic work, and have deployed a series of specific measures to stabilize industrial operations, promote consumption, stabilize investment, and bail out small and medium-sized enterprises. In the context of economic work with stability at the forefront and seeking progress while maintaining stability, proactive fiscal policy will continue to exert force to improve efficiency, and monetary policy will intensify cross- and counter-cyclical adjustments.
4. Investment strategy: Repeated grinding of the bottom is more solid, and the three main lines are bargain-hunting layout. Affected by geopolitical emergencies, the decline in investor risk appetite has led to increased global asset volatility.
Given that my country has a complete industrial chain, and domestic inflation pressure is not high, RMB assets have been given the attribute of hedging, and it is expected that the disturbance of overseas risk events to the A-share market will be short-lived. In the follow-up National Two Sessions, it is expected that the policy of stabilizing growth will continue to be implemented intensively, and A-shares are still in the policy dividend period; in addition, A-share companies have successively entered the first quarterly report disclosure period of the annual report, and the sectors with high profit growth and economic reversal will become the main line. In terms of allocation, three main investment lines are deployed on dips: First, the policy is to allocate varieties of “steady growth”, such as “stable growth”.Bankreal estate, building materials and construction”, etc.; the second is to benefit from the expected price increase (price increase),”food and drinkbreeding,agricultural products”, etc.; the third is related to the themes that benefit from policy (support) promotion, such as “new energy (vehicles), digital economy, eastern and western computing, agriculture, rural areas and farmers” and so on.
Risk warning: Geo-risks escalate; domestic and foreign epidemics are repeated; overseas markets fluctuate greatly; corporate profits are lower than expected, etc.
(Article Source:West China Securities）