21st Century Business Herald reporter Fang Haiping Shanghai report 2021 is coming to an end, the epidemic is repeated, energy shortages, power rationing and production rationing, real estate regulation, inflation pressure and so on are the outstanding characteristics of economic operation this year.
These factors will continue to affect the operation of the economy in 2022 and beyond, but their direction and intensity may be different. In the context of the trade-off of various factors and the tilt of macro policy objectives, what characteristics will appear in the economic trend in 2022? What kind of trend will the price of various types of assets show, and how will it guide the allocation of large types?
Looking back at the overall trend of economic growth in the past two years, it is found that in 2020, China's economic growth suffered a huge impact from the epidemic, but under the strong and effective control of the Chinese government, economic growth took the lead in repairing. Since entering 2021, the above multiple factors have led to pressure on economic growth, economic growth slowed down in the second half of the year, GDP in the third quarter of 2021 increased by 4.9% year-on-year, and economic growth fell below the long-term path.
Further dismantling the specific performance of macroeconomic operation in 2021, there are mainly several distinctive characteristics, first, due to the repeated epidemic situation, heavy rain flood conditions and power rationing and other factors, the supply side of the whole year is under greater pressure, resulting in a significant increase in the price of industrial products, an increase in downward pressure on the economy, and a more obvious inflation pressure in the later period.
Second, real estate regulation continues to tighten, the market has some problems, in the long run, this phenomenon clarifies the overall tone of housing and housing speculation, but the direct impact of the short term includes the downturn in housing prices and sales, the pressure on economic growth, credit risk events have a certain impact on the financial market;
Third, exports have performed well, supporting economic growth. In 2021, with the spread of the epidemic around the world, the supply chain suffered an impact, global trade resonated with the same frequency, while China took the lead in returning to economic growth, strong foreign trade demand, bringing about a sustained export boom, and the cumulative year-on-year growth rate of exports in the first three quarters of 2021 reached 33.0%.
In this macro environment, how will financial markets and capital markets perform in 2021?
Let's start with the stock market. The biggest trend of the equity market this year is characterized by the fact that the pressure and opportunities are very clear. Judging from the performance of the Shanghai Composite Index, the CSI 300 Index and the ChiNext Index, with the gradual emergence of economic pressure, the PPI continued to be high. These stock indexes have seen a repeated trend of decline in the first quarter, rise in the second quarter, and decline again in the third quarter.
At the same time, however, structural opportunities are clear. In 2021, the structural opportunities spawned by the policy dividend are obvious, with the dual carbon target, the in-depth promotion of the green energy revolution, and the supply impact leading to the rise in industrial prices, the energy-related sector has risen sharply, and the upward trend has run through the whole year. In the third quarter, the Shenwan Extractive Industry Index and the Shenwan New Energy Power Generation Index rose by 36.6% and 46.1% respectively in a single quarter.
Look at the bond market. The performance of the bond market is closely related to monetary policy and liquidity, after a wave of upward interest rates at the beginning of the year, with the central government's statement to "promote the further reduction of real loan interest rates" and another round of global epidemic heating up, interest rates in the first quarter appeared online and down a roller coaster, but for the rest of the year, due to the slowdown in economic growth, the decline in US Treasury yields, monetary policy easing expectations, interest rates remained downward or shocked.
From 2021 to 2022, the repeated epidemics, energy revolutions, real estate regulation, debt problems, credit risks, etc. these factors that have affected or even dominated economic operation in the past few years will continue to play a role. In addition, the common concern of the market includes key issues such as the normalization of the Fed's monetary policy and how China's policy should respond.
In general, in the "China Interest Rate System and Interest Rate Marketization Reform" issued by Governor Yi Gang of the Central Bank in September this year, the potential growth rate of China's economy is in the range of 5%-6%. Since the second half of 2021, economic growth has shown more obvious pressure, the GDP growth rate in the third quarter fell back to 4.9%, which is why this macroeconomic operation is below the potential growth rate, considering that the downward pressure on the economy in 2021 is mainly related to short-term factors such as repeated epidemics and power curtailment and production rationing, and 2022 as the year of change and the opening year of the party's second century, the policy level may be more inclined to stabilize growth, so it is expected that the macro economy may stabilize in 2021. Steady growth will be maintained in 2022.
Coexistence with the pandemic. Recently, some areas represented by Shanghai, Hangzhou and other places have set off another round of epidemic turmoil, suggesting that the epidemic may make a comeback at any time, and in 2022 and even for a period of time to come, the epidemic is undoubtedly still a factor that cannot be ignored affecting economic performance. However, in general, in 2022, relatively speaking, the epidemic, as a major factor affecting economic operation, will become more and more controllable, and the economy may continue the general tone of smooth recovery.
Since the outbreak of the epidemic, one of the most affected areas is consumption, according to the logic of occasional recurrence of the epidemic but more and more controllable, in 2022, consumption is expected to continue to recover to the potential level, but the consumption level of residents has not declined, but it has been suppressed during the epidemic period, so it is expected that after entering the post-epidemic era in 2022, consumption has room for further increase.
