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中信证券:盈利复苏扩散,美股迎接风格切换

Citic Sec: Profit recovery diffusion, US stocks welcome style switching.

Breakings ·  Jun 24 08:19
CITIC Securities Research Report believes that the upward momentum of the reserve ratio of the US banking system and the performance repair of the "seven giants" are the two driving forces behind the US stock market bull market since October 2022. Looking forward to 2024H2, we believe that the US stock market will usher in a situation of performance recovery and diffusion. The operating income of S&P 500 components other than the "seven giants" was negative for six consecutive quarters and is expected to turn positive in 2024Q2. The growth of earnings is also expected to drive further increases in listed company buybacks, and the huge amount of funds hoarded in money market funds may also become a source of incremental funds for the US stock market after the Fed opens a rate-cutting cycle. However, the current trading congestion of the US stock market has reached the highest level since this bull market, and indicators such as PE, free cash flow yield, and shareholder returns all show that the overall valuation of the US stock market's large-cap blue-chip stocks is too high. If the Federal Reserve continues to shrink its balance sheet after the excess liquidity in the US financial system is exhausted, the US stock market may face an unexpected downward inflection point of liquidity. Against this background, it cannot be ruled out that the US stock market will repeat the style rotation of "cutting big and raising low" from mid-July to the end of October last year, temporarily suppressing the valuation of the US stock market and dragging down its overall performance. However, with the opening of a new round of monetary easing cycle and the diffusion of performance recovery, we are relatively optimistic about the performance of the US stock market at this point in time and recommend focusing on three main lines: 1) information technology, optional consumption, and healthcare industries with abundant cash flow; 2) energy, utilities, and real estate industries with more reasonable valuations; 3) construction machinery, electrical utilities, and power enterprises that benefit from the investment upturn cycle. Finally, in the face of an environment of sustained high interest rates, we need to be vigilant in the second half of the year against the drag on physical economic demand from weakened employment and consumption, as well as the potential risks posed by commercial real estate loan refinancing problems or impacts on the US financial system.

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