How will the market go next year? CCB International Chief Forecast: Hong Kong stocks welcome valuation repair

As 2021 draws to a close, during the year, the global financial market continues to be turbulent, A-shares continue to deduce structural markets, and Hong Kong stocks have experienced a large-scale correction since the beginning of this year.

From the performance of global large-scale assets, the performance of commodity crude oil and agricultural products this year led the rise in large-scale assets, and the performance of large-scale assets in developed markets, especially in the US market, is relatively strong, but for domestic, the differentiation between Hong Kong stocks and A-shares is larger, the A-share ChiNext index is stronger, and the growth stocks represented by the Hang Seng Technology Index of Hong Kong stocks are more affected, and the valuation and profitability are higher.

Yinxie financial reporter learned at the 2022 investment strategy meeting of CCB International that Zhao Wenli, managing director and chief strategist of the company's research department, said, "The stability and visibility of the policy next year is expected to be better than this year, and the industries that are more affected by the policy this year should be much weaker next year in terms of the marginal impact of the policy than this year." ”

What are the opportunities and challenges for Hong Kong stocks in 2022?

Zhao Wenli pointed out that from the perspective of the environment, with the increase of the central government's policy of benefiting Hong Kong, Hong Kong will be better integrated into the overall situation of national development and open a new stage of economic development in the future, which will have many benefits for Hong Kong stocks.

In terms of liquidity, the liquidity of the Hong Kong dollar will not change much in absolute quantity, but if the expectation of interest rate hikes next year is strengthened, the exchange rate of the Hong Kong dollar may fall back to 6.85 from the current close to 7.80.

In terms of valuation, In 2021, Hong Kong stocks have suffered a "double kill" of valuation and earnings, but at present, the hang seng index has a price-to-earnings ratio of 12 times, and the downside of the forecast is very limited.

Hong Kong stocks after a painful year, I believe that the first half of next year can see the "dawn", is expected to usher in the window of valuation repair, is expected to fluctuate in the annual HSI range of 22000 ~ 28600 points, the national index volatility range in 7600 ~ 10500 points, the Kono Index volatility range in 5800 ~ 7500 points.

How risky is global stagnation in 2022?

Zhao Wenli analyzed that in the first half of next year, the characteristics of global economic stagnation may continue to strengthen. In contrast, China's economy will face more short-term economic downside risks than inflationary pressures, macro policies are more autonomous, and cross-cycle designed fiscal and monetary policies have moderate strength and relaxation.

From the perspective of the risk of stagnation in the global economy, although the inflation level has not yet reached the level of the 1970s, this time the inflation rises faster, the impact on the market is very strong, and it is expected that inflation will be high in the first half of next year.

In terms of low expectations for economic indicators, the economic surprise index is constantly downward around the world, while the economic inflation surprise index is constantly exceeding expectations. Judging from the operating indicators of the economy itself, the pressure to slow down in the short term is still relatively large. At the same time, the pressure of the structural rise in inflation is also relatively strong.

From the perspective of the main factors driving inflation, in the short term, the epidemic has affected the global supply chain, resulting in increased shipping freight rates, labor shortages, rising costs, and the expectation of price increases in crude oil and agricultural products.

Zhao Wenli said that from the perspective of global monetary policy and liquidity, the speed of tightening monetary policy in the United States may be faster than before, but the influence on the world will gradually weaken. From the perspective of the fluctuation range of the US dollar index, in 2022, the US dollar exchange rate is more likely to further strengthen in the first half of the year, but in the second half of the year, if the US economy continues to slow down, the US inflation will have a certain correction in a short period of time, and the US dollar may go down again, so the fluctuation period of the whole year may be between 92 and 102.

What are the new perspectives of China's economy and macroeconomic policies?

In contrast, China's stagflation risk is not large, but it is more reflected in industrial products, but the transmission of PPI to CPI is always stronger than the previous few transmissions in 2008.

In addition, pork prices are currently at a low level as a whole and are expected to slowly recover in the second half of next year, but this time the upward slope may not be as fast as before, so the inflation pressure facing China in the first half of next year is very low.

Zhao Wenli pointed out that in the future, China will create a better policy environment for high-quality economic development, and the visibility of policies under the new development pattern will continue to increase. Anti-monopoly market supervision has entered the normalization stage, and the marginal impact of regulatory policies on relevant industries will weaken.

Looking forward to next year, the further appreciation of the renminbi should be relatively small, especially in the case of the United States began to strengthen interest rate hikes, the dollar has the possibility of further rise, so it is expected that the exchange rate of the renminbi against the dollar next year will be between 6.3 and 6.4, and the overall fluctuation range is not very large. In addition, after the narrowing of interest rate spreads, the amount of money flowing into China's bond market and stock market may also be less than before.

This article originated from Silver Persimmon Finance