On April 25, the Shanghai Composite Index plunged more than 5%, losing 3,000 points, the lowest since July 2020.
After hours, the Chinese reporter of the securities company interviewed a number of securities company strategy and macro analysts, and also collected the latest reports of some analysts. The reporter noted that some analysts believe that the current market is already in the bottom area, not pessimistic about the future market, in the long run, at this time the configuration is quite cost-effective.
"Now, the market has become desperate, the funds are free to give up cheap chips, and it is time for people to abandon me." In operation, it is recommended that heavy positions be on the sidelines, and low positions gradually open positions, pay attention to oversold stocks, and pick up cheap chips that have been wrongly killed. One analyst said.
As for the reasons for Monday's sharp market decline, analysts believe that the recurrence of the domestic epidemic is one of the important influencing factors. The performance of some key companies (such as an inverter leader) is significantly lower than expected, which has also caused market concerns about the fundamentals of related industries. In addition, the Fed balance sheet reduction cycle has a high probability of opening, the Sino-US interest rate differential is inverted, and the pressure of capital outflow is also one of the reasons.
The sharp decline stemmed from multi-factor disturbances
The reporter noted that securities companies generally believe that the sharp fall on the 25th comes from the disturbance of many factors, especially the trend of the domestic epidemic has become the focus of market attention in the near future.
Duan Xiaole, a macro analyst at Guojin Securities, believes that for yesterday's sharp fall, the market's concerns come from three major aspects:
1) The domestic epidemic situation is repeated, the outbreak of the epidemic in various places is divergent, the current is the peak season for construction, the lockdown and logistics blockage have caused a significant impact on the current economic activities, and the market's economic concerns about the second quarter have increased;
2) The domestic epidemic has a greater impact on the supply chain of some industries, and overseas orders have begun to gradually transfer out of China to Southeast Asian countries with smooth supply chains such as Vietnam and India, and the market is worried that domestic exports may be lower than expected;
3) In the financial reporting season, the performance of some key companies (such as an inverter leader) was significantly lower than expected, triggering market concerns about the fundamentals of related industries.
Qin Peijing, chief strategist of CITIC Securities, believes that judging by the structural characteristics of the degree of transaction congestion, the recent outflow of funds mainly comes from floating funds and retail investors, judging from valuation, redemption and position, the institutional end of the capital adjustment and reduction is at the end, and the market sentiment has fallen back to near the low point since 2018. The dynamic P/E ratio of major indices has also fallen below the 25% quantile since 2010, with the major blue-chip indices below the 10% quantile since 2018.
Qin Peijing believes that the long-term fundamentals of China's economy will not change, and the current index's medium- and long-term allocation is prominent. It is expected that the annual stable growth target will not change, with the weakening of the impact of the epidemic, the end of the quarterly report disclosure, the three factors of the US dollar interest rate hike as scheduled, the three main lines of infrastructure, real estate and consumption are expected to usher in a synchronous recovery in May, and the medium-term repair market is gradually approaching, it is recommended to continue to adhere to the main line of stable growth, and firmly lay out the low valuation and expected low varieties.
Zhang Chi, chief of the open source securities strategy, believes that the current overall weakening of market fundamentals has not changed, and the core of the rebound is liquidity-driven. The key new variable in April's situation is not optimistic: the epidemic. (1) The epidemic has not only further weakened economic fundamental expectations; (2) the epidemic will also push up domestic CPI expectations, narrowing the actual interest rate differential between China and the United States. (3) The epidemic will increase the demand for funds in the service industry, resulting in the flow of demand funds to entities, thereby squeezing the liquidity of financial markets.
Zhang Chi believes that looking forward to May. The upward trend of overseas US Treasury yields and the repeated situation in Russia and Ukraine will still make the market sentiment fluctuate, but the "epidemic relief" is the key, once the epidemic eases as scheduled: (1) domestic liquidity will continue to strengthen; (2) CPI will fall again; (3) The actual interest rate differential between China and the United States is expected to expand again, and the RMB exchange rate will stabilize again; (4) domestic monetary policy will return to "me-based" - the market will return to the rebound logic of March, liquidity-driven, and the style will still grow.
CICC said that Monday's market correction is a continuation of last week, with more comprehensive internal and external factors, but may be dominated by internal factors. The tightening trend of major overseas central banks continues, geopolitical conflicts are still deadlocked, and major overseas stock indexes have rebounded after March 16, and the overall range has fluctuated since the end of March, without making new lows. However, China's A-shares and Hong Kong stocks have rebounded significantly after a slight rebound, and A-shares have hit a new year-to-date low, which may be more affected by domestic factors. With the increase in the volatility of the RMB exchange rate, the market has paid more attention to the RMB exchange rate and potential capital flows recently, but growth expectations are the more critical factors.
