A Depth Adjustment: Short Term Adjustment In The Bottom, Long-Term Upward Trend Does Not Change.

On the first trading day after the Spring Festival holiday in 2020, A shares experienced a deep adjustment under the uncertainty brought by the epidemic. The Shanghai stock index closed at 2746 points, or 7.72%.

The first day's decline has become an established fact. Behind the deep adjustment has also brought more thinking, such as whether the negative emotions are digested after the first day's fall, whether asset allocation in large categories is still worth configuring, whether the logic of A share industry has changed or not.

In the twenty-first Century, the economic and economic news reporter interviewed several chief economists, chief analysts, public fund managers and well-known private investors with a number of questions about the market. He used multidimensional views to help investors better understand the market.

Bottom up in short term adjustment

Twenty-first Century: in February 3rd, the A shares underwent a deep adjustment. Did the adjustment on the day fully release market sentiment? Did the bottom of the market caused by the epidemic have come in the short term?

Pan Xiangdong, vice president and chief economist of securities in New Era: the catharsis of the first trading day after A shares is predictable. The decline in A shares is basically the same as the declines in the FTSE China A50 index during the Spring Festival. If the new suspected cases and the new medical observation cases decrease in the coming week, the A share market may form the middle bottom area.

Liu Ankun, the fund manager of financing and reverse strategy: the release of market sentiment in February 3rd or the end of the market. From the experience of historical epidemics and sudden negative events, the number of days that the index falls more than 7% per day is also few. Especially the comparable SARS decline in 2003 and the decline in Hong Kong stocks in overseas holidays have not seen such a big decline. We believe that the next market will enter a grinding bottom digestion stage, generally showing a U trend. The upward inflection point needs to observe the changes of new suspected and confirmed indicators of the epidemic.

Guo Jin Securities chief strategist Li Lifeng: I think there is a need for a certain process, because the need to reverse the market sentiment requires a certain process, there is still some uncertainty in the short term, so the market still needs follow-up policies, and with the introduction of policies, the market sentiment may be gradually restored.

Twenty-first Century: how do we see the phenomenon of net inflow of billions of dollars in north capital in February 3rd? This shows that there is a difference between the allocation logic of northbound capital and domestic market.

Pan Xiangdong: Although the A shares have been adjusted in depth, foreign investment has accelerated inflow, indicating that foreign investors believe that the impact of the epidemic on A shares is short-term. In the long run, A shares still have high performance price ratio in global assets. At present, the A share is decreasing, but it is a good time for layout.

Liu Ankun: the behavior of northward capital reflects that the first day adjustment is indeed very obvious. The decline of the main index of Hong Kong stock is greater than that of the holiday. Many stocks of A share have the value of long-term allocation. Second, the net inflow may be dominated by long term allocation fund. They have long debt duration. Compared with the trading hedge fund, they are not very sensitive to emergencies, exchange rate fluctuations, and so on. There may be some discrepancy between possible liabilities and duration and allocation.

Li Lifeng: I think it is caused by many factors. On the one hand, it is the positive guidance of weekend regulators, including the active guidance of the SFC and the CIRC. On the other hand, many stocks can not be sold at the limit, so the outflow of funds has been limited. Northward capital may be in the medium to long term, some domestic funds may be more short-term or redemption pressure, so there will still be some differences.

Do not change the upward trend of A shares in the medium and long term

Twenty-first Century: from the medium to long term, will the trend of A share be affected?

Gao Ruidong, chief macroeconomic analyst of Guotai Junan Securities, said: the impact of the new crown epidemic on the economy is transient, and the impact on the A share market is temporary. China is in a great environment conducive to the development of capital market, including the unprecedented importance of decision making to capital market and the continuous improvement of capital market efficiency. In addition, the new round of interest rate cuts will open and monetary policy will continue to be flexible and moderate. At the same time, the allocation of residents' assets will be transferred to financial assets historically. In addition, since the end of 2019, China's economy has shown signs of short-term bottoming and the gradual opening of the stock cycle. In view of this, the impact of the epidemic on A shares is short-term. The trend of A shares in 2020 will never be stopped by epidemic. We are very optimistic about the medium and long-term opportunities of A shares.

