Short-term oscillation hot spots gradually turn to large stocks

-Citic Securities Research Strategy Group there are three main drivers for the current round: liquidity adequacy, policy stimulus and expectations of economic recovery, which have not changed radically, so the market will remain volatile upward. But in the short term, the market may be dominated by shocks in the coming period.　　In addition, in the process of gradually confirming the trend of macroeconomic improvement, the market style will gradually be shifted from small stocks to large stocks. Medium-to short-term shocks overall, the market rally since the start of the year has been dominated by three major drivers: liquidity adequacy, policy stimulus and expectations for economic recovery.　　We believe that the above three factors have not undergone a fundamental change, which also determines that the market will continue to maintain the volatility of the upward pattern.　　But from our field research, the two main concerns of the current macro-export and real estate, although the former has already bottomed out, but the overall recovery is still to come, although the latter has shown signs of recovery, but the completion of the conduction process still takes time, these two constraints make the short-term market may be dominated by shocks. Moderately loose monetary policy will continue to underpin market liquidity. According to the "first-quarter monetary policy implementation Report" issued by the People's Bank of China, the parties concerned will continue to "unswervingly implement moderately loose monetary policy, maintain continuity and stability of the policy, maintain the liquidity of the banking system, optimize the credit structure and adopt flexible and vigorous measures to increase financial support for economic development"　　Under these conditions, the situation of ample liquidity in the market will remain and continue. The potential for policy stimulus remains vast. According to relevant information, 4 trillion investment plan is only one of the four policy responses, "policy response to the financial crisis far more than 4 trillion investment plans, other policies will be introduced in the year", the government's livelihood projects and infrastructure investment, the top ten industrial revitalization planning, science and technology support, social security will be integrated,　　This policy positive sustained stimulus will undoubtedly be a strong impetus to the long-term market shocks. Exports have bottomed out and real recovery will take time. From recent research, the export has passed the worst period, in the policy stimulus and orders fall narrow, the premise of corporate confidence has also been restored; however, the export situation in April is still not optimistic, the overall still in the low consolidation state, full recovery still need time,　　The process of export recovery will undoubtedly restrict the upward breakthrough of the short-term market. The conduction effect of real estate recovery still needs to be released gradually. Since February 2009, the real estate market appeared "small spring" market, sales continued to rebound, developers "inventory" and cash flow situation has also been rapidly improved. CITIC Real estate industry analysts believe that, although the signs of the industry recovery has been obvious, but the development of corporate behavior has not been agreed, real estate developers to take the land and increase development and construction efforts are limited to local behavior, did not form an industry consensus. We believe that from the real estate continued to sell to real estate enterprises take a long time to carry the transmission, real estate development investment accelerated also still need to be a while, in the real estate development upstreamThe conduction process is not fully demonstrated in the situation, the market in the short term upward breakthrough is still a certain pressure. The structural characteristics of small stocks to large-cap stocks have important influence on the rebound logic and the running path of the whole market.　　Under the background of obvious structural differences in a-share market, analyzing the structural changes of profit and valuation constitutes an important basis for predicting market operation and grasping investment opportunities. The size of the two-yuan structure has created a a-share market unique rebound logic. From the statistical data, 20 of the state-owned companies (14 banks, 2 coal, 2 oil, Changjiang Power and China Unicom) 2008 net profit of 602.52 billion yuan, an increase of 60.1% per cent, 2009 1 quarterly net profit was 154.472 billion yuan, the year-on-year increase of 0.61%. Excluding the above 20 companies, the remaining 1500 listed companies in 2008 net profit amounted to 270.688 billion yuan, a year-on-year decline of 44.83%; 2009 1 quarterly net profit amounted to 59.147 billion yuan, down 50.43% year-on-year.　　From the dynamic point of view, according to the current market consensus forecast, 20 state-owned large market companies 2009 and 2010 net profit growth of 2.78% and 13.25% respectively, the other listed companies are 46.18% and 27.6%.　　This shows that the A-share market there is a clear "two Yuan" distinction: state-owned large market capitalisation companies in the policy or monopolistic factors have a clear profit stability, equivalent to the overall market profit stabilizer, while the rest of the listed companies have a stronger cyclical volatility characteristics. The structural differences are also reflected in the valuation dimension. According to statistics, 20 of the state-owned big market companies in 08, 14.59 times times the static earnings ratio, 09 dynamic earnings ratio of 14.3 times times, while the rest of the 08 static earnings ratio of 45.94 times times, 09 dynamic earnings ratio of 26.9 times times, enjoy a more obvious valuation premium.　　