Debon Securities Wu Kaida and others believe that there are two reasons behind Monday's double killing of stock exchanges:
First of all, the epidemic has been repeated, and the resumption of work and production has been slow. Since mid-March, the number of provinces and cities with more than 10 new + asymptomatic cases has remained above 10, and economic activities are bound to be affected under the impact of the epidemic. High-frequency data shows that economic activity is relatively sluggish, on April 24, the quantile of the congestion delay index of the top 10 cities of GDP in 2021 was only 24% of the past three years, the quantile of passenger traffic in 10 cities was 12%, and the number of flight plans was at the lowest. Some listed companies reported a decline in their quarterly performance. Pressure at the outlet end gradually becomes apparent. In March, PMI new export orders were 47.2% (previous value 49%), imports turned negative year-on-year, and the OECD comprehensive leading indicators fell back.
Secondly, the Fed balance sheet reduction cycle is about to open, and the Sino-US interest rate differential is inverted, and the funds have a certain outflow pressure. According to data from the CCASS and the Shanghai Clearing House, the total bond held by overseas institutions fell by 80.4 billion yuan in March, and the total net outflow of northbound funds from March to the present exceeded 48 billion yuan.
A shares will meet the moment of counterattack
Li Meicheng, chief strategist of Caitong Securities, believes that looking forward to the next 1-2 quarters, the market is getting better and better, and the "cheap time" in the current bottom area should be cherished, and A shares are expected to meet the counterattack moment of "Normandy landing" and "unlimited scenery at the dangerous peak".
Li Meichen said that at present, it is in the stage of great pressure on exchange rate expectations, stock market stock game, and pessimistic liquidity. Coupled with the repeated epidemics and other factors, the Shanghai Composite Index is once again close to the previous low, and investors' pessimism is relatively strong. This week is a week of critical decisions, and the uncertainty that investors are concerned about is becoming clear: (1) The Politburo meeting in April set the tone for the economy and epidemic prevention and control in the second quarter, stabilizing investor expectations. (2) The disclosure of the first quarterly report is over, and investors are expected to turn to the mid-report. (3) On May 3 and 4, the Fed interest rate meeting, whether the rhythm of the annual interest rate hike and balance sheet reduction will be "more hawkish", or the price is basically priced in.
First, in terms of economic fundamentals, the comparative advantage of the domestic economy will return. Since the current Chinese fundamentals are hovering at the bottom and Europe and the United States are at the top, if the domestic epidemic improves in the second half of the year, the supply chain recovers, and overseas crosses the recovery high point, the domestic economy will run upwards, and overseas downwards, and our comparative advantage is expected to return.
Second, corporate earnings are expected to gradually stabilize and rebound. From the perspective of the past 20 years, the downward cycle of A-share earnings has been in 6-8 quarters, and the second and third quarters of this year or the bottom of A-share performance will gradually improve in the fourth quarter.
Third, at the liquidity level, the market liquidity situation in the first half of the year was poor, for 2 reasons: 1) the Fed raised interest rates, and funds returned to the United States; 2) the market fell since the beginning of the year, resulting in pressure on the issuance of public funds, and some absolute return products also reduced their positions. In the case of less incremental funds, the market showed a stock game situation throughout the first half of the year. Looking further back, if the Fed does not make a more "eagle" statement in the future, as the comparative advantage of China's economy becomes prominent, overseas funds may return to emerging markets, especially the Chinese market with significant medium- and long-term allocation value.
Wang Delun, chief economist of Industrial Securities Asset Management, believes that the Politburo meeting at the end of April is imminent, and the measures to stabilize growth are expected to be further clarified, while the trend of the domestic epidemic situation has improved, providing favorable conditions for stable growth. The market is expected to raise interest rates by the Federal Reserve in May, and after the FOMC meeting lands, the superimposed resumption of work and production will be carried out in an orderly manner, and the growth sector is expected to usher in a staged respite.
In terms of industry, Wang Delun is optimistic: (1) benefiting from the stimulation of stable growth signals, it is expected to usher in the valuation repair of the financial, cyclical, real estate, construction, building materials and other undervalued sectors; (2) the policy and data effects are more certain of the new infrastructure direction, such as digital economy, power grid transformation, wind power, photovoltaics, etc.: From the perspective of the local two sessions, new infrastructure is one of the main starting points for promoting economic growth in various places, in line with the long-term concepts of "double carbon" and "high-quality development"; (3) the consumption sector related to post-epidemic recovery ;(4) High-end manufacturing sectors that have rebounded from oversold: such as new energy vehicles, semiconductors, military, etc., as well as growth sectors with rising penetration rates from low to high, such as smart cars.
Zhao Wei of Founder Securities said that the bottom is falling out, and the market is born in the process of no longer believing, although this truth is simple to say, it is very difficult to do it in despair and adhere to a belief. Now, the market has become desperate, the funds are free to give up cheap chips, and it is time for people to abandon me to take. In operation, it is recommended that heavy positions be on the sidelines, and those with low positions gradually open positions, pay attention to oversold stocks, pick up cheap chips that have been wrongly killed, avoid delisting risk stocks, and continue to pay attention to the "three low" stocks with low, low prices and low valuations.
