Key takeaways:
The mystery of the cause: the divergence between easy money and low inflation. Since 2023, M2 has continued to grow highly, while CPI PPI has continued to decline, and the mystery of easy money and low inflation is the most concerned and perplexing issue in the current market
1) Financial side: Although the currency is broad, residents consume less, enterprises invest less, and the fiscal accumulation is more, and the funds are "not transferred", resulting in insufficient actual currency circulation; 2) Inflation: Mainly due to sluggish domestic and foreign demand and overcapacity in some industries, which triggered this round of endogenous low inflation;
The way to break the game: the key is to synchronize supply and demand. 1) Review of the domestic: To break the situation, it is necessary to ease the currency + expand the financial foundation, stabilize the real estate + promote the reform, and the turning point of A-shares mostly appears before and after the big moves such as financial reform and real estate reform; 2) Review of Japan: **The "three arrows" of economics (easy money + fiscal expansion + structural reform) have boosted inflation**rebound and **bottomed**; 3) Breaking combination: This round of endogenous low inflation is caused by sluggish effective demand, overcapacity, sluggish real estate, and blocked exports, which requires a policy combination of monetary easing + fiscal expansion + stabilizing real estate + promoting reform.
Opportunity for layout: high dividends and consumption, technology growth relay. 1) Historical trend: ** first adjusted and then bottomed out, high dividends have attracted much attention, consumption and growth have been interpreted in turn, mandatory consumption has the advantage in the early stage, and consumption and technology growth can be followed by relay; 2) Layout opportunities: With the gradual development of policies and the approaching inflection point of this round of inflation, it is recommended to pay attention to the three-legged strategy and grasp the growth opportunities of high dividends, consumption and technology.
Key takeaways:
The new ESG regulations will effectively promote the formation of disclosure standards, and ESG governance and investment may enter the fast lane of development. 2024.2.8The Shanghai, Shenzhen and North Stock Exchanges issued the Self-Regulatory Guidelines for Listed Companies – Sustainability Reports (Trial) (Consultation Paper) (hereinafter referred to as the "Guidelines"), which further clarified the disclosure requirements and disclosure framework for ESG reports. ESG status: The quantifiable degree of ESG information is low, and the product richness is limited. China's initial ESG policy can be traced back to 2003, with voluntary disclosure as the mainstay, and since 2008, it has gradually entered the stage of combining voluntary disclosure and mandatory disclosure. However, compared with international ESG, there is a lack of unified standard guidelines for ESG in mainland China, and the degree of quantification and disclosure rate are low, with a total of 1,714 A-share companies issuing independent ESG reports in 2022 (disclosure rate of 33.).8%), of which only 583 companies disclosed carbon emissions data (disclosure rate was 11.).5%）；China's ESG is mainly guided by regulatory authorities, ESG investment mainly revolves around green inclusive finance (green credit), while the international market is mainly driven, forming an ESG investment and trading ecology with asset management as the mainstream.
ESG disclosure: Adopt a combination of mandatory disclosure + voluntary disclosure. The Guidelines further clarify the disclosure requirements for ESG reports: The disclosing entity adopts a combination of mandatory disclosure + voluntary disclosure; From the perspective of disclosure time, the exchange requires that the ESG report of listed companies should be disclosed simultaneously with the annual report, and has set up a two-year transition period, and the formal regulatory requirements are to release the ESG report for 2025 before April 30, 2026. ESG issues: The disclosure framework is in line with international standards and conforms to the national conditions with Chinese characteristics. The framework of ESG information disclosure in the Guidelines is consistent with the four-pillar system of the ISSB, the materiality principle adopts dual materiality, aligns with the GRI standard, and the index design conforms to the national conditions with Chinese characteristics.
ESG impact: Domestic ESG governance and investment may enter the fast lane of development. China's ESG report presents the characteristics of "uneven disclosure + diverse forms", and most of the disclosed companies in 2022 will be concentrated in ** (market value) of 100 billion yuan, with a disclosure rate of 977%), central state-owned enterprises (disclosure rate 59.).7%), including ESG reports, social responsibility reports, sustainability reports and other forms. Taking the Hong Kong Stock Exchange as a reference, after the 2019 Environmental, Social and Governance Reporting Guide came into effect, the corporate disclosure rate increased to 95% in 2022, of which 100% of the HSI constituents disclosed carbon emission data; In addition, China's ESG investment is still in its infancy, China accounts for less than 2% of the global ESG** management scale, and only 140 institutions have joined UN PRI.
Key takeaways:
Event: From February 18 to 19, 2024, the China Securities Regulatory Commission (CSRC) held a series of symposiums to listen to opinions and suggestions from all parties on strengthening capital market supervision, preventing and resolving risks, and promoting the high-quality development of the capital market.
Further release strong regulatory signals to improve the quality of listed companies from the source. At this series of symposiums, the participants "suggested that the IPO access should be strictly controlled, the whole process of listed companies should be supervised, and unqualified listed companies should be resolutely cleared, so as to fundamentally improve the quality of listed companies and increase investment returns". In addition, the meeting emphasized that the China Securities Regulatory Commission will comprehensively and strictly supervise and manage, effectively improve the style of work, strengthen the construction of executive power, promote the leadership team and the cadre team to truly make a big change in ideology and action, and further release the signal of strong supervision.
The whole process of IPO has slowed down, and the scarcity premium of listing has become prominent. Since August 2023, when the China Securities Regulatory Commission (CSRC) stated that it would tighten the pace of IPOs and give full play to the countercyclical adjustment mechanism, the IPO market has entered a slow lane. As of February 20, 2024, there have been no new acceptances in the Shanghai and Shenzhen IPO markets for five consecutive months, and the pace of review and registration has also slowed down significantly, with an average of only 6 monthly meetings in Shanghai since October 20236, compared with the monthly average from January to September 2023 of 257 decreased by 74%; During the same period, the average number of enterprises with monthly registrations was 64, down 71%. As of February 20, 2024, there are currently 685 IPO projects under review, with a total of 719.4 billion yuan to be raised. Among them, there are a total of 559 IPO queue projects in Shanghai and Shenzhen, a decrease of about 30% from the end of January 2023 and the lowest point since 2023. The issuance side also showed a significant tightening trend. With the pace of IPOs slowing down since October 2023, new listings have performed well, with an average first-day increase of 1295%, and only 1 new stock broke slightly during the period. Combined with the current pace of new stock issuance and strong regulatory situation, it is expected that the pace of subsequent new stock issuance will maintain the current low speed and may even further decelerate, assuming 2-4 issuances per week, and the neutral expectation is to issue 135 companies throughout the year, and it is expected to raise 189.5 billion yuan, a decrease of 40% compared with 2023
Combined with the number and progress of IPO queuing projects, Neutral expects 35, 50 and 50 companies to be issued on the Science and Technology Innovation Board, ChiNext and Main Board respectively. Considering that the slowdown in the pace of new stock issuance will bring a certain scarcity premium, and historical data shows that there is a certain negative correlation between the increase in new stock listings and the number of new shares issued, combined with the weighted average increase of about 72% on the first day of new listings since 2024 (the total amount of initial funds raised), we assume that under the neutral scenario, the first-day increases of the Science and Technology Innovation Board, ChiNext and Main Board are respectively %. To sum up, on the premise that there is no major adjustment to the issuance pricing system, weIt is estimated that in 2024, the yields of 100% of the 100% shortlisted new products in the Shanghai and Shenzhen A** field and non-preferential objects will be: 200 million yuan products33%, 500 million yuan products52%。