In the past week, whether it is a global or domestic major event one after another, the stock markets and commodities in many countries or regions around the world have fluctuated in a “roller coaster” style, and the market is changing fiercely. How should investment face in May?

A list of major events of the week

After May 1, last week, major domestic policies continued, which provided positive support for the market.

1. The “Opinions on Promoting Urbanization with County Towns as Important Carriers” issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council this week were released on the 6th.

By 2025, important progress will be made in the urbanization construction with the county seat as an important carrier, the weak points of the county seat will be further supplemented, and a group of people with good location advantages and industrial foundations, strong resource and environmental carrying capacity, and good economic conditions for agglomeration of population will be made. Significant achievements have been made in the construction of the county seat in China, the allocation of public resources has basically matched the size of the permanent resident population, the characteristic and advantageous industries have developed and grown, the municipal facilities have been basically completed, the public services have been comprehensively improved, the living environment has been effectively improved, the comprehensive carrying capacity has been significantly enhanced, and farmers have settled in the county town for employment. The scale has continued to expand, and the quality of life of residents in the county has been significantly improved. After another period of hard work, a modern county town with its own characteristics, dynamism, livable and suitable for business will be basically built across the country, and the development gap with neighboring large and medium cities will be significantly narrowed, promoting the improvement of the urban system and supporting the integrated development of urban and rural areas. manifest.

2. The Central Bank: It will launch a 100 billion yuan re-loan as soon as possible to support the financing of transportation, logistics and warehousing industries

The research team of the Monetary Policy Department of the Central Bank released a policy study saying that my country has formed a set of structural monetary policy system suitable for national conditions; according to the requirements of the executive meeting of the State Council, the central bank will launch 100 billion yuan of re-loans as soon as possible to support the financing of transportation, logistics and warehousing industries, promote Solve the pain points and difficulties in epidemic prevention and control. In the next step, the central bank will continue to play the dual functions of monetary policy tools in terms of total volume and structure, continuously summarize and optimize the structural monetary policy system, grasp the total amount of liquidity provided by structural monetary tools, and take into account the long-term goal of serving inclusive finance and different periods. The key task of economic development, the implementation of various structural monetary policy measures. Monetary policy, fiscal policy and industrial policy should be coordinated to boost the confidence of market players, stimulate market growth momentum, better support the development of the real economy, and achieve the goal of stabilizing growth.

3. The China Banking and Insurance Regulatory Commission encourages large banks and high-quality listed banks to release more credit resources

The China Banking and Insurance Regulatory Commission held a special meeting to emphasize that large banks with relatively high provision levels and other high-quality listed banks are encouraged to reduce their provision coverage ratios in an orderly manner to release more credit resources. Support the key role of effective investment, ensure financing for key areas and major projects in the 14th Five-Year Plan, and support the development of infrastructure investment in a moderately advanced manner. Guide financial institutions to accurately grasp credit policies, strengthen financing support for industries, small, medium and micro enterprises and individual industrial and commercial households severely affected by the epidemic, improve financing convenience and reduce comprehensive financing costs. It is necessary to urge banking and insurance institutions to adhere to the positioning of “houses are for living in, not for speculation”, implement differentiated housing credit policies according to city-specific policies, support the demand for first and improved housing, and flexibly adjust the personal housing of those affected by the epidemic Loan repayment plan.

4. The central bank increased the special re-loan quota of 100 billion yuan to support the clean and efficient utilization of coal

The central bank increased the special re-lending quota of 100 billion yuan to support the clean and efficient utilization of coal, which is specially used to support the development and use of coal and enhance the capacity of coal reserves. The central bank stated that financial institutions should give priority to supporting project loans for the safe production and reserve of coal. For coal power companies in the field of guaranteed supply of coal, the working capital loans issued by financial institutions for coal power companies to purchase coal can apply for special re-loan support as required.

Last week, the same major events continued overseas, with global inflation gradually rising, and many central banks began to raise interest rates.

1. The Fed starts the largest rate hike since May 2000

On May 4, local time, the Federal Reserve announced its latest interest rate resolution, raising the benchmark interest rate by 50 basis points to a range of 0.75%-1.00%, the largest rate hike since May 2000, in line with market expectations. The statement said the Fed will begin shrinking its balance sheet at a monthly pace of $47.5 billion on June 1. During the month, the balance sheet reduction limit will be gradually increased to $95 billion per month, that is, a monthly reduction of $60 billion in U.S. Treasuries and $35 billion in mortgage-backed securities.

2. The Bank of England raises interest rates for the fourth time this year

On May 5, the Bank of England announced that it would raise interest rates by 25 basis points to 1% to combat inflation. This is the fourth time the Bank of England has raised interest rates since December 2021, and the hike also pushed the Bank of England’s benchmark interest rate to its highest level in 13 years. The Bank of England expects UK inflation to reach more than 10% this year and the UK economy to shrink by 0.25% in 2023.

