Pharmaceutical and consumer stocks will enjoy a scarce premium

Against the background of highly uncertain globalization speed and scale of the epidemic, deterministic growth in domestic demand will enjoy a scarce premium, with medicine and consumer products as the main outlets. If the global economy continues to deteriorate beyond expectations, then real estate stocks and infrastructure stocks may also make a comeback.

It is difficult for A shares to break away from US stocks and get out of independent market
I entered the market at the beginning of 1996. My investment style was mainly to reorganize concepts and themed investments, chase the mainstream market opportunities, obtain liquidity premiums, and advocate becoming a “chaser” (chaser). Since the stock market crash in 2015, stock assets accounted for a gradual decrease in personal assets. The strategy of shareholding is based on “long-term heavy positions + occasional light positions”. Currently, it mainly holds pharmaceutical shares.

The investment strategies for 2018 and 2019 are mainly themed investments, and the overall position is extremely light. This year’s position has increased, and as of now, the gains from this year have exceeded 20%. At the end of last year, the overall judgment of the market was that there was a market in the spring of 2020, and the harvest should be timely. The reason for holding pharmaceutical stocks at the beginning of the year is that the market value of most A-share industry leaders is already in the forefront of the world, and only pharmaceutical stocks are lagging behind. This logic still holds. Because the policy “make up for the shortcomings” can not do without strengthening the pharmaceutical industry. The position change after the year is to increase the concept of holding blood products.

The current bear market in US stocks will far exceed the past, and may be second only to the Great Depression in 1929. The main reason for the US to get rid of the Great Depression crisis is to increase external demand, that is, “World War II” brought a lot of export dividends. On February 20 this year, the Nasdaq’s rapid downturn from an 11-year long bull market to a bear market was superimposed on the epidemic of the United States seen once in a century. This makes the “blockage” of the major power economies and the depletion of stock market liquidity a catalyst for each other, triggering frequent meltdowns of major global stock markets. In contrast, the Shanghai and Shenzhen stock markets only reflected box shocks, and the leading index GEM index rose 27%. In comparison, the history of 1998 and 2008 is similar to this year, both of which are “A shares fell first, US stocks fell A shares rose”. In 2015, it was a combination of A shares falling first + US stocks rising continuously. This is not because the regulators misjudged the A-share bubble, but underestimated the imagination of all sectors of the US to blow up the U.S. stock bubble.

At the moment, it cannot be said lightly that A-shares have passed the bear market of US stocks because the bear market of US stocks is far from being terminated. The Shanghai Composite Index is far more resistant to decline than U.S. stocks, not only because of low valuations, but also because there are fewer profitable positions for heavyweight stocks. Historically, since the “World War II”, the U.S. stock bear market has fallen by an average of 30.4% for 13 months. The current bear market in US stocks fell sharply and deeply, but the adjustment time was not sufficient. The Fed’s rescue of the market only halted the issue of liquidity depletion (this is the reason why US stocks rebounded 20% and entered the technical bull market), and it cannot stop the epidemic’s obstruction of the United States and the global economy.

The ultra-low speed of the global economy will become the norm
The globalization of the new crown epidemic is extremely unpredictable, asynchronous, and mutually contagious. Some experts now predict that the new crown epidemic may reappear in autumn, or even become a seasonal epidemic. This also indicates that the tsunami-like impact of the new crown epidemic will continue to be the biggest uncertainty in the financial market, and it is difficult to hold high-risk assets for regular pricing. From a cautious point of view, the probability of intermittent spread of the epidemic is high, and the ultra-low-speed operation of the global economy will become the norm.

The premise of predicting economic recovery in 2021 is that the global disruption and termination of the new crown epidemic will occur this year, and the global post-disaster reconstruction will be highly coordinated. This is the most optimistic forecast. In fact, countries have different policies, resources, and determinations to deal with the new crown epidemic and economic obstruction. It is difficult for the epidemic to end and economic recovery to be synchronized. It is difficult for global stock markets to repeat the bull market after 2009 and the V-shaped reversal of the global economy .

Because, even in the most difficult period of the US stock market and epidemic situation, the United States still adheres to the foreign policy of completely surrounding China. This indicates that the global economy blocked by the epidemic may continue to be bogged down in the future due to technological wars and trade wars. It can be said that the global economy has entered a difficult period of “who is the worst” or “who is the most resistant”. The conflicts between major powers caused by the economic recession may intensify, and the risk premium level of the stock market will continue to decrease. It can be deduced from this that the Nasdaq’s biggest decline this year only erased the 35% increase last year. This only reflects the first wave of panic shocks and does not reflect the mid- to long-term impact of the economic recession. Davis’ double kill is currently only a valuation kill, and the killing performance stage has not arrived.

