Key takeaways:
Theme thermometer: The Chinese head index has turned from rising to falling, and there has been a significant net outflow of funds from heavy positions and leading technology themes. In the past two weeks, the volatility of hot themes has been significantly amplified, with the average daily turnover increasing to more than 300 million yuan, and the average daily turnover rate rebounding slightly. Technology and industrial themes were larger, small-cap themes such as micro-cap stocks led the decline, and value themes such as coal and electricity turned from rising to falling but were still net inflows. At present, the choice of theme direction should still start from the top-level design of policies, and in terms of incremental policies, we are optimistic about the structural opportunities of new technologies, new products and new application scenarios catalyzed by new quality productivity-intensive policies.
Theme 1: New Qualitative Productivity. The Political Bureau of the Communist Party of China (CPC) conducted collective learning on accelerating the development of new quality productive forces and solidly promoting high-quality development. During his investigation in Shaanxi, Premier Li Qiang proposed to speed up the cultivation and development of new quality productive forces. The Ministry of Industry and Information Technology's "Implementation Opinions on Promoting the Innovation and Development of Future Industries" proposes to actively cultivate future industries and accelerate the formation of new quality productivity. The new quality productivity is expected to lead the new direction of future industrial investment. Recommended: 1. Future technologies such as intelligent manufacturing, new materials, nuclear fusion, and hydrogen energy; 2. Future products such as humanoid robots, intelligent terminals, brain-computer interfaces, unmanned aerial vehicles, etc.; 3. Commercial aerospace, low-altitude economy and other future scenarios.
Theme 2: Capacity going overseas, in the context of structural overcapacity and insufficient demand in the manufacturing industry, the layout of overseas incremental markets has become a strategic trend. In 2023, China's construction machinery exports will increase by 9% year-on-year57%, significantly higher than the overall growth rate of exports, in addition to the high growth of automobile exports, excavators, loaders and other high-end equipment export growth rate is significantly higher than domestic sales.
Key takeaways:
The fiscal data for 2023 ended successfully, with fiscal revenue actively repaired, the expenditure structure continued to be characteristic of the past three years, and the decline in land sales revenue narrowedFiscal policy is expected to maintain a positive tone in 2024, with a deficit ratio of 3About 0%, ultra-long-term special treasury bonds are expected to be an important reserve policy, with a high probability of active fiscal front-loading force, focusing on supporting the development of new productive forces and the "three major projects", focusing on fiscal and monetary coordination and synergy, especially the use of policy development.
The tax structure highlights the economic pressure, and the VAT is better due to the low base support. Fiscal expenditure remained positive, continuing the characteristics of the past three years. Income from land sales picked up. In 2024, we will focus on fiscal strength, and ultra-long special treasury bonds or reserves. Fiscal policy has been actively exerted, and expenditure has been front-loaded and the scale has been increased.
Under the active policy tone and work objectives, we believe that the active force of fiscal policy will be reflected in the following aspectsFirst, the narrow deficit ratio is expected to be 3 in 20240% or so,The corresponding deficit size is 4About 1 trillion yuan, the scale of general public budget expenditure and revenue will reach 29 trillion yuan and 23 trillion yuan respectively, and the scale of new special bonds in 2024 is expected to reach about 4 trillion yuan. On the one hand, public budget expenditure will be pre-empted, and on the other hand, the issuance of special bonds will also be relatively pre-emptive. Third, broad fiscal spending will expand further, as we expectIn 2024, broad fiscal expenditure is expected to approach 42 trillion yuanCompared with the margin of 39 trillion yuan in 2023, the incremental fiscal funds are expected to form a stronger pull on nominal GDP. Ultra-long-term special treasury bonds remain an important reserve policy. On the one hand, it can be used for the expenditure of major projects in specific areas, and on the other hand, it can help to free up budget funds to increase support in some areas.
