The Bond Market "To Take Advantage Of The Storm" Temporarily Stock Market Need Not Worry Too Much Valuation Shrinkage

The discussion on the "bottom line thinking change" of the economic policy has heated up. This is in line with the spirit of the central economic work conference before "the stability of the word, the emphasis on the real and the prevention of emptiness".

Therefore, we continue to reiterate the views in the annual strategy report, and suggest that investors arrange the opportunity for next year by market adjustment at the end of the year, especially focusing on the structural opportunities of the "five new flowers" - the leading medium and high-end manufacturing segments.

The bond market has temporarily suspended interest rates and the interest rate has been restored to the level before the "state sea incident".

But at the end of the year, the short-term funds are still tight. In December, although the high frequency data of the economy continued the trend of cooling down in the early stage, it has not yet reached a clear point of falsification or confirmation, so the interest rate level will not be completely repaired in the short term.

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Looking at the cash demand peak of new year's day, Spring Festival and other factors such as the new year's day, Spring Festival and other factors such as MPA assessment, it is expected that funds will remain tight in the short term.

Moreover, according to the signal pmitted by the central economic work conference, monetary policy will be mainly based on maintaining "basically stable liquidity", so the central bank will not release obvious easing signals.

From a fundamental point of view, although the December economic high-frequency data is still continuing to moderate the trend of early cooling, but there has not been a marked decline, so it is currently difficult to clearly confirm or falsify the "empty window period", interest rates in the short term is difficult to completely repair.

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From the point of view, we still maintained last week's point of view. Although the impact of capital and sentiment still exists, there is no need to worry about the impact of short-term interest rate rise on valuation contraction.

First, the negative impact of rising interest rates on valuation tends to be established in a long period of time; secondly, the yield of the current 10 year treasury bond is close to the historical center of 02 years (3.5%-3.6%), which corresponds to the average growth rate of nearly 10% in the past China's economy. Considering that the future economic growth rate will still face downward pressure, and then superimpose the pformation of the economic structure, the interest rate center will also descend in the future. Therefore, as the temporary factors affecting the bond market fade away, the fundamentals will lead the future interest rate downward.

In the overall market trend, we maintain early judgement that, before the fundamental recovery has yet to be falsified or confirmed, the market will continue to shake up the pattern in the divergence, but in the short term, we need to pay attention to the RMB.

The negative impact of volatility on the market, the rumor of weekend exchange quotas and the opening of the swap window in the new year will exacerbate the expectation of devaluation and capital outflow.

From the bottom line of growth to the bottom line of risk, we should pay attention to the pformation of bottom line thinking in the coming year and the structural opportunities of the layout of the "new five small flowers". Apart from selecting the leading companies from bottom to top, we can screen industries from the dimensions of export and capital expenditure and R & D investment.

The discussion on the "bottom line thinking change" of the economic policy has heated up. This is in line with the spirit of the central economic work conference before "the stability of the word, the emphasis on the real and the prevention of emptiness".

Therefore, we continue to reiterate the views in the annual strategy report, and suggest that investors arrange the opportunity for next year by market adjustment at the end of the year, especially focusing on the structural opportunities of the "five new flowers" - the leading medium and high-end manufacturing segments.

Because the market volume can not be compared with the "five golden flowers" in 02-04, therefore, the choice of subdivision depends on the bottom-up mining of the industry. But from the top down perspective, we believe that investors can also select industries from two dimensions, such as industry export proportion, capital expenditure and R & D investment.

1) under the background of RMB devaluation, we are concerned about the manufacturing industry with high export proportion.

In the context of the depreciation of the renminbi, the gradual recovery of overseas demand and the rebound in commodity prices, exports in 2017 are expected to be the positive factors driving economic growth, while the higher the manufacturing sector, the higher the benefit will be.

According to the average value of the export delivery value of various industries, which accounts for the proportion of the operating income of the industry, exports of computers, telecommunications and electronic equipment, light manufacturing, textile, instrumentation, electrical machinery, pportation equipment and other industries account for a relatively high proportion.

2) under the background of the overall growth of capital expenditure of non-financial enterprises, we are concerned about the continuous growth of capital expenditure in recent years.

From the capital expenditure of non financial enterprises listed in the A stock market in the past few years, the overall growth rate is downward trend, but the semiconductor in the electronic industry, the high and low voltage equipment in the power equipment, the electrical and electrical automation equipment, the space equipment in the military industry, the whole vehicle and the auto parts, the biological products in medicine, the instrument and instrument in the mechanical equipment have maintained the capital expenditure in recent years.

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