黑The Golden Age

Since October, the prices of commodities such as iron ore, coal and steel have risen sharply, and in November, commodity prices have risen rapidly again. In the face of the opportunity of "black gold", Guotai Junan and the industry team conducted an in-depth study on the performance, underlying reasons, persistence and impact on monetary policy of this round of commodity price increases. First of all, from the performance point of view, into the second week of December, the domestic black commodities are staged a rising and stopping tide, thermal coal, iron ore are once up and down, the market is magnificent.

Commodity prices rose sharply in the fourth quarter of ▼:

Secondly, Guotai Junan macro team concluded that the "black gold era" is the market created by strong fundamentals and supply disturbances. In terms of iron and steel, benefiting from the strong domestic economy and higher-than-expected real estate, the domestic apparent consumption of steel increased by 18% in October compared with the same period last year; at the same time, iron ore production is lower than the same period in history, port inventory has declined rapidly recently, and the situation of steel is similar, resulting in a greater contradiction between supply and demand. Moreover, the disturbance of supply factors has also ignited the market of iron ore and rebar, which is mainly manifested by the market's concern about the continued tension in Sino-Australian relations and the production reduction of Vale SA. In terms of coal, the demand for thermal coal has greatly increased because of the cold winter. The daily consumption of the latest eight coastal provinces rose 5.7% year on year, while inventory decreased 15% year on year. The continued decline in superimposed imports is less than half of what it was in 2019, and the macro team expects supply growth to be achieved by the end of the first quarter of 2021 at the earliest.

▼ the "surprise" of the Chinese economy has fuelled the rise in commodity prices:Thirdly, from the perspective of sustainability, Guotai Junan's macro team believes that some skyrocketing varieties have a certain supply disturbance, but as a whole, the large masterpieces that represent the demand for resource goods that represent economic recovery, such as industrial metals, energy, and so on, are supported by macro factors. Domestic black is short-term or rising too fast, but from a half-year latitude perspective, there is still room. Guotai Junan Shipping team supply chain agrees with the macro team's view that commodity prices are expected to rise year-on-year with the global economy repairing and inventory cycle rising in 2021. On the other hand, the profit margin of bulk supply chain enterprises is relatively stable in the mode of earning service fees. As a result, corporate profits in the supply chain are expected to increase significantly with commodity prices. The profit of supply chain enterprises is expected to accelerate growth.

The net profit rate of ▼ bulk supply chain enterprises is relatively stable:

Note: Jianfa Co.'s supply chain business data is based on the ARDL-ECM model established by the macro team, which expects overall commodities to rise by 30 per cent by June 2021, with energy up to 50 per cent, industrial metals up 15 per cent, agricultural products 7 per cent, precious metals or just 5 per cent. Finally, from the perspective of market allocation, Guotai Junan strategy team believes that the rhythm and slope of the future global recovery in the next stage are more important for earnings expectations and stock pricing than the direction. Centering on the profit boom, it is proposed to lay out the three golden flowers, that is, from the infrastructure real estate cycle to the global raw material cycle, from required consumption to optional consumption and new energy technology.

In the bond market, Guotai Junan's collection team believes that the sharp rise in commodities will not lead to a trend tightening of monetary policy, taking into account the recent significant reduction in the supply of interest rate debt, the increase in central bank funds, and the strong allocation force at the beginning of the year. this round of interest rate downward market is far from over, it is expected that 10-year Treasury bond interest rates may fall to 3.0-3.1 in the coming months.

▼ expects overall commodities to rise by 29 per cent through June 2021:

需Seek reform on the side

The political Bureau of the CPC Central Committee held a meeting on December 11 to analyze and study the economic work in 2021. The meeting proposed "promoting reform and opening up as a whole", emphasizing both supply-side structural reform and demand-side reform. The "demand-side reform" put forward for the first time attracted market attention, and Guotai Junan's research teams conducted an in-depth analysis of the layers of meaning on the demand side, in order to provide more clear investment suggestions for investors.

First of all, Guotai Junan macro team believes that the central government will raise "demand management" to "demand-side reform", there are five aspects to look forward to.

First, adhere to "housing speculation" and build two systems of housing market and housing security.

Second, strengthen social security and redistribution policies to increase the income of low-and middle-income groups.

Third, the new type of government investment represented by "new infrastructure" will still be an important starting point.

Fourth, based on the gradual improvement of China's carbon-neutral carbon trading market, green consumption may rise.

Fifth, the population and fertility policy may be liberalized.

Second, compared with the 2019 meeting of the political Bureau of the CPC Central Committee did not mention the real estate industry, this meeting was included again, and put back into the framework of supply-side reform, Guotai Junan real estate team analysis that this means that the industry is still in the period of integration, combined with the three red lines for the supervision of debt ratio, it is expected that the industry pattern will also change greatly. Correspondingly, this additional reference to the description of demand-side reform, in view of the current increase in inter-city population mobility, is expected to introduce relevant supporting measures, it is expected that the phenomenon of higher-than-expected land acquisition and higher-than-expected investment in 2020 will continue until 2021.

Finally, Guotai Junan consumer team believes that the core of the supply side is to improve quality and efficiency, optimize production capacity, and the core of demand-side reform is to expand domestic demand and stimulate consumption. Under the policy background of building a large domestic cycle, demand-side reform is an important part of speeding up the cultivation of a complete domestic demand system, the core is to expand domestic demand, through demand-side reform traction supply-side reform, to improve the overall efficiency of the national economy.

Specific to the consumer industry, investors are advised to pay attention to investment opportunities in various subdivided races, such as medium-and low-grade spirits and mass consumer goods in food and beverages, new increases in household paper and personal care consumption in the light industry, and investment opportunities brought about by the growth in demand for meat, food rations, mushrooms and other agricultural products in the agricultural sector.

The income growth rate of low-income groups in ▼ is significantly higher than that in cities and towns: