General situation research and judgment: valuation repair, wait for the flowers to bloom.Since the beginning of 2022, the A-share market has undergone certain adjustments.Growth Enterprise Market Index, China Securities 1000 Index fell 6.80% and 4.09% respectively. Behind the analysis of market volatility, the core lies in the valuation pressure caused by changes in liquidity expectations at the denominator end. On the one hand, what we see is the further establishment of the demand for stable growth, and the expectation of economic growth has shifted from the original worry about stalling to the expected stabilization; on the other hand, what we see is the market’s consensus judgment on the 22Q2 profit decline. Therefore, the “poor” of molecular profit is not the dominant factor in the current market. In contrast to the denominator, domestic easing expectations tend to be consistent, with a smaller marginal increase.Overlay overseascurrencyThe policy bias has accelerated the market’s adjustment of liquidity expectations, and the investment focus has been switched from high growth to low valuations. On the whole, with steady growth as the anchor, as fundamentals are expected to improve, the valuation restoration channel is opening.
Under the structure: Value returns to the stage.In 2021H2, under the environment of “declining profits + currency widening”, the profit elasticity characteristics will perform better. First, high profit growth during the period of profit decline has the advantage of scarcity; second, the wide currency environment has benefited growth and profit growth. After the Central Economic Work Conference in 2021, the expectations of “wide currency → wide credit” under the tone of stable growth have gradually converged, and the direction of higher valuation and congestion will be under pressure. Correspondingly, since mid-December, the growth sectors of Dianxin, military industry, etc. have recovered, while household appliances, construction, building materials,BankEquivalent value rose against the trend. In the future, on the basis of grasping the high economy, we should face up to the matching degree of profit and valuation, and grasp the investment opportunities of value style.
The inflection point of overseas liquidity has come, and the panic of shrinking the balance sheet should not be excessive.The minutes of the FOMC meeting in December show that the discussion involving the reduction of the table has been very sufficient, andMidlandChu Chu may start the process of shrinking the balance sheet immediately after raising interest rates for the first time.In fact, since the beginning of 2022, the 10-year U.S. Treasuryinterest rateFast upwards to 1.76%, with an upward range of more than 20bp.Structurally, in the context of a slight fall in inflation expectations, the actualinterest rateContributed more than +30bp. In the resumption of the previous round of balance sheet contraction, in the context of tightening liquidity, although the short-term volatility of high-risk/high-value assets will increase, the subsequent core constraint on the US stock market lies in the direction and intensity of profit restoration. In China, since 2011, the 10-year spread between China and the United States was 130bp, and the bottom extreme was once reached around 30bp.Mapped to the A-share market, despite the arrival of the global liquidity inflection point, the relatively loose policy tone is still the main theme before the domestic economy and corporate profits are restored.MidlandIt is not advisable to panic excessively on the shrinking table.
Industry allocation: Focus on low valuation, grasp consumption and infrastructure repair.As the market driving force shifts from the numerator to the denominator, the investment focus is switched from high growth to low valuation. In accordance with the order of steady growth, the correction range of pessimistic expectations is superimposed. Recommendations: 1) Consumption: Accelerate to reach the bottom of expectations ,recommendPerformanceSupporting and diminishing negative expectations, such as pigs, home appliances, furniture, social services/tourism, liquor and other directions; 2) Infrastructure: Infrastructure investment improvement, helping “infrastructure” to exceed expectations in the future: building materials, construction, power operations, etc.; 3) Finance :Brokerage、Bank；4)Consumer Electronics。
(Source: Research on Chen Xianshun’s Strategy)