Last week, the market fluctuated widely, with an average turnover of more than 900 billion yuan on the whole week, a slight increase, and in terms of style, value outperformed growth, and the large market outperformed the small and medium-sized market. In terms of industries, household appliances, banking, coal, and non-bank financial industries performed well, while media, commerce and retail, and social services performed lagged behind. High dividends continue to perform, and the market tends to be conservative. As April draws to a close, the market continues to fluctuate, and the centralized announcement of annual reports and quarterly reports of listed companies at the end of the month may bring greater volatility to the market.
Market differentiation is mainly affected by policy stimulus
At the macro level, the macroeconomic data for the first quarter of last week was released, and the GDP growth rate in the first quarter was 5.3%, exceeding market expectations in terms of aggregate. In addition to the relatively bright aggregate growth data, we also see that a number of sub-data in March have slowed down in stages, with the demand side being weak (micro perceived to be weak) but the supply side being strong (as measured by the data) still persisting. Looking ahead, the relatively good economic aggregate growth means that there will be a small probability of macro policies that significantly exceed market expectations, and it is expected that the second quarter will still be dominated by the reduction of the reserve requirement ratio of the monetary policy and the issuance of ultra-long-term special treasury bonds of the fiscal policy. Compared with the first quarter, under the influence of factors such as the base effect, the degree of recovery in the domestic macroeconomic expectation in the second quarter may be more obvious.
We expect that the onshore macro-level risks faced by the A-share market will decline, and more attention needs to be paid to the more bright parts of the economic structure and the investment opportunities it brings.
From a policy perspective, the new "National Nine" policy has recently triggered certain fluctuations in the market, with the large market outperforming the small and medium-sized market. Last week, we predicted that the introduction of policies will be conducive to the medium- and long-term development of the market and the consolidation of the market bottom, given that the market has sufficient expectations for regulatory thinking, but the effect on sentiment in the short term may be limited. In terms of specific impact, on the one hand, some small and medium-sized companies with poor operating quality may face the risk of delisting, and it is recommended to avoid small and micro cap stocks; on the other hand, listed companies with standardized operation will place more emphasis on long-term shareholder value, and companies with stable shareholder profits and continuous dividends and buybacks are the investment directions that will be focused on in the future. At present, our expected judgment on the continued impact of the "National Nine Articles" remains unchanged.
From an overseas perspective, the risk of geopolitical conflict in the Middle East is still fermenting and has a direct impact on the market's risk appetite. Looking ahead, the unstable situation in the region will continue to be a stimulus, or continue to cause disruption to global commodities, exacerbating the current main line of bulk price increases.
Pay attention to Politburo meetings, the performance of listed companies and the overseas situation
There are three major topics that need to be focused on this week, including: the tone of the Politburo meeting on the economy and policies, the earnings performance of listed companies, and new changes in the overseas political and economic situation. The details are as follows:
Looking at the April Politburo meeting, according to the previous time rules, the Politburo meeting in April this year is likely to be held on April 26. As for the topics to be discussed at this Politburo meeting, we can look for clues from the recent symposium of experts and entrepreneurs on the economic situation. It is not difficult to find that the upper echelons are relatively optimistic about the overall economic growth forecast, emphasizing "consolidating the foundation and cultivating the yuan" (the previous monetary and fiscal policy will continue), and emphasizing the solution of structural problems and the resolution of risks in key areas. Overall, we will be conservative about the overall macro aggregate stimulus.
Looking at the profit performance of listed companies, from the perspective of annual reports and dividends, the overall profit of listed companies has rebounded compared with the first three quarters of last year, but structurally, the overall profit growth rate of the entrepreneurship and entrepreneurship sector has weakened month-on-month, and the dividend data of listed companies under the guidance of policies has been significantly strengthened. However, the overall disclosure rate of the first quarterly report is currently low, and it is necessary to continue to pay attention to the market impact brought by the performance disclosure of the first quarterly report at the end of the month, and the high-dividend sector is still worth paying attention to.
Looking at the overseas situation, we should pay attention to the possibility of US inflation raising interest rates again in the context of geopolitical conflicts impacting the supply side. At present, geopolitical risks are driving commodities to rise across the board, especially the oil hub breaking through to more than $90, and the risk of hyperinflation in the United States may appear again this year, which is also the most likely scenario to lead to another interest rate hike. At present, the market expects a high probability of interest rate cuts in the third quarter, and the number of interest rate cuts may be 1.57 times/39.4bps throughout the year, which is relatively neutral, but there is still room for a pullback, and it is necessary to be vigilant against the tail risk that inflation and economic data continue to exceed expectations and no interest rate cuts throughout the year.
Defensive strategy is the main focus, focusing on structural performance sectors
Overall, the overall impact of the above three events is negative, so the pressure on the broader market still exists. At present, A-shares are still in the pressure range, and show the characteristics of "top and bottom" - there are event factors and economic factors to suppress the upward, and policies and national team funds to support the bottom.
In terms of market style, large-cap stocks are more resilient, with slightly better value than growth, and the dividend strategy market is not over. In our view, in the short term, the market pullback pressure makes the market value and dividend style still the main safe-haven direction. At present, companies that already have a high dividend ratio are relatively expensive, and you can gradually pay attention to individual stocks with low dividend yields, but strong dividend distribution capabilities, and strong dividend yield improvement in the future.
In terms of specific sectors, the overall idea remains the same as in the previous period, focusing on the high-profit and high-dividend sectors under the main line of profit restoration of listed companies, upstream international pricing bulk products, export chain sectors under macro fundamental repair, and "new quality productivity" theme concept plates (waiting for industrial fermentation and policy promotion after the quarterly reporting period) and other directions.
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