Finally, the main line of A-shares came out

Today, the stock market came out of the "inverted V" shape, opening low, going high, and falling, and the Shanghai Composite Index once broke through 3,100 points intraday, hitting a new high in recent times, and then went all the way down, closing at 3,074 points, up 0.09%.

Yesterday's market can be positioned as an over-falling rebound market, with micro-cap stocks and small-cap stocks ushering in a deep rebound; today's market, emotional factors are gradually fading, and the medium and long-term logic is once again emerging.

At the broad-based index level, the dividend index outperformed, the small-cap and micro-cap indices underperformed, and at the industry level, home appliances, non-ferrous metals, financial and other sectors outperformed. In the medium term, we will continue to be optimistic about the pro-cyclical and new quality productivity sectors, and in the short term, we will be optimistic about the performance of non-ferrous metals and social services.

As of closing,

Wind All A rose 0.04%, CSI A50, CSI 300, CSI 500, CSI 1000 and CSI 2000 rose 0.2%, 0.12%, 0.19%, -0.01% and -0.15% respectively. The broader market style has relatively outperformed.

At the industry level, household appliances (1.81%), non-ferrous metals (1.38%), non-bank finance, and banks performed better, while public utilities (-1.45%), petroleum and petrochemical (-1.19%), media, and environmental protection lagged behind.

In the total of the four days this week, pro-cyclical sectors such as household appliances (5.74%), banks (4.64%), non-bank finance, and coal are still leading the gains.

Today, the turnover of the two cities was 949.6 billion yuan, and the net outflow of northbound funds was 5.285 billion yuan. Today's stock market rose, with foreign capital as a drag.

After the close of trading on Friday, the new country nine articles were released, and in the first three trading days of this week, the market fell first and then rose, and the mood fluctuated violently. Judging from today's market, the emotional market has ebbed, and the market has begun to return to the original main line.

Since April, there are two characteristics of the sectors that have risen well, either there is an independent industrial logic, such as non-ferrous metals, steel, petroleum and petrochemical and other resources and energy sectors, benefiting from secondary inflation and commodity price increases, household appliances, benefiting from the approaching peak season and export support, or the dividend sector, providing defensive attributes, typical representatives are coal and banks, with dividend yields of more than 5%.

Since April, the dividend index has risen by 7.5%, outperforming the Wind All A Index by 9 percentage points, and since the beginning of the year, the dividend index has risen by 18.4%, outperforming the Wind All A Index by 22.6 percentage points.

It's already clear. At this stage, the market risk appetite is low, and incremental funds are becoming more and more picky, either the industrial logic is clear enough, or the dividend is high. Against the backdrop of falling deposit rates, buying dividend indices to eat dividends is becoming more and more reliable and attractive.

Reiterate the long-term trend of index volatility to the upside. At the industry level, we are optimistic about non-ferrous metals and social services in the short term, and pro-cyclical and new productivity sectors during the year.

Attached: Recent deductive logic of individual industries

Macro target: GDP growth target of about 5% in 2024. In terms of finance, the 3.0% deficit ratio + 1 trillion special treasury bonds + 3.9 trillion local government special bonds is not weak, in addition, there is a large balance of additional treasury bonds issued last year, and the PSL expansion capacity of 500 billion yuan at the beginning of this year is likely to continue to expand. Structurally, scientific and technological innovation, industrial upgrading, green investment, rural revitalization, and the three major projects may be the main directions to ensure that the GDP growth rate meets the standard.

Throughout the year, the trade-in of automobiles and home appliances and the high boom in service consumption have promoted the steady recovery of consumption, while overseas inventory replenishment, the acceleration of the Belt and Road Initiative, and the new three types of exports have helped the export growth rate to return to positive, and "the old momentum has stabilized and the new momentum has progressed" has helped investment to remain resilient.

Macro data: In the first quarter, GDP increased by 5.3% year-on-year, higher than the forecast of 4.91%. The year-on-year growth rate of primary, secondary and tertiary industries was 3.3%, 6.0% and 5.0% respectively. The GDP deflator was -1.1% year-on-year, and nominal GDP was 4.2% year-on-year.

In terms of investment, investment in fixed assets increased by 4.5% year-on-year. Among them, infrastructure investment increased by 6.5 percent, manufacturing investment increased by 9.9 percent, and real estate development investment decreased by 9.5 percent. Excluding real estate, fixed asset investment increased by 9.3% year-on-year, which is still an important force for stable growth.

In terms of consumption, the social zero growth rate was 4.7%, higher than the average of 3.4% in the past two years, indicating that consumption is recovering steadily. In terms of type, retail sales of goods increased by 4.0% year-on-year, and retail sales of services increased by 10.0% year-on-year. Service consumption remained the bright spot, with food service revenue increasing by 10.8% year-on-year.