Western Securities Yi Bin believes that overall, the current market valuation adjustment has approached the historical limit, from the perspective of the comparison relationship between stocks and bonds, the difference between the current implied yield of A-shares and the yield of 10-year Treasury bonds has also hit a new high since the 2008 financial crisis, showing that the investment value of equity assets is prominent. With the advancement of the epidemic policy and the landing of the Fed's interest rate hike boots in May, the market is expected to usher in a rebound window in the future.
"Buy in the second quarter, harvest in the third quarter"
Chen Guo, chief strategist of CITIC Construction Investment, said that in the hope of despair, Q2 bargain layout, Q3 waiting for the harvest.
Chen Guo said that the environment facing the A-share market, profitability, liquidity and risk appetite are unfavorable is the consensus. But on the one hand, the market position is reduced as a favorable factor. On the other hand, we can only believe in high-probability events to see the market today that we have never seen. The high probability of the second quarter is the bottom of profits, the high probability of the Fed's interest rate hike and balance sheet reduction is the largest in the second quarter (May and June), and the follow-up domestic demand for stable growth continues to rise, the liquidity environment may be marginal improvement is a high probability, and the marginal improvement of epidemic expectations and risk preferences is also a high probability. Buy in the second quarter, harvest in the third quarter, is a high probability.
"I used to think there was a good opportunity for the market at the height of the COVID-19 pandemic in 2020. Today, the epidemic situation in Shanghai and other places also has a variety of different emotions. I believe that from a medium-term strategic perspective, today's Omikejong conforms to the law of human cognition, and the continuous reduction of the toxicity of the new crown marks that human beings have entered the post-epidemic era in sight, no matter what the path, we can hope that life will return to normal. Chen Guo said.
From the perspective of the low-level layout direction, Chen Guo believes that the first probability event is that the epidemic will always improve. Omicron is difficult to control, but Shenzhen has achieved zero, Jilin has also controlled and begun to resume work, and Shanghai will always do it. After Shanghai does this, even if it spreads elsewhere, the market's expectations and sentiment for the epidemic will be better than it is now. Therefore, the direction of damage and repair of the epidemic is worth considering the layout when the stock is pessimistic, and there should be opportunities to make money.
In addition, Chen Guo believes that another high probability event is stable growth and will increase. "Especially after the outbreak is under control, whether it is the first priority or not, it is an important matter. The greater the increase in steady growth, the greater the resilience of the economy to rebound in the third quarter. The structure of stable growth is not clear, but monetary policy as a supporting is certain, every dark cloud has a golden edge, when today's depreciation really comes, on the one hand, it is conducive to tomorrow's exports, on the other hand, it is conducive to the opening of loose space. ”
Chen Guo also said: "Since the end of last year, we have been strategically conservative, and now we are strategically neutral, not radical, but also not blindly retreating, and can be laid out at a low price." Tactically, the most suitable at this stage is not position warfare, but mobile warfare, where small victories are accumulated into big victories. At the same time, it is believed that the conditions will continue to improve, and the day when the turn to the strategic counteroffensive will not be too far away. ”
Guohai Securities Hu Guopeng and others believe that the market ushered in a sharp decline in sentiment catharsis on April 25, but with the sharp adjustment of the market, the indexes gradually entered the value range, and should not be overly pessimistic.
First, after Monday's decline, the valuation quantiles of major indices have been in a relatively cheap position, of which the Shanghai Composite Index and the ChiNext Index are located at about 20% valuation quantile in the past 10 years, and Wonderland Quan A is located at about 30% valuation quantile in the past 10 years.
Second, after effectively controlling the epidemic, adhere to economic construction as the center, stable growth is still the focus of policy efforts, and the implementation of greater macro policies to hedge the impact of the epidemic and return the economy to more than 5% in the second quarter is the basis for achieving the annual target of 5.5%.
Third, from the perspective of overseas disturbance factors, the Fed's tightening expectations are strongest in May-June, and a 50bp interest rate hike in May is almost a foregone conclusion, the market tends to price in advance, and the amplitude and frequency of the Fed's actual interest rate hike in the second half of the year will be lower than the most extreme expectations at present.
Hu Guopeng and others suggested that the layout of bargaining, structural optimism on consumption, focus on three subdivisions. First, the food and beverage, catering and tourism, hotels, automobiles, home appliances and other industries that have been fully adjusted and benefited from the marginal improvement of the epidemic; the second is agriculture, forestry, animal husbandry and fishery, which benefit from rising product prices and inflation; and the third is medicine and biology, which have a low valuation.
Editor-in-charge: Wang Lulu