Source: Debon Securities
Judging from the valuation, market sentiment, profitability, risk premium, policy variables, degree of adjustment and other indicators of historically comparable bottoms from 2005 to the present, the round of downturn in April 2022 has reached the bottom range, but whether the subsequent market uptrend is the opposite There are still some differences between the turn or the rebound.
We believe that the biggest difference between a reversal and a rebound lies in sustainability, and the expected improvement in earnings brought about by a better economy in the future is an important signal to distinguish between a reversal and a rebound . The process of bottoming the market during the bottom consolidation period and the credit cycle often corresponds to the process of stabilizing and recovering economic data. May and June are important times to confirm whether the credit cycle starts to rise. Before confirming the upward trend at the bottom of the credit cycle, between the market’s expectations for the economy and the confirmation of the actual improvement, shock periods occur from time to time. We believe that the current market is still at this stage after the rebound period is over.
In the past few rounds of bottoming, judging from the previous style changes, except in 2013, which led the gains in the early stage of the rebound, the ChiNext and growth stocks, the other bottoms were mainly led by large-cap stocks, and gradually transitioned to small and medium-sized stocks. From the experience of previous bottom industries, we can find that the sectors that rebounded during the bottoming period of the market are often oversold in the previous period, but in the follow-up, the sectors that lead the rise are often the sectors with the least logical resistance from the fundamentals, not the ones with the largest decline in the previous period. plate.
Therefore, the recently compensatory sectors may have released their rising potential to the greatest extent. In the selection of subsequent sectors, it is necessary to follow the logic of fundamental flexibility and capital selection . Varieties that have received more policy support and their own boom cycles tend to be able to There are good excess returns.
Market sentiment has recently diverged, and the “strong and weak recovery” in the early game has become more differentiated, representing the “strong recovery” policy-supported auto, home appliances, and liquor sectors in the post-real estate cycle, and the “weak recovery” in the new energy and electronics sectors. The dividend value sector that is superimposed with the logic of recession expectations, which is a necessary condition for recovery, is in a state of rotation; at the same time, there is also differentiation within the sector. Not all sectors have a general pattern of rising, and funds are always rotated among sub-sectors.
It can be seen that the current market still has not reached an agreement on the choice of sectors after the rebound. The characteristics of the stock game are still relatively obvious, and funds can only choose to concentrate in one direction. The recent strength of the Science and Technology Innovation Board is also the result of insufficient market liquidity. For the overall performance of the sector, the expectation of changes in capital flow can easily lead to changes in the market’s style.
From the perspective of profit expectations, the currently observable economic data and financial data show that the recovery of the economy is still strong production and weak demand. The current policy framework system is still dominated by the bottom line of stabilizing employment. The economic fundamentals for half a year are likely to be dominated by a “weak recovery”.
From the perspective of risk premium, the decoupling of Chinese and US stock markets in the short term , and the difference in economic recovery between the two countries is an important time point for raising the risk premium. The low level of sentiment has already appeared at the end of April. After a repair period of about a month, there is currently no breakthrough for continued upward movement. The unresolved fundamental recovery expectations and credit expansion expectations are still important factors to curb the current market risk appetite.
With the gradual reduction of macro volatility in the second half of the year, the stable sector may no longer be the main target of market transactions. If there are no further framework adjustments and changes in the second half of the year, the trading logic of A-shares in the second half of the year may shift more from macro top-down sector selection to bottom-up individual stock opportunities.
From the perspective of valuation, after the adjustment of the track stocks with higher valuations in the early stage, after this round of market upswing, the sectors with clear logic are still crowded with transactions, the scope of capital transfer is limited, and the overall micro liquidity in the market is expected to improve. In a weaker case, the expected improvement in liquidity within the sector may lead to the performance of sectors with higher elasticity.
Combining changes in macro and micro factors, the transactions before the performance cashing period may follow the direction of “successful policy” and “sun performance”. In the short term, the logical deduction may focus on the recent policy stimulus, the post-real estate cycle, and the possibility of performance. The concentrated release of automobiles, parts, home appliances and other sectors that boost domestic demand and the new and old infrastructure sectors that may once again exceed expectations in the second quarter.
In the second half of the year, the factors that can be determined at present are still concentrated on the long-term inflation chain and the sector where liquidity is expected to improve. The logic of upstream resource products, oil and gas, and agriculture is still unbroken .
Risk reminder: prevention and control measures have been upgraded again; global inflation crisis; overseas recession is larger than expected; economic recovery is less than expected; policy rollout is less than expected
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