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    How to invest in 2019? Let’s take a look at Ping An’s assets and Taikang’s assets.

    2019-02-11 11:39:34

    Brokerage China Pan Yurong


    Recently, large-scale mainstream insurance asset management institutions such as Ping An Assets and Taikang Assets have given investment views in 2019.

    Ping An Asset believes that:

    1. The economic growth in 2019 will be under the thinking of “double bottom line” (growth bottom line + de-leverage and environmental protection bottom line). The policy has limited room for growth and whether there is a significant rebound in economic growth in the second half of the year;

    2. The real estate industry is currently facing the problem of overlapping large and small cycles, and more is a fine-tuning of policies;

    3. In terms of monetary policy, it is expected that more is the possibility of lowering the interest rate of the open market. The reduction of the benchmark interest rate requires an extreme situation to trigger;

    4. In terms of fiscal policy, it will be more active, but there are contradictions in tax reduction and fee reduction, high debt and increased expenditure, which restricts its space;

    5. In 2019, large-scale asset bonds are better than equity, but attention should also be paid to the long-term allocation of equity.

    Taikang Asset believes that:

    1. The current situation can be portrayed as “political and fundamental racing”, but it is clear that the existing hedging policy is not enough to reverse the downward trend of economic fundamentals. Social welfare (credit derivation) is also not a trend improvement, and it is only the change in rhythm. In this process, the continued exploration of the economy may re-establish a consensus in the capital market.

    2. The decline in economic growth in 2018 was due to the same direction of fundamental and de-leverage policies, and the certainty was higher. In 2019, fundamentals and policies were reversed, and uncertainty increased significantly. At the stage when the economic growth rate is near the bottom line of the decision-making level, the post-period indicators such as employment will further deteriorate, which will further increase the steady growth policy. At present, there is an amplifier effect at the implementation level. Once the wind direction has a clear change, it will be the bottoming time of the economy during the year. Market expectations have a huge impact.

    For the performance of various markets in 2019, both organizations have discussed from different angles.

    Interest rate perspective: interest rates may move from fast down to shock period

    Since the fourth quarter, the long-term interest rate is still in a downward trend, but recently interest rates seem to have encountered a downward trend. In the past 10 years, the country opened a shock around 3.60.

    Taikang Asset believes that in addition to the long-term interest rate of the long-end interest rate, there are three factors that may constrain the downward trend of interest rates. First, the supply of interest rate bonds this year is significantly earlier than in previous years; second, the funds face has a certain convergence; third, the risk appetite of the financial system has been repaired.

    In the first half of January, the funds face slightly converge from the extremely loose, with the implementation of the RRR cut, the adjustment of the targeted reserve + TMLF, it is expected that the interest rate of funds will be difficult to rise again.

    Ping An Asset also noticed a rebound in market risk appetite. In January, among the various assets, the performance of stocks and commodities was better than the fixed income. The reason behind this was mainly due to the intensive domestic policy of Sino-US trade friction easing and the market risk appetite rebounded.

    Taikang Assets believes that the rebound in financial market risk appetite is the short-term main risk of the market. The equity and futures markets have rebounded since the beginning of the year, significantly inhibiting long-end interest rate performance.

    There are three main reasons that can lead to risk appetite repair. First, China-US trade negotiations have made significant progress; second, social stability has stabilized/credit has exceeded expectations; third is the steady growth policy in the first quarter.

    None of the above factors can be falsified for a short period of time, which may make the interest rate increase in the first quarter.

    In the long run, the market's internal growth momentum is not strong, and the short-term main positive factor is the further loosening of monetary policy. Taikang Asset believes that the interest rate market may turn from a fast downturn to a shock in the short term.

    Credit market: alert to credit risk

    Taikang Assets expects that the credit spread will still fluctuate between 40 and 50 BP. There is still room for the market, but the risk is gradually increasing.

    In terms of fundamentals, we are wary of the valuation risk and credit risk of the entity represented by Kang Dexin, but the credit risk of other entities has not increased.

    In terms of supply and demand, both supply and demand are booming. It is necessary to pay attention to the issuance and supervision of cash management, and the potential supply will continue to remain high at the current rate of return.

    On the valuation side, the spreads are below the historical average, and the absolute level is close to the end of 2015.

    In terms of industry, the profitability of the strong cycle industry has entered a downward cycle, but the magnitude and pace are relatively controllable, and it will take about 2 years for the solvency to deteriorate significantly.

    For the recent research feedback of City Investment, the local government's attitude toward the settlement of implicit debt is relatively positive, but mainly depends on the local government's own economic and financial strength.

