The A** market experienced a bull market in 2021, setting a number of all-time highs. Behind this round of bull market, there is a deep cyclical logic. So, will the A** field repeat the ** of 2019? Let's break it down.
Cyclical logic refers to the rise and fall of the market is affected by factors such as economic cycle, policy cycle, and industry cycle, showing a certain regularity and appreciability. Cyclical logic can help us grasp the general trend of the market and discover the opportunities and risks of the market.
The bull market in 2021 was mainly driven by the following factors:
Economic recovery: In 2020, the global economy fell into a deep recession due to the impact of the pandemic. However, with the development and promotion of vaccines, as well as the stimulus measures of various countries, the global economy has begun to recover gradually, especially China's economy, which has taken the lead in achieving positive growth and has become the stabilizer and engine of the global economy.
Liquidity is looseIn response to the impact of the pandemic, the world's major central banks have adopted extremely loose monetary policies, releasing a lot of liquidity, lowering interest rates, and stimulating capital inflows and investment. The People's Bank of China (PBOC) has also implemented a moderate easing policy, keeping the market's liquidity and credit stable.
Scientific and technological innovationThe outbreak of the epidemic has also given birth to innovation and change in the field of science and technology, especially in cloud computing, artificial intelligence, 5G, new energy, etc., many new technologies, products and models have emerged, leading the upgrading and transformation of the industry. Technology stocks have emerged as the market's leading sectors, demonstrating strong growth and competitiveness.
The bull market in 2019 is also a typical round of cyclical bull market, which mainly has the following characteristics:
The economy stabilizedIn 2018, due to the impact of the Sino-US war, China's economy experienced certain downward pressure, but with the adjustment and optimization of policies and the easing of Sino-US relations, China's economy began to stabilize and rebound in 2019, restoring growth momentum and confidence.
Policy supportIn order to promote economic stability and development, China** implemented a series of policy measures in 2019, including RRR cuts, tax cuts, expanding infrastructure investment, and supporting private enterprises and small and medium-sized enterprises, etc., which increased the vitality and expectations of the market and raised the valuation level of the market.
Industry rotationThe bull market in 2019 is also a typical round of industry rotation bull market, from consumption and medicine at the beginning of the year, to science and technology and gem in the middle of the year, and then to finance, real estate and cyclical stocks at the end of the year, the market has shown the characteristics of diversification and balance, reflecting the maturity and rationality of the market.
From the above analysis, it can be seen that the bull market in 2021 and the bull market in 2019 have certain similarities, both are bull markets based on cyclical logic, and both are affected by factors such as the economy, policy, and industry. So, will the market repeat the ** of 2019?
In our view, the market is unlikely to have a complete repeat of 2019 for several reasons:
Uncertainty over the economic recoveryAlthough the global economy began to recover in 2021, there are still great uncertainties about the speed and extent of the recovery, especially in the prevention and control of the epidemic and its mutation, the popularization and effectiveness of vaccines, and the coordination and adjustment of fiscal and monetary policies of various countries, which may bring new risks and challenges and affect the sustainability and stability of the economy.
Diminishing marginal returns with loose liquidityWhile the world's major central banks have maintained accommodative monetary policies, the marginal returns of loose liquidity have diminished, the market's risk appetite has declined, and the inflow of capital and the efficiency of investment have also decreased. At the same time, loose liquidity also brings inflationary pressures and expectations, which can lead to higher interest rates and asset volatility.
Competition and regulation of scientific and technological innovationWhile innovation and change in the technology sector continues, valuations of technology stocks have reached high levels, market expectations have been high, and the growth and competitiveness of technology stocks are facing greater challenges and pressures. At the same time, regulation and regulation in the technology sector are also strengthening, which may have a certain impact and restrictions on the development and performance of technology stocks.
Although there is a certain cyclical logic, however, the situation and conditions of the market have changed a lot, and the market is unlikely to repeat the ** of 2019. We suggest that investors should not blindly chase the rise and fall, do not be overly optimistic or pessimistic, but should do a good job in asset allocation and management according to the actual situation of the market and their own risk tolerance, grasp the opportunities and risks of the market, and achieve stable returns.