The pro-cyclical chemical sector has shown strong signs of recovery this year, thanks to the marginal improvement in performance and a large inflow of funds, the chemical sector has recently come out of the bright market.
According to Yan Dong, fund manager of Penghua Chemical ETF (159870), the recent market of the basic chemical sector has mainly benefited from the soaring price of TMA (trimellitic anhydride) and the rise in the market price of soda ash and MMA. At present, the sentiment of chemical expansion has subsided significantly, and the profitability of the sector may have bottomed out. This cycle can be compared to 2012 to 2014 - also in the context of low demand growth, supply is still accelerating and has not yet turned around. There is a transmission cycle of about one and a half years from the construction in progress to fixed assets, and when the growth rate of fixed assets enters the downward channel (indicating that the release of production capacity has come to an end), the profitability of the chemical sector is expected to usher in a new round of upward movement worth looking forward to, and the chemical sector may be dawning.
Talking about the current market, Yan Dong believes that in terms of policy, the effect of the "National Nine Measures" on the quality improvement of the capital market is expected to gradually appear in the medium and long term. On the macro front, the domestic economy is beginning to see more and more positive changes, and pessimistic expectations are starting to be revised. After the PMI of the world's major economies rose to more than 50, in March, driven by the recovery of both supply and demand, the PMI also rebounded to more than 50 after 5 months, and the PMI in April was still on the line of prosperity and decline, indicating that the manufacturing industry is booming and better. On the demand side, the key to leading the rebound of PMI lies in the straight rise of new orders, on the one hand, it is gradually confirmed that the pro-cyclical recovery driven by equipment renewal is advanced, and on the other hand, due to the rebound of the global manufacturing boom, the global demand for replenishment is gradually opening. (Source: National Bureau of Statistics, Wind)
Regarding the market's concern about the suppression of prices on the supply side, Yan Dong said that this year's two sessions will re-raise the energy consumption target, and the pro-cyclical industries with high energy consumption such as chemicals, nonferrous metals, and steel are expected to usher in a marginal improvement on the supply side. Under the pull of global commodity prices and positive changes in supply and demand, domestic PPI and other price indicators are also expected to gradually improve in the second quarter.
As an index investment system solution provider, Penghua Ashares has a forward-looking layout of oil and gas, non-ferrous metals, chemicals, steel and other sub-sectors, and its oil and gas ETF (159697), non-ferrous ETF fund (159880), chemical ETF (159870), Penghua CNI Steel Industry Index (LOF, Class A: 502023 Class C: 012810), Penghua CSI A-share Resource Industry Index (LOF, Class A: 160620 Class C). 012808 Penghua CSI Belt and Road Theme Index (LOF, Class A: 160638 Class C: 015677) provides a comprehensive investment through train in the resource sector, which is convenient for investors to deploy pro-cyclical and multi-segment industries in one stop.
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