As far as the domestic economy is concerned, China will give priority to making the domestic demand market bigger and stronger. Some think tanks started to suggest that there should be no economic growth target for the whole year of this year, which is very in line with the global political and economic situation. The traditional channels of financial crisis and economic crisis can be predicted, and the globalization crisis caused by the epidemic is difficult to predict. If the epidemic spreads throughout the year and globally, China’s forced growth will not only lead to the flooding of debts, but also cause long-term hidden risks of high investment and low efficiency. The most important thing is that if there is no export-driven, expanding production capacity will only increase the inventory crisis.

In 2007, China’s economic growth rate was 14.23%, which was caused by the overheated asset bubble caused by the resonant rise of the global housing market, stock market and commodities. This is also the main reason why China joined the global bailout and bailout economy from 2008 to 2009. However, China’s finance and economy are in the late stage of the deleveraging cycle in 2019, which is exactly staggered from the prosperity cycle of the United States. At the same time, China took the lead in ending the large-scale local spread of the epidemic, and domestic production gradually returned to normal. This also means that the comparative competitiveness of the Chinese economy has reached a higher level, and the risk depression effect has been demonstrated.

The recent Politburo meeting was interpreted by the market as setting the direction of economic development this year. Personally, it is understood that if there is no large-scale unemployment, the Chinese economy will be dominated by stability. International trade is highly uncertain due to the impact of the epidemic, and China’s economic growth will be the first choice for expanding the consumer market. Infrastructure investment is largely driven by government debt. Against the backdrop of a possible long recession cycle in the global economy, it is extremely difficult and risky to expand investment to boost exports. It can be deduced from this that government debt investment should focus more on supporting employment to drive a more efficient service industry recovery, and consumer stocks therefore benefit the most.

The deterministic growth of domestic demand will enjoy a scarce premium
The global economic recession is a foregone conclusion. A-share risk aversion has risen sharply. The bull market for technology stocks that was spurred by the proliferation of liquidity in the early stage has come to an end. It was evident that most of the popular science and technology board bull stocks returned to the original form at the beginning of the year. Under the long-term bearish suppression of the full circulation and registration system, the A-share policy market promotes weaker momentum (this is also the main reason for the IPO not to be suspended in this round of bear market), which is more manifested by the pulse of funds. Shenzhen’s single-day turnover has shrunk from a peak of 902.2 billion yuan on February 25 to 337.5 billion yuan on March 31. The market will return to the pattern of “beautiful 50”, which is holding groups to warm up.

In terms of investment opportunities, the impact chain of this round of global epidemic is: the outbreak of the global epidemic has led to the “locked city”, “locked country” → the shrinking of the asset prices of the stock market, property market, and commodities → resident unemployment → corporate bankruptcy → worsening fiscal deficits → bank bad debts Large increase → The economy continues to decline. The mere anticipation of a “lock-in” economic recession itself will cause governments of all countries to shrink their hands when fighting the epidemic crisis, thus allowing the epidemic to spread globally. In the uncertain background of the globalization speed and scale of the epidemic, the deterministic growth of domestic demand will enjoy a scarce premium. Medicine and consumer products are the main outlets. If the global economy continues to deteriorate beyond expectations, the country may restart the real estate-driven growth model, and real estate stocks and infrastructure stocks may return.

From the perspective of asset allocation, the “cash is king” strategy is mainly manifested in the period when the liquidity is exhausted. The main reason is that asset pricing is anchored and avoiding the risk of systematic selling is the first choice. During the economic downturn, “cash is king” is a passive choice to deal with the balance sheet recession cycle. Risk-averse investors preferred treasury bonds, followed by high-dividend-weight stocks such as large-cap bank stocks.

The relatively low valuation sectors of A shares and Hong Kong stocks are mainly financial heavyweights. Judging from the comparison of absolute market value, pharmaceutical and consumer stocks still have policy support and market value growth space, and the proportion of the two in the total market value of A shares is much lower than that in Europe and the United States. In terms of local institution allocation, the popularity of debt products is much greater than that of equity, which shows that the dividend rate of most A-share stocks is low. Under the mainstream expectation that the balance sheet recession may be globalized, international capital will be the king of cash, and the demand for the allocation of A shares may be exaggerated.

“Germany gives subsidies to nursing staff for the first time!” Germany’s “Photo” reported on the 6th that Germany’s Bavaria, which has the most confirmed cases, announced on the 5th that it will issue 500 euros (about 3823 yuan) to all the nursing staff in the state. bonus.

The governor of Bavaria, Soder, said that in order to thank the nursing staff for their continuous efforts, the state government decided to give bonuses to more than 250,000 nursing staff in medical care institutions such as hospitals and nursing homes. He also said that the government will provide free food and drink for nursing staff. The state will cost 126 million euros for this purpose.

Organizations such as the Bavarian Red Cross appreciate this, but many German netizens believe that 500 euros is really “shabby.” Bavaria is the richest state in Germany and home to large companies such as BMW. More subsidies should be given to front-line nurses. Experts believe that the income of German nursing staff should be greatly increased. At present, the average annual pre-tax income is below 40,000 euros, which is less than half of that of doctors.