In terms of exports, the renminbi increased by 4.9% year-on-year, and the US dollar increased by 1.5% year-on-year. Among them, exports unexpectedly negative growth in March, weaker than market expectations, mainly due to the high base of the same period last year (USD, 10.86%; RMB, 19.2%) and price factors.

In terms of rhythm, the economic data in March slowed down marginally compared with January and February, and the endogenous momentum of the economy is still unstable, and stimulus policy support is still needed.

Looking ahead to the second quarter, consumption will continue to recover, especially service consumption, which will still maintain a high growth rate, exports are likely to continue to maintain positive growth, and in terms of investment, manufacturing and infrastructure investment are also driving the economy, while real estate is still a drag. In other words, the focus of steady growth is still real estate.

The pace of Fed rate cuts has changed: At the March meeting, the Fed raised its forecast for US GDP growth in 2024 from 1.4% to 2.1%, and raised its forecast for 2025 growth from 1.8% to 2.0%, indicating that the US economy remains resilient.

In March, the US CPI increased by 3.5% year-on-year (previous value 3.2%), and the core CPI increased by 3.8% year-on-year (previous value 3.8%), indicating that the downward trend of inflation has been interrupted. On the trend, several important details have entered the upward channel, and the US CPI is likely to continue to rise in the future.

Inflationary pressures have increased, secondary inflation expectations have risen, and the Fed's pace of interest rate cuts has been twists and turns. At present, CME interest rate cut expectations show that the probability of a rate cut in June has been reduced to less than 20%, and the probability of a rate cut in July has also been reduced to 38%, and two interest rate cuts starting in September have become a high probability scenario expected by the market. Some pessimistic views even suggest that the Fed may only cut interest rates once in the fourth quarter this year.

Non-ferrous metals: Since March, the non-ferrous metals sector has come out of excess returns. In terms of segments, the precious metals sector has benefited from the continuous record high of gold prices, driven by global de-dollarization (central banks have increased gold allocation) and the Federal Reserve has entered a cycle of interest rate cuts, gold prices have repeatedly hit new highs and are still supported, while the industrial metals sector has benefited from the rapid surge in copper prices.

On the supply side, inventories are at a low level, and short-term expansion is limited. At present, the inventories of copper, aluminum and nickel are basically below the 25% percentile in the past decade, and the capital investment in industrial metal minerals at home and abroad has declined a lot in recent years, and the production capacity has been constrained in a short period of time.

On the demand side, the global manufacturing industry has recovered, new domestic construction has boosted demand, the demand for power equipment + heat exchange copper pipes is strong, and the restructuring of overseas supply chains has brought incremental demand.

Driven by the rise in gold and copper prices, the non-ferrous metal sector is likely to continue to outperform excess returns in the short term.

Automobiles & Household Appliances: Trade-in logic, good. On January 26, 2024, the Minister of Commerce stated that the trade-in of cars and home appliances will be the focus of this year's consumption promotion. "In 2023, the number of cars in mainland China will be 340 million, and the number of home appliances in major categories such as refrigerators, washing machines, and air conditioners will exceed 3 billion." It has been more than 10 years since the end of the last round of large-scale "home appliances to the countryside" activities, and the cumulative sales of 293 million products at that time have reached the stage of needing to be upgraded, and the demand and potential for upgrading are great.

From January to February, household appliances and audio-visual equipment companies totaled CNY 131 billion, up +5.7% y/y, while automobile production and sales totaled 3.919 million units and 4.026 million units, up 8.1% and 11.1% y/y, respectively.

Pro-cyclical sector: macro fundamentals reverse logic, positive. On March 5, the government work report clarified the economic growth target of 5%. Compared with the average GDP growth rate of 4.1% in the past two years, the growth rate of 5% in 2024 indicates that the macro fundamentals will usher in an inflection point.

In terms of pro-cyclical logic, non-ferrous metals, social services, trade and retail, beauty care, food and beverage, building materials, home appliances 3C, automobile industry chain, etc., the winning rate and odds are worth looking forward to.

New quality productivity: The government work report lists "vigorously promoting the construction of a modern industrial system and accelerating the development of new quality productivity" as the top ten tasks in 2024. New quality productive forces are the inevitable choice of the new driving force for the mainland's economic development under the background of the gradual disappearance of labor dividend, urbanization dividend and globalization dividend.

The new quality productivity mainly includes strategic emerging industries and future industries. In 2024, we can focus on investment opportunities at the level of data, computing power, basic software, new materials, basic equipment, core components, scientific instruments and other elements.

In terms of specific operation, the new quality productivity involves a wide range of fields and is relatively new, and it is difficult to grasp individual stocks, so it is more suitable for layout in the form of indexes. Among the major broad-based indices of A-shares, the STAR 100 Index is a better mapping target.