    In the real estate industry, some regions have restricted purchases and sales restrictions, but it is difficult to reverse the overall situation of sales, and the financing and liquidity are still relatively tight.

    The consumer industry is still at a high risk.

    Ping An’s judgments on monetary policy and credit market are similar to Taikang’s assets.

    Ping An Asset believes that in terms of policy, the overall RRR cut in January showed that the monetary policy easing was further overweight. Monetary policy is still good for the bond market. In terms of funds, although the liquidity gap in the Spring Festival is large, the central bank's early layout and the intention to maintain a reasonable and sufficient liquidity are clear, and the overall funding is expected to be innocent.

    On the whole, for the next stage of the bond market outlook, Ping An Asset believes that the current bond market is in the bull market relay stage. It is recommended to maintain a longer period of time and appropriately increase the leverage. If there is a correction, the rate of return can still be increased. However, because the current absolute rate of return is low and the valuation protection is insufficient, the superposition of counter-cyclical policies will gradually introduce or repair the market's risk appetite, which will cause disturbance to market expectations, and the fluctuation frequency of the yield will increase. Therefore, the operation can increase the frequency of transactions and increase the profit. In terms of credit, we will continue to adhere to high-level, preferably medium-grade, and avoid low-grade credit bonds.

    Stock equity market: long-term allocation value appears

    Ping An Assets Outlook The stock market believes that the fundamentals are still under pressure, but the pessimistic expectations are slightly restored. In the medium and long term, the value of A-share allocation is prominent.

    In terms of profitability, the current profit forecast is still in the process of decline. Compared with the change pattern of 2012-2013 earnings expectation, it is expected that the future profit forecast will still have a downward adjustment process.

    In terms of valuation, the overall valuation of the market has slightly recovered after a short-term rebound. Overall, the market valuation is at a low level, the CSI 300 is at the 18% quantile level in the past 10 years, and the CSI 500 is at the 1% quantile level in the past 10 years.

    In terms of funds, since the beginning of the year, the inflow of funds into the stock market has met with a small peak. Although the continuous inflow of overseas funds has led to a short-term rebound, history shows that capital inflows are difficult to reverse the market trend.

    For the allocation of large-scale assets in the next stage, Ping An Assets gives recommendations in the annual investment outlook report, Bond>; Equity>; Commodities.

    Ping An Asset believes that the allocation value of bond assets is greater than that of equity assets, but at the same time, the A-share market is constructing the bottom of the history. The positive factors of fundamentals, policies, emotions and funds are gathering. Medium and long term configuration value.

    Insurance institutions expect downward pressure on economic stability in the next six months

    Not long ago, the China Insurance Asset Management Association issued the "Investment Confidence Survey of the First China Insurance Asset Management Industry in 2019". The results show that the insurance institutions expect the domestic economy to be generally stable in the next six months, or there may be downward pressure; more than half of the institutions believe that the developed economies are not optimistic in the next six months, and the RMB exchange rate pressure is generally controllable; it is expected that the financial market liquidity will be marginally loose in the next six months; It is optimistic about the bond market and favors medium and high-grade credit bonds and financial bonds.

    Yu Pingkang, chief economist of the Yangtze River Pension Insurance and director of the China Chief Economist Forum, said in his comments on the survey results that 2019 will be a year of challenges and opportunities. The external uncertainty faced by China in the social and economic fields has increased. The polarization between the rich and the poor in the United States and European countries has intensified, and the populist trend of thought has spread. Even if trade disputes are alleviated in the short term, they may repeat and deteriorate in the medium and long term. Both the US and European capital markets are likely to undergo further adjustments in the second half of 2019 as the US economy expects a slowdown.

    Looking at the domestic market, the economic deleveraging policy has achieved staged results, the industrial structure has undergone significant adjustments, and financial de-leveraging has become more thorough. In the first half of the year, the downward pressure on the economy increased, the growth rate of real estate investment slowed down, infrastructure investment was insufficiently hedged, and the negative pressure of trade disputes began to appear. The transmission channels of monetary policy are not smooth. In the context of financial deleveraging, capital markets, especially primary markets and direct investment, are suppressed.

    But the challenge is to foster opportunities. Downside pressures may be the driving force behind a series of substantive reform and opening up policies. In the third and fourth quarters, the economy may stabilize in stages, or even rebound slightly. In the Tier 1 capital market, asset prices have significant investment value; the secondary stock market is also in the bottom stage of valuation; the secondary bond market still has opportunities in a relatively loose currency environment. Both the primary and secondary markets will be the spring of long-term investors.

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    Editor in charge: Robot RF13015

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