Key takeaways:
Operation Lone Star has triggered a border crisis, and the Democrats are planning to make major concessions in the new border bill. As the hardest hit area of illegal immigration, Texas has been head-to-head with Biden on the border issue, carrying out "Operation Lone Star" to block illegal immigration. Recently, troops were sent to control some border areas, federal law enforcement officers were not allowed to enter, and 25 Republican governors signed a joint petition in support of Texas against Biden**. At present, the White House is actively negotiating with the Senate on a new bill on border security, and the situation in Texas is undoubtedly adding fuel to the fire. Due to the tie-up of military spending such as the draft and aid to Ukraine, the Democratic Party plans to make significant concessions, including granting ** the "right to close the border".
The huge policy differences between the two parties on immigration are also a reflection of differences in values, economic philosophies, and voter base. This year is the first year, and the immigration issue will undoubtedly be the main battlefield for stirring up and launching political games. Often, in elections, Republicans use immigration issues to appeal to conservative voters, especially those concerned about border security and law and order. The Democratic Party, on the other hand, has sought to consolidate its base through immigration policy reforms, particularly to win the support of Hispanic and other minority voters. Polls show that the American population is still open to immigration in general, but polarized is severe. Dealing with immigration issues is key to winning swing states
Think globally,The political and social impact of immigration is far beyond the United States. At present, Europe is still a favored destination for migrants, and this year is the first year of the European Parliament, and in the context of frequent geopolitical conflicts, the EU needs to be more careful to prevent a repeat of events like the "2015 refugee crisis". The test of East Asian countries on migration may seem mild, but it is more fundamental to economic development. Especially in the aging era, how to introduce more attractive and targeted immigration policies in non-traditional migrant recipient countries such as Japan and South Korea is crucial for future development prospects. The migration policies of ASEAN countries are still conservative, and the movement of people mainly occurs within the region, which is manifested in the cross-border movement of labor, especially low-income labor. This group of labor migrants has also supported the rapid economic development of the entire region, helped to regulate the impact of an aging population, and filled the vacancies of domestic workers in certain areas.
Key takeaways:
In the medium and long term, the "bull market" of 30Y treasury bonds may continue; But we still maintain the previous conclusion:Institutions with short-term positions are not in a hurry to take profits, and institutions with unstable liabilities that have not been on the bus are not recommended to chase up.
Behind the 30y transaction** exceeding expectations, chance is accompanied by inevitability. Since March 2023, there has been a long-term phenomenon of "bond bull** accompanied by spread compression" in 30Y treasury bonds, which is behind the superposition of multi-point trend driving factors: first, because of the bullish period of bonds, the demand of institutions for duration to return objectively exists, and during the three-year bond bull period since 2021, the medium and long-term fundamental expectations of institutional investors in the bond market have changed substantially; Second, after the listing of the 30-year treasury bonds, the market has driven the activity of the cash bond market; Third, the decline in residents' risk appetite has led to the growth of life insurance income, and the growth of ultra-long-term incremental funds on the liability side of insurance capital has significantly driven the asset side's demand for the allocation of ultra-long-term assets. Therefore, behind the "transactional" ** exceeding expectations, the 30y-10y treasury bond maturity spread has its inevitability.
The interest rate on 30y Treasury bonds is lower than 2The 7% point has not completely broken through the market perception boundary. Since the end of 2023, the interest rate of 30Y treasury bonds is actually close to the downward channel of the interest rate of high-grade long-term credit assets. If we anchor the lows of the yields of 3-year high-grade urban investment and secondary bonds since 2020, which have reached historic lows in April-May 2020 and July-October 2022 respectively, the current bond market performance has not completely broken the perception of historical experience. If the bond bull continues, the 30Y Treasury bond interest rate breaks through 260% is based on its pricing.