Pan Xiangdong: in the short term, the impact of the epidemic on the financial market will be relatively large. But with the mitigation of the epidemic, the A share market may form the bottom of the mid term market. For investors, if it belongs to short-term operations, the short-term trend needs to be grasped according to the change of the epidemic situation. If it is a medium and long-term investor, this fluctuation can be ignored, and the golden pits, which are smashed under the impact of the short-term epidemic, will usher in a better allocation opportunity over the long term.

Wang Qing, chief executive of Chongyang Investment: after adjusting the deleveraging policy in recent years, the macro-economy has gradually bottomed out, the policy environment has gradually been restored, and the corresponding counter cyclical regulation is also exerting force, so the impact of the epidemic on the economy is also transient. Compared with the SARS in 2003, the situation we encountered today is different. The current economic fundamentals and the performance of listed companies all have signals and trends to stabilize and rebound. Although the current epidemic has increased some uncertainty, as long as the market can see that certainty is improving, there will be corresponding rebound.

Twenty-first Century: this epidemic has obviously affected some industries, especially the consumption assets. How do we see the logic of the next industry or stock allocation?

Haitong fund manager Huang Feng: for the impact of this incident, the impact of consumer assets is mainly in the short-term statements, does not affect its investment logic. In contrast, the pro cyclical industry is the most obvious impact. The consumption target will be shorter than the original expectation due to the waste of the Spring Festival. But in the next few quarters, most industries, especially the leading ones, will return to the expected trajectory.

It is noteworthy that, as the epidemic is controlled, residents' consumption will return to normal, which will bring about the inflection point of consumption assets. In addition, from a fundamental point of view, after the summer heat comes, consumer assets will also continue to strengthen. Therefore, the consumption leader will rebound before the summer heat comes, or even exclude the high quality stocks. Core consumer assets are still long-term priorities, and shocks will only lead to better buy points.

Li Lifeng: we combine the prediction of the development of the epidemic by the authoritative experts of relevant medical science. The current time point can be approximately analogous to the 4 SARS in 2003. In the short term, A shares will be more affected by the risk of avoidance and share prices are under pressure. Some industries such as commerce, leisure services, textile and clothing, food and beverages, and the share of transportation industry will be under pressure. But what needs to be emphasized is that when the subsequent epidemic is relieved (turning point), when the A shares start to rebound, the counter cyclical policy will gradually restore the market sentiment. As a whole, we are not pessimistic about the market trend of the A share market in February. Besides the relative benefits of the "medicine" sector, we continue to recommend the three directions of "US stock mapping", namely apple industry chain, electric vehicle industry chain and cloud games.

Twenty-first Century: does the outbreak trigger changes in asset allocation in large categories? What should be done in long-term asset allocation?

Pan Xiangdong: the epidemic is relatively good for the bond market and the products of risk aversion. Therefore, the bond market has rebounded substantially. In the short term, commodities will also be under pressure. Copper, aluminum and zinc have been relatively large in recent years. The BDI crash also shows investors' concerns. Because of the pressure on the economy in the near future, investors expect monetary policy to become more relaxed, and because of the sharp contraction of demand, the pressure of future prices will ease, which will help the bond market to form a medium and short-term advantage.

Liu Ankun: the deep adjustment of the A share market makes the attraction of the risk-free assets relative to the risk-free assets measured by the latest EPR (1/pe- ten year interest rate) has reached a high level since 2016, and the pattern of stock declines and bond rising is good, EPR continues to rise and even reaches the extreme value. According to statistics, last time, EPR ranked the highest in the end of 2018, followed by the bull market of A shares in 2019.