3. The Reserve Bank of Australia raises interest rates for the first time since 2010

On May 3, the Reserve Bank of Australia raised its benchmark interest rate from a historical low of 0.1% to 0.35%, and the market expected it to be raised to 0.25%, the first rate hike since 2010. With a positive outlook for economic growth, the RBA said now was the right time to unwind unconventional support, with the economy already proving resilient and further interest rate hikes needed to hit the CPI target.

Stock markets in the world’s major economies fell broadly

After the domestic rebound before the May Day holiday, and under the influence of the successive interest rate hikes by many overseas central banks, the stock markets of the world’s major economies generally fell last week after the holiday. Wind data shows that except for the strong Nikkei 225, which closed up slightly, the rest of the market fell. Among them, the Hang Seng Index and the French CAC40 Index fell more in a week, both exceeding 4%. Followed by India’s SENSEX30, ChiNext Index, Germany’s DAX and other five indexes fell more than 2% for the week.

The domestic A-share Shanghai Composite Index was the strongest, down only 1.49%, stronger than 11 indexes including the Nasdaq Index, the Korea Composite Index, and the FTSE Singapore Straits Index. It can be seen that overseas central banks have started raising interest rates one after another, which has a certain impact on the stock markets of major economies.

Commodities fell more and rose less

The stock market fluctuated sharply and the external situation was complicated. The world’s major commodities such as natural gas, crude oil and other energy and agricultural products, wheat, rose sharply, while most other commodities fell. Wind data shows that among the 20 varieties, 14 commodities fell, accounting for as high as 70%. Among them, LME zinc and LME aluminum have the largest declines of more than 7%, and five varieties such as LME nickel and LME copper have fallen by more than 3% in a week, and the decline is not small. Natural gas, oil and wheat rose sharply, all rising more than 5%.

Where are the investment opportunities in May?

Domestically, infrastructure may bear the brunt. He Yaxuan of Guosheng Securities believes that a new path for the county’s infrastructure will lead to a new space for growth.

By the end of 2021, my country’s urban permanent population is 910 million, of which the county population accounts for about 30%. The per capita fixed investment in municipal public facilities and per capita consumption of the county-level population are only about 1/2 and 2/3 of those in cities at the prefecture level and above. Large space and sufficient potential to stimulate consumption. The direction of county infrastructure construction: There are many short-board areas, and there is a lot of room for improvement.

The National Development and Reform Commission pointed out in answering reporters’ questions in response to this “Opinion” that at present, many counties and cities have imperfect public facilities, such as outdated and aging pipeline networks, insufficient road network capacity, poor supporting facilities in old communities, lagging parking lot construction, and passenger station facilities. The backwardness, etc., reduces the carrying capacity and attractiveness of the county to the population. In this regard, the “Opinions” proposed that the key directions of county construction include:

1) In terms of transportation, improve municipal transportation, strengthen the construction of parking lots and charging piles, and expand the coverage of trunk railways, expressways, and national and provincial trunk highways; 2) In terms of flood control and disaster prevention, gradually eliminate the serious waterlogging-prone sections, and carry out important projects. Seismic identification and reinforcement and renovation of buildings; 3) In terms of pipeline network renovation, comprehensively promote the renovation and renovation of aging gas pipelines, promote the renovation and renovation of aging heating pipelines, and improve the basic living conditions of residents; 4) In terms of low-carbon development, actively promote rooftop distributed photovoltaic power generation , vigorously develop green buildings, prefabricated buildings, and green building materials.

Therefore, it focuses on the central state-owned enterprises in infrastructure; the leader in infrastructure design; the leader in the transformation of heating pipe network.

CITIC Securities Research believes that the peak of internal and external suppression has passed, and the four main lines are actively deployed.

The high point of the domestic epidemic has passed, the external pressure has gradually eased, the resumption of work and production is gradual, the implementation of support policies is accelerated, and the extreme pessimism in the market has been fully released.

In terms of configuration, it is recommended to continue to actively deploy the four main lines of modern infrastructure, real estate, resumption of work and production, and consumption restoration. From the perspective of the whole year, it is recommended to focus on modern infrastructure and real estate layout. The infrastructure sector should focus on low-value building leaders, power grids, data centers and cloud infrastructure, and the real estate sector should focus on high-quality developers, property management and building materials. From the quarterly perspective, it is recommended to actively add related industries that resume work and production, focusing on smart cars and parts, semiconductors, photovoltaic wind power equipment, etc. On a monthly basis, it is recommended to focus on consumption repair related to aviation, hotels, duty-free, food and beverage, department stores and supermarkets. It is expected that these industries will also usher in a phased recovery under a package of policies such as the subsidence of the large-scale epidemic, bailouts of market players and consumption stimulation. .

Overseas, CICC Liu Gang analyzed that the Federal Reserve’s FOMC decision to raise interest rates by 50bp in May and start to shrink its balance sheet in June, although fully in line with expectations, still caused heavy losses to the market after a short period of excitement. Overall, the demand side of the United States has cooled down, and the tightening of financial conditions will gradually suppress demand; the repair of the domestic supply side is still continuing, but it is worth paying attention to whether there will be new and larger disturbances in the overseas supply chain. The delivery time extension in the industry PMI sub-item has been reflected.

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