Although the 30-year treasury bonds** have continued to exceed expectations since 2023, the core driving mechanism behind each round** is different. Based on the review of the behavior level of treasury bond institutions in the past 30 years since 2023, we have summarized the following conclusions: First, if the trading ** since 2023 is divided into two major rounds - from March to August 2023 and from November 2023 to the present: the first round is the emergence of **trading** driven by insurance allocation, and the second round is the first to enter the market. Second, rural commercial banks generally make 30-year treasury bonds with the idea of "taking advantage of highs and dips", and are less likely to hold them for a long time. In addition to July is chasing dips, from March to April 2023, June, November to January of the following year, rural commercial banks are all on dips**. When the rural commercial bank enters the market, its operation idea may be regarded as a confirmation of the subsequent interest rate adjustment. Third, insurance funds are less active to take profits on 30-year treasury bonds. Since insurance has allocation attributes for the 30-year treasury bond itself, there are few ** behaviors, and only a small amount of profit will be taken in July 2023 and January 2024, with a net increase of about 5 billion to 6 billion yuan respectively, which is less than 20% of the net increase in insurance capital last month. Since the ** behavior appears, we can regard this part of the funds as a trading order, which accounts for a relatively small proportion of the profit-taking order, and the insurance capital allocation order is less likely to occur when the interest rate falls. Fourth, the current round of 30Y Treasury bond yields has obvious trading attributes, and at present, only ** is still increasing its holdings significantly. After the brokerage increased its holdings in November and December, it has not yet begun to take profits, and the exit appeal of this part of the funds constitutes a risk point for 30Y treasury bonds; At present, the bond base continues to increase holdings, but the marginal scale is gradually converging.
Key takeaways:
Weak rebound below the PMI cut-off value. The manufacturing PMI index in January ended the previous three-month downward trend and rebounded 02 points. Generally speaking, January is close to the Spring Festival holiday, which is often the off-season for the manufacturing industry, and the PMI as a month-on-month indicator mostly shows a downward trend, and the manufacturing PMI in January has fallen by an average of 0 in the past ten years2 points. Although the rebound in this month's reading is still below the critical value, it also reflects the increase in factors for economic stabilization. 1.Pre-holiday stocking to support production. Rush to work before the long holiday, and the production threshold will rise above the critical value. This year's Spring Festival is late, falling in February, and the holiday is longer, and enterprises are more willing to stock up. The difference between production and demand continued to be high. Since the weakening of the demand side in the fourth quarter, the performance of the supply side has been relatively strong, and the "production-demand" difference indicator has been hovering at a relatively high level, and it has further expanded to 23。While it is normal for the gap between production and demand to widen during the production preparation month, continued overcapacity may also weigh on future production space.
2.Weak demand continues, and external demand is stronger than domestic demand. The improvement in external demand is more pronounced than that in domestic demand. This month, the order indicators reflecting demand have rebounded, but in terms of splitting, the rebound of the new export orders sub-indicators is significantly stronger than the new order indicators, that is, external demand has improved this month, while domestic demand still needs to be repaired. Overseas, the US Markit manufacturing PMI recorded 50 in January3. It is the second time since the end of 2022 that it has returned to expansionary territory, the last time occurred in April 2023, and it has fallen back into contraction territory only a month later. This PMI expansion occurs at the end of the interest rate hike cycle, and the strength and persistence may be stronger than the last one. At the same time, the U.S. destocking cycle has lasted about a year and a half, and the current inventory growth rate has been at a historical low.
3.The prosperity of the non-manufacturing industry is differentiated. The index of business activity in the services sector returned to expansion territory. The Spring Festival holiday is approaching, driven by the holiday effect, residents' willingness to travel and consumption has increased, and the service industry has expanded, with 13 of the 21 industries surveyed in the expansion range, an increase of 4 over the previous month. Among them, the business activity index of retail, road transport, air transport, catering and other industries rose to the expansion range, and the market activity rebounded; The business activity index of railway transportation, postal services, monetary and financial services and other industries is all at 600% and above high prosperity range. The business activity index of the construction industry was cold. Affected by factors such as low temperature weather in winter and the approaching Spring Festival holiday, the construction industry has entered the off-season of construction, and the business activity index is 539%, down 3 from the previous month0 percentage points. Among them, all sub-indicators have dropped significantly, and the new orders index has fallen sharply by 39 points, again below the critical value; The employment index fell by 16 points; Business activity is expected to fall sharply by 38 points, although still in the high boom range, has been significantly weaker than the same period in previous years.
