【英文】汇丰银行报告：2020中国A股投资地图A-share Investment Atlas：2020: From good-to-have to must-have（48P）

英文研究报告 2019年12月26日 08:49 管理员

We think 1Q20 could see rotation to quality cyclical stocks in construction machinery, oil equipment, petrochemical, and airports among others. We upgrade consumer discretionary from underweight to neutral, downgrade IT from overweight to neutral, and utilities from neutral to underweight. While auto sales are still under pressure, we see a recovery in industries that are downstream from the property market, such as furniture, home decoration and appliance. An improvement in China-US trade tensions would also benefit the clothing and textile industries. We think valuations for these industries have bottomed and we would accumulate on the dips. We downgrade IT from overweight, although we still like the growth outlook and the long-term trend. But the trade is already crowded and valuation is not cheap, so we suggest investors take a short break from the risk-on mode. We also downgrade utilities, as the major players in this sector have received privatisation offers from their unlisted parent companies at distressed valuation. In addition, the National Development and Reform Commission’s guidance on feed-in tariffs has added more uncertainty to the sector outlook. We remain overweight financials and industrials.

2019 has been an eventful year, highlighted by a global economic slowdown. For investors in China, the main uncertainty has been the Sino-US trade tensions, which have broadened into geopolitical, financial, science and technological arenas. It has been like a rollercoaster ride, but the market is becoming less sensitive to the headlines, reducing volatility. The prolonged trade tensions appear to have reduced both sides’ appetite for further escalation. Agreement on an interim “Phase-1” trade deal may be forthcoming, despite renewed market concerns, although issues such as technology transfer, intellectual property and industrial subsidies will require further discussions. Regardless of the outcome, the growth slowdown is expected to persist in 2020.Meanwhile, investors are turning their attention to the 2020 US presidential election. Nearly 60 years of historical market data may play a role, too. Over 1960-2018, the S&P 500 index has risen by an average of c15% in the year preceding an election year, but increased only 6-7% in an election year. Asset allocators are likely to be thinking about whether to increase their EM allocations. Global investors increasingly interested in DM-EM rotation trade Looking back to the 2008 global financial crisis, EM outperformed DM significantly from 2009, with Asia being the most dynamic region. However, for the past 10 years, EM has been less exciting. EM last outperformed in 2016 and 2017, supported by stronger earnings growth. However, a strengthening dollar, geopolitical uncertainties and dwindling investor confidence contributed to a decline in performance and fundamentals from 2018 onwards. Deceleration in the Chinese economy and trade tensions, which were key catalysts for EM growth, have raised concerns about the country’s economic momentum. Looking to 2020, global economic uncertainty and lower bond yields have led more investors to start to examine the potential for DM-EM rotation. According to Bloomberg consensus, EM earnings growth is expected to pick up to 6.5% in 2020 from current negative levels, and GDP growth is also expected to recover slowly, ahead of developed economies.