Logically, this is clearly linked to the two-dollar structure of profitability, which, in anticipation of an economic recovery, tends to give higher valuations to companies with more resilient performance, the main reason for the relative backwardness of weighted stocks in the market rally since the end of last year.　　From the existing valuation level, the other listed companies ' earnings rebound is expected to have been more fully reflected in the valuation data, and the market for the state-owned large market value of the company's earnings forecasts are relatively conservative, the valuation level is also low, which actually has been buried market style conversion foreshadowing. At the same time, regional disparities in economic recovery have been reflected in valuation comparisons. Due to the difference of economic extroversion and industrial structure, China's economic recovery shows obvious regional characteristics. Only in the 2008, the net profit of the listed companies in the northwest region was increasing, and the net profit fell relatively small in the 1 quarter of 09; In North China, because of the large state-owned companies, net profit overall performance stability; Northeast, Southwest, The decrease of net profit in South Central and central region is obviously related to the high or high degree of the local cyclical industry.。　　From the 2009 and 2010 earnings forecasts, the expected net profit growth is the northeast and Southwest, the central and South regions will also have a certain recovery; The earnings forecasts are already reflected in valuation data, from PE, where the highest valuations are in the south-west and northeast, and then in the northwest and South Central, indicating that the market has given a higher valuation premium to regions with a cyclical sector of high economic growth potential. While the state-owned large-market companies accounted for higher than the North China and the external economic impact of the larger coastal areas listed companies, it reflects a more obvious valuation discount.　　The regional characteristics of valuations will also drive market-style conversions. In addition, a variety of concept-subject-type stocks have been given a relatively full valuation premium. We have counted the profit and valuation data in the eight major investment areas with high market interest. From the view of profit structure, the net profit in 08 was relatively stable except that of SASAC's company and aerospace military plate, and all the other plates experienced a more obvious decline. and 09 1 Quarter profit performance is good is agricultural faucet and 3G concept plate.　　From the 2009 and 2010 earnings forecasts, the agricultural leading plate 09-year earnings recovery is more clear, new energy and scarce resources plate will also have a larger profit growth, 3G concept stocks because China Unicom 09 no longer enjoy the benefits of CDMA transfer and normal fall back. Implementation to the valuation structure, in addition to the company directly under the SASAC, after several rounds of speculation, the remaining plate 08-year static P/E level is relatively high.　　And from the dynamic PE look, 09 new energy, scarce resources, agricultural leaders, stock index futures plate valuation level is relatively high, although stable earnings growth will ensure that its 2010 earnings multiples gradually fall to a reasonable interval, but the short-term speculation space has been relatively limited, which also indicates that the market continues to rise there is the inherent requirements of style conversion.　　Style change is a gradual process according to the research of Citic Financial engineering group, the wheel movement of market size and disk style mainly depends on technical index, market volatility, enterprise profit status, inflation level, monetary credit factor and capital inflow in six aspects.　　In general, the economic recovery in the context of large-cap stocks needs to have four conditions: the economy came out of the bottom, corporate earnings began to rebound; the CPI bottomed out and the trend moved towards moderate inflation, with interest rates falling, m1/m2 from high, and the RSI index peaking, running at more than 80, or even close to 100. From the current situation, although the economic bottom has been clear, but based on our latest export research and macro Group on the April 09 industrial value forecast, its overall still in the low consolidation state, corporate earnings recovery is still to be a while, and from the CPI data, April CPI continues to negative growth,　　It will take some time to move towards moderate inflation, with the overall m1/m2 growth still high in April, and the recent change in the renminbi against the dollar could reflect the flow of money into China.In combination, we think that although the market style will gradually turn to large stocks, but in the export is still hovering at the bottom, and the conduction of real estate development upstream is not completed, its successful conversion still need to wait for further confirmation of the macroeconomic improvement signal. In the process, the market is likely to be a major shock in the coming period, gradually increasing the allocation of large stock stocks and grasping the corresponding structural opportunities will constitute the main melody of short-term investment.