Brokerage Morning Meeting Highlights | From Stagnation Risk Avoidance to Taco 2.0

Yesterday, the market bottomed out and rebounded throughout the day, with the Shanghai Composite Index and Shenzhen Component Index both rising by over 1%, and the ChiNext Index flipping into the green at the close after briefly falling nearly 2.5%. The volatility of the Huang Bai line was evident, with micro-cap stocks surging by over 5%. The trading volume of the Shanghai and Shenzhen markets was 2.08 trillion yuan. In terms of sectors, the sectors of electricity, military industry, optical fiber, space photovoltaics, and shipping were active. On the downside, oil and gas stocks performed weakly. At the close, the Shanghai Composite Index rose by 1.78%, the Shenzhen Component Index rose by 1.43%, and the ChiNext Index rose by 0.5%. At today's morning meeting of brokerage firms, Huatai believes that positioning-oriented funds are shifting towards defense; CICC believes that monetary policies of central banks in China, the United States, and Europe may ultimately become more accommodative this year; Guotai Haitong believes that from stagflation hedging to Taco 2.0. Huatai: Positioning-oriented funds are shifting towards defense Although external risks have been deduced before, trading funds have shown strong positional inertia in the early stage. Last week, investors' pricing for geopolitical risks increased, market volatility expanded, and the fact that more than 15 billion yuan of financing funds flowed out in a single day last Friday indicated a downturn in fund sentiment, triggering the deleveraging process of margin trading. The leverage ratio fell rapidly from a historical high of 290% to the level at the beginning of the year of 278%, and further observation is needed for the magnitude of the deleveraging of margin trading. Secondly, the structural game of existing funds is shifting from "offensive" to "defensive hedging". Against the backdrop of increasing uncertainty, the aesthetic of positioning-oriented funds has undergone a significant shift: calculation data shows that fund positions have shown a tendency to move towards consumption, finance, and other sectors, and funds are beginning to seek new safety margins in defensive sectors. In addition, after 9 weeks of net outflows, broad-based ETFs have turned slightly into net inflows, with net inflows of 9.5 billion yuan last week. CICC: Monetary policies of central banks in China, the United States, and Europe may ultimately become more accommodative this year At present, inflation expectations in China, the United States, and Europe are not clearly out of control, and the balance of supply and demand in the economy is relatively stable, with limited risks of secondary effects. If geopolitical tensions do not escalate further, it is expected that the monetary policies of China, the United States, and Europe may ultimately become more accommodative, with a low probability of global central banks raising interest rates. Guotai Haitong: From stagflation hedging to Taco 2.0 Affected by midterm elections, the impact of market risks and inflation risks on Trump will greatly increase, prompting the US to either ultimately compromise or withdraw troops, i.e. Taco 2.0. The market will enter a phase of Risk-On and liquidity trading, and various asset classes may experience pulse-like impacts, with oil prices falling from their high levels, global stock markets rebounding significantly, and US bonds also expected to rebound. Specifically, US stocks are expected to return to a growth logic once again. For US bonds, with Taco 2.0, the Federal Reserve may restart its accommodative policy, and the yield curve of US bonds will gradually steepen. In the medium term, a yield of around 4.3% for the ten-year US bond will have value in allocation. European assets will be most severely affected by this conflict, and theoretically, after the conflict ends, European assets will have the greatest rebound potential, but continued problems such as attacks on Qatari infrastructure will further delay their recovery process. Most Asian economies are oil-importing countries, similar to the US stock market. If there is a turning point in the Iran conflict, emerging market stock markets will also be major beneficiaries. This article is reproduced from "Cailianshe", GMTEight editor: Xu Wenqiang.