A Share'S "Peak Road" And "Re Inflation" Will Become The Core Vocabulary.

In the context of the United States seeking inflation again, Hong Kong stocks will be a good choice. Valuations are relatively low, earnings growth prospects are improving, South capital continues and overseas demand for capital allocation is still there. We expect Hong Kong stocks to achieve 15-20% gains in the coming 2017. We should actively pay attention to them, including re inflation related raw materials, infrastructure and military industry.

The inflation policy led the us ten year Treasury yields to the bottom of history, and bond assets "war and retreat".

We have already stated this view in the "2017, the peak turning road". In 2016, the long term cycle of commodity markets meant that deflation expectations could gradually become "past tense" on a global scale. Even if the growth did not improve significantly, it would be difficult for us to return to the crisis for the time being.

It may be hard to get back to the previous lows, though the road to recovery in the future will be rough.

Things may not look that way.

After Britain's departure from Europe, we made comments on the trend of "anti globalization"; after Trump's election, there were many similar comments.

But after careful reflection, things may not be as simple as they appear.

There is a Chinese word called "dry fish and dry fish". It is said that the pond water can not be dried to catch fish.

The trend of globalization is also the same: the trend of globalization is a good thing in theory. But in the past pattern and institutional arrangement, the benefits of globalization can only be enjoyed by a few people, and most of them are not getting better or worse, just like "the water in the pond is drained".

It should be said that the so-called "anti globalization" trend in recent years, instead of "reverse globalization", is a correction and Reflection on the drawbacks of globalization before. In the long run, it may be a measure of "fish farming with water letting".

Considering that any trend of thought may not be mature at first, such "anti globalization" measures will inevitably bring some negative effects in the short term. But after groping, these reflections may lead to a more balanced and sustainable globalization of interest distribution, which is not necessarily a "bad thing" for global growth.

Then inflation expectations are heating up, deflation is expected to end, and global stock assets will not be bad, especially in the US.

Although yesterday's market reaction to the US election results was similar to the reaction of meeting black swans, we must note that, first, Trump's policy is "anti globalization" on the surface, and the more substantial situation is "promoting growth"; second, the possibility of fiscal stimulus has risen sharply: considering that both houses of Congress are Republican, the president is also Republican. Although the relationship still needs to be run in, even before Trump is elected, the fiscal stimulus and infrastructure construction are the consensus of the candidates of the Republican and democratic parties.

Third, in his first speech after winning the battle, Trump reiterated that he would double the US growth rate, increase infrastructure and create more jobs, which indicated that he would still attach great importance to growth.

although

After the election, the outlook for US monetary policy and the chairman of the Federal Reserve will continue to be heated for some time to come. But overall, monetary policy is not expected to deviate significantly from the above goal even if it continues to withdraw.

Under the background of inflation, earnings growth of equity assets is likely to accelerate. Especially in the US stock market, earnings growth is likely to achieve double-digit growth in 2017. The US stock market may have a "maverick city" in 2017, and China's market profit is not expected to be as low as in the past two years.

In the 2017 outlook, we believe that A shares are expected to achieve a "peak turn" in 2017, which will be more profitable than in 2016.

At present, the main obstacle to A share may be the low elasticity of income resulting from the low valuation.

Nevertheless, in the short term, the A share market will not be excluded from the topic of "re inflation" following the US stock market. It is worth noting that similar sectors of raw materials and infrastructure are concerned, and the military industry needs to be aware that the prospects for the midline should not be overly pessimistic.

We should realize that

As a result, the new era of global structure has begun.

In the four big economies, China, the United States, Europe and Japan, after the election in the United States, the house of Representatives and the presidency of the United States both favor the Republican Party, and the efficiency and execution of the policy may be greatly improved. The two big economies of China and the United States will be relatively powerful leaders in power. In contrast, Europe and Japan are faced with relatively long-term structural problems. Europe's split and internal friction patterns may still be endless. (for example, the recent Hungarian "Nazi party" election), Japan is constrained by structural challenges such as aging. It is still difficult to get rid of the situation. After the end of the cold war, the world will probably return to the "two strong pattern" after nearly 30 years of single polarization trend, and the new world pattern may have opened. Looking at the current world

We do not mention Russia here, and it is estimated that its impact is still important under the new pattern, but it will not be as good as China.

Asset allocation under the new world structure requires new ideas. We will continue to pay close attention to this and continue to update it.

The uncertainty is that Trump is a "political novice". This feature can give him a "new perspective and new thinking", and may also bring some partial shocks. The process may be quite twists and turns. Next, his "cabinet" process deserves great attention.