The risk of real estate is controllable. In the second half of 2021, under the continuous tightening of real estate financing, there have been individual market credit crisis events, the impact of real estate on other industries and the entire economy is self-evident, how real estate risks in 2022 have also become a major problem of general concern to the market, the current trend, after the real estate risk is more tense, the early stage has appeared for mortgage mortgage loans, development loans loosening signs, therefore, real estate as a whole must still adhere to the tone of "housing and not speculation", the overall downward trend, However, the regulatory scale will not be further tightened, and the probability of systemic risks in China's economy due to real estate will be lower.
In terms of investment in other fixed assets, high and new technology is a long-term policy orientation, and it is expected that the trend of rapid growth of high-tech manufacturing investment is expected to continue next year, thus driving the overall growth rate of manufacturing investment in 2022 to remain in a high boom range.
In terms of import and export, the export boom is a major highlight in the macroeconomic operation in 2021, in 2022, with the control of the overseas epidemic and the stabilization of the economy, the gap between supply and demand in overseas markets is expected to recover, and the dependence on China's exports may be reduced, so it is expected that the export performance in 2022 will slow down significantly compared with 2021.
In addition, there are some important points in the economic operation in 2022 that deserve attention. For example, common prosperity has become the theme of the times, and the expansion of middle-income groups will be the goal, with emphasis on the third distribution, and the continuous promotion of supply-side reform of the service industry represented by the rectification of some industries in the service industry.
For example, the development of green industries and the green energy revolution under the dual carbon target, the growth of coal consumption will be further limited, wind power and solar power generation are bound to be further invested and promoted, and the risks and opportunities of related industries deserve continuous attention.
In addition, at present, the world is plagued by inflation or stagflation, but the specific situation is different, from the perspective of China, due to the constraints on the supply side of the low-carbon transformation, with the introduction of corresponding measures, this inflationary pressure will be alleviated. Overseas, labor shortages may reflect structural changes in population and the economy, and the extent and duration of global inflation may exceed expectations. Coupled with the slowdown in economic growth, the possibility of the macro environment evolving into a stagflation scenario cannot be ruled out.
From the perspective of asset price performance and large-scale asset allocation, based on the above analysis, macroeconomic growth may stabilize in the early or first half of 2022, and correspondingly, the performance of domestic assets next year is also likely to maintain a stable growth trend.
On the other hand, from the perspective of overseas market conditions, the continuous impact of the epidemic, the slowdown in economic growth, the policy level, the central banks of major overseas economies are opening Taper and even raising interest rates, asset valuations are high, and risks have risen. Other emerging markets are still facing multiple pressures such as runaway inflation, exchange rate depreciation, high debt, and repeated epidemics. Therefore, from the perspective of global asset allocation, In 2022, China's assets are relatively attractive.
From the current valuation of various types of assets and the possible performance in 2022, first look at the stock market, such as the above analysis, the overall performance of the stock market-related index in 2021 is not good, the index yield and valuation are at a low level, and in 2022, the probability of economic fundamentals and macro policy levels is more stable and optimistic than this year, and china's stock market may have some room for growth.
In particular, in recent years, macro policies have become more and more precise, and a series of new strategic directions and long-term goals proposed at the central level, such as common prosperity, double carbon targets, and high-quality growth, have also directly guided the development of the economy and industry, in this case, the equity market may have more obvious structural opportunities, and some growth companies that conform to the policy direction may have better performance. The mainstream view of the market believes that the green energy revolution represented by "double carbon" may become one of the most important investment lines of A-shares next year.
Look at the bond market. Since the beginning of 2021, dividend yields have increased, interest rates have declined, and the relative attractiveness of stocks and bonds has gradually shifted from debt to equity, and from the perspective of the absolute yield of bonds, the yield of ten-year treasury bonds has fallen by 28bp year-on-year. Look at future interest rate trends in the short term and in the long term, respectively. In the short term, although the current Chinese economy is expected to resume stable growth, the internal factors driving growth on the whole are still relatively fragile, and there is still some room for force at the macro policy level, so interest rates are still expected to decline further next year.
In the long run, China's macro leverage ratio has risen significantly after the new crown epidemic, the overall debt burden of China's economy may increase in the future, and the superimposed long-term demographic dividend decline and the decline in capital marginal returns will pose downward pressure on the long-term growth rate of China's economy, and the future China's interest rate valuation center may shift downward.
Commodity aspect. In 2021, due to the repeated impact of domestic production restriction policies and the epidemic in overseas resource exporting countries, various varieties of bulk commodities have generally risen, but recently the government has successively introduced a series of policies to ensure supply and stabilize prices, and the energy supply has shown signs of improvement. The next step is expected to continue to improve; in 2022, as the impact of extreme weather factors on production capacity fades, the commodity market is rebalancing in the context of falling demand growth and supply margin recovery, and the high valuation of commodities supported by supply risk premiums may be difficult to sustain.
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