Summary
Under the convergence of negative factors, the market will still face periodic pressure, and it is necessary to focus on the marginal impact of overseas liquidity risk and real estate credit risk on the market. But on the whole, the bottom of the market has been approaching, and the bargain-hunting layout a few years ago is waiting for the Chinese New Year. Structurally, it follows the direction of low valuation, grasps consumption and infrastructure, and recommends live pigs/new infrastructure/home appliances/consumer electronics.
The general trend is judged: the bottom is approaching, waiting for the new year.This week, the market continued its volatile downward trend.The Shanghai Composite IndexThe cumulative decline was 1.63%, and the market will still face periodic pressures under the convergence of negative factors. However, considering that the current market transaction congestion is significantly lower than that at the beginning of 2021, we believe that it is difficult to form negative feedback → the market has bottomed out, and we will wait for the new year for bargain hunting.1) Intensive deduction of current negative factors:Negative disturbance at the denominator end is the core contradiction in the recent market. On the one hand, the minutes of the Fed’s December interest rate meeting released a strong hawkish signal, which affected the 10-year U.S. bond yields to rise rapidly.In the market, the domestic first half of thecurrencyOn the basis of consistent expectations, the impact of overseas disturbances on market liquidity expectations is marginally amplified. On the other hand, the superposition of real estate credit risk and Omikron intensifies the pressure of domestic epidemic control, so that the risk appetite at the denominator side is still suppressed.2) But the market downturn has a bottom:The current market congestion is low → the possibility of stampede is low → the market downturn is bottomed out, which is not comparable to the market in February 2021. Looking forward to after the Spring Festival, the negative factors centered on overseas liquidity risks will be gradually implemented and digested. At the same time, with the successive completion of the transition of provincial party and government organs, the policy of stabilizing growth will be gradually promoted and exerted, and the market is expected to gradually recover. . On the whole, we made a bargain-hunting layout a few years ago and waited for the Chinese New Year.
There are two core contradictions that currently dominate the market operation: 1) Domestic liquidity expectations are gradually becoming consistent, but overseas liquidity expectations will continue to be highly volatile, becoming an important factor affecting the rhythm of market operation.From the perspective of marginal changes, the current market expectations for domestic liquidity are relatively consistent. Although there are still some differences in specific operations, there is no disagreement on the rhythm of loose money. Specifically, in the first quarter of 2022, under the influence of various factors such as the pressure of New Year’s funds, the pressure of stable growth, and real estate risks, it is possible to reduce the RRR 1-2 times again, and reduce the MLF at the same time.interest rateThe window is also in the first half of the year. However, overseas liquidity is expected to remain in high volatility, which will become an important factor affecting the rhythm of the market. On Monday, Powell stated that the Fed has taken measures to achieve normalization. “This is a long road to normality.” Looking ahead, wage growth has accelerated month-on-month and supply chain issues have disrupted inflation pressures ahead of the March interest rate meeting, and overseas liquidity expectations are still in a state of instability.2) The most dangerous moment for real estate credit risk has not yet passed, and the large-scale overseas debt maturity in the first quarter will face a severe test.Since January, there have been frequent thunderstorms and work stoppages in the real estate industry. This week, the real estate chain led the decline in the entire market, which also shows that the market is still worried about real estate risks. Looking ahead, the debt repayment of real estate companies in the first quarter will usher in a peak, of which the maturity of overseas debt of US$19.25 billion will further increase the risk.
The style is switched, and the water flows low. 1) In the short term, the market is accelerating the high-low switching.The recent structural market situation has gradually shown the characteristics of high and low switching. Since the beginning of January, the low price-to-book ratio index and the low price-to-earnings ratio index have risen by 1.76% and 1.26% respectively, while the corresponding high price-to-book ratio index and high price-earnings ratio index have respectively fallen. 8.16% vs -6.81%. At present, the impact of negative expectations on overseas liquidity and the low risk appetite, we believe that the market style will accelerate the switch to the low valuation style.2) From a medium-term perspective, we should also grasp the direction of valuation repair under the improvement of fundamentals.Further from the perspective of the medium term, with the weakening of profit contribution in 2022, the excess returns of the market will also come from valuation repairs. At the same time, considering the limitations of time and space for loose expectations, the valuation side does not have the basis for a comprehensive uplift. We should focus on the direction of valuation repair, and the positive feedback mechanism of fundamentals will further determine the slope of valuation repair.
Industry configuration:1) Consumption: live pigs/home appliances/furniture and social services/tourism/liquor; 2) Infrastructure: building materials/construction/electricity operation; 3) Finance:brokerage、Bank；4)Consumer Electronics。
(Article source: Chen Xianshun’s strategy research)
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