Key takeaways:
2024 is still a year of fundamental recovery and economic transformation. In the macroeconomic sector, "recovery", "weak recovery", "challenge" and "transformation" appeared 51, 26, 15 and 16 times, respectively. Holding the view of "recovery"**Managers mostly believe that in 2024, especially in the first quarter, the domestic fundamentals are expected to gradually stabilize and rebound, mainly because the additional trillion treasury bonds issued in 2023 will form a physical workload as soon as possible in early 2024, and the construction of major projects is expected to start; With the gradual accumulation of policy effects such as the relaxation of purchase restrictions in the real estate market, the real estate market is expected to bottom out and stabilize; The continued efforts of fiscal and monetary policies have provided sufficient support for the economic recovery; The rebound of the overseas inventory cycle is expected to drive the repair of the export center and other factors. Most of the managers who hold the view of "weak recovery" believe that the economic recovery process in 2024 may be gradual and twists and turns, including many "challenges", mainly because the financing platform is constrained by debt, and the infrastructure development is restricted; What China is experiencing is a major adjustment of the real estate cycle, and under the drag of real estate, it is difficult for aggregate demand to improve comprehensively and rapidly; Residents' consumer confidence needs to be restored; insufficient investment motivation of enterprises; The pace and intensity of the policy may remain restrained in the short term, and the actual effect on the economy remains to be seen. The pressure of the old kinetic energy will continue for a long time during the conversion of the old kinetic energy. "Transformation" means that 2024 is in the transition period of old and new kinetic energy, and most managers believe that traditional kinetic energy is facing stalling in the short term, and the filling of new kinetic energy cannot be achieved overnight.
The infrastructure, real estate and export sectors are generally positive next year. There is a strong degree of consensus on fiscal strength and monetary easing. In the policy sector, "force", "easing", "abundant" and "cooperating" appeared 24, 40, 15 and 18 times respectively, reflecting the manager's expectation that the fiscal policy and monetary policy in 2024 will be more consistent, that is, the demand for "stable growth" of the policy is strong in the context of the continuous recovery of the economy. The sentiment of bulls is strong, but the first quarter is more. The basis for the judgment of the ** manager who believes that the interest rate will be on a downward trend mainly depends on the weak performance of the economic data at this stage, and the continuous repair of the fundamentals requires the cooperation of monetary policy, and the reduction of the bank deposit rate confirms the medium and long-term downward trend of the broad-spectrum interest rate, so the interest rate center still has room to fall. The ** manager who believes that the interest rate will maintain the range ** is to take into account the interference of credit "good start" and fiscal policy on liquidity, and the probability that the funding rate will fluctuate up and down the policy rate in the first quarter of 2024, and the interest rate center will remain basically stable, so more ** managers judge that the interest rate bonds in the future will be in the upper and lower boundary.
As a result of the debt-reduction policy, there is limited room for urban investment bonds to be tapped. In the context of debt, some ** managers believe that the space for mining income from urban investment bonds is very limited. With the implementation of the debt policy, the credit risk of urban investment bonds has recovered and controlled, and the margin of safety has been further confirmed, driving the credit spread to decline rapidly. Considering that the follow-up urban investment bonds will be in a state of contraction, the asset shortage may continue. The income method is mainly coupon and leverage, and the short- and medium-duration strategy is preferred. In the investment strategy sector, in terms of income methods, "coupon" and "leverage" were mentioned 38 times and 47 times respectively, which are the mainstream income methods chosen by bond-based managers.