Guoshou asset president Wang Junhui: fixed income better allocation opportunities may be in the second half of the year


The reporter Wu Shaozhi on February 17th, exchange conference organized by the China insurance asset management, the new President and chief investment officer of China life insurance (group) company, China life asset management co., LTD. (hereinafter referred to as “the long-lived assets”), President and party secretary of jun-hui wang Shared the 2022 kinds of asset allocation of insurance funds.First of all, from a macro perspective, he believes that he is not pessimistic about the economic growth of the whole year, and it is highly likely to achieve a growth rate of around 5.5%. He does not rule out the possibility of higher growth rate.Inflation was generally moderate throughout the year, showing a trend of low before and high later.PPI inflation fell, not low due to the carry-over effect, but maintained a downward trend throughout the year, reaching near 0 by the end of the year.The pattern of credit contraction slowed down, and the growth rate of social finance stock and M2 was around 10.7% and 9.4%, respectively, higher than that of 2021.The key to ensuring steady growth is to keep investment and consumption stable and to cut taxes and fees.Wang Junhui said: “MOF 2022 Working Conference: Tax cuts and fees are expected to reach about 1 trillion yuan in 2021, and greater efforts will be implemented in 2022.We believe tax cuts and fee cuts are still likely to reach about 1.5 trillion yuan in 2022, an increase of 500 billion yuan from 2021.”Under this expectation, what will be the trend of traditional fixed income and equity investment?Solid income, Wang Junhui said that economic structural transformation will be accompanied by China’s GDP growth center to fall, the long-term cycle of China’s interest rate center level will also fall.In addition, the slowdown of China’s labor force population growth and the rise of social leverage ratio are also factors restricting the recovery of China’s interest rate center.In the short term, under the dual effect of economic downward pressure and the central bank’s easing expectation, the interest rate of national debt has been at a historical low fraction, and the interest rate of various bond varieties other than national debt is also at a historical low level.Looking beyond the end of the year, Treasury yields have limited room to fall further.In 2022, bond yields may recover before the economy, not ruling out a recovery in the first half of the year.In addition, given the long-term trend of low interest rates and the lack of endogenous driving forces in the economy, it is expected that the bond yield will not break the post-epidemic high of 3.3 percent even if it recovers.On fixed income allocation strategy, he said: “Fixed income investment of insurance funds has a characteristic of buying and then holding to maturity, especially in large insurance companies like China Life.Under the environment of low interest rate this year, insurance institutions may need to be more flexible and proactive, reasonably arrange the allocation structure and varieties according to market conditions, and actively look for trading opportunities. Seizing trading opportunities can further improve investment returns, but the trading strategy is not good at insurance institutions.I think the fixed income better allocation opportunity is probably in the second half.”Equity investment, as a “key minority” in the use of insurance funds, Wang Junhui said that the long-term strategic value of equity asset allocation.For the recent market hot spots, Wang Junhui pointed out that developed central bank liquidity tightening is one of the most noteworthy overseas concerns this year.”We expect a big negative shock from emerging markets, but the impact on China is manageable.”Monetary policy is based on China and the US, and the divergence of Policies between China and the US is not the main reason affecting the market. Internal factors such as policies, fundamentals and liquidity still affect the trend of A-shares.”Residential assets, the third pillar of pensions, foreign capital and so on all mean more liquidity.”A-shares were officially included in the MSCI index in June 2018.Referring to the experience of Taiwan and South Korea, it is expected that the proportion of foreign ownership in China’s A-shares will rise to more than 10% within 10 years, and the average annual net inflow of foreign capital into A-shares will exceed 400 billion yuan.”From the perspective of corporate earnings, he believes that corporate earnings are still in a downward cycle, industrial earnings growth is expected to fall to negative in the first half of the year;The growth rate of new social finance, a leading indicator, has rebounded but remains at a low level, and a mid-year inflection point in corporate earnings growth is expected.According to the top-down calculation of profit growth rate, it is expected that the annual net profit growth rate of non-financial A will be around 4%, which is significantly lower than that of 2021. The pace will be low in the first quarter and then high. The second quarter is likely to be the bottom, and the third quarter will start to stabilize and recover, but the strength of recovery is relatively mild.In 2022, Wang Junhui is optimistic that A shares are expected to achieve positive returns.”Steady growth means the policy base. There are still good investment opportunities in the equity market in 2022, but the market style may change.The market performance is expected to remain volatile upward pattern, increased volatility, phased, structural opportunities are more active.”Specifically, he pointed out: “According to the logarithmic return forecast model, it can be estimated that the expected return rate of CSI 300 in 2022 is still positive (about 5%), in which the valuation change is -4.15%, and the earnings growth is 8.2%.As a whole, equity assets still have a certain allocation value in the medium term.”The structural focus can be on three main directions: banking/infrastructure, big consumption and advanced manufacturing.At the same time, Wang junhui also warned of four major risks in 2022, including repeated or prolonged outbreaks;Geopolitics and increased competition between The United States and China;Overseas economic downturn and liquidity shock exceed expectations;The strength of steady growth was lower than expected.

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