20230717-万和证券-复苏期_不悲观_20页_2mb

A-Share Market Analysis: 2023 Market Review and H2 Outlook

Market Performance in 2023 H1

The A-share market experienced a mixed performance in 2023 H1, with most major indices finishing positive due to structural growth. Key indices like the Shanghai Composite rose by approximately 27%, while others showed declines, including the Shenzhen Component and ChiNext. Valuations remain relatively low, with PE-TTM multiples indicating PE decade percentiles around 30-40%, suggesting undervaluation. Liquidity was ample, supported by high M2 growth, net inflows from foreign funds, and stable interest rates, fostering market participation.

Economic Recovery Status

China's economy officially entered a recovery phase in early 2023 Q1, driven by improving PMI indicators and higher GDP growth. This recovery is expected to continue through 2023 H2, with characteristics similar to historical recovery periods averaging 104 months. Unlike some past recoveries, PPI has not yet bottomed, potentially lengthening the current phase.

H2 2023 Outlook

The outlook is cautiously optimistic, drawing parallels to the 2013 recovery period. Despite similar challenges in consumption, investment, and exports, the monetary environment is more supportive, with room for policy easing. A-bullish stance suggests a gentle market rebound in H2, driven by structural opportunities.

Recommendations

Industry Focus

• Household appliances: Benefiting from consumption policies, falling input costs, and improved real estate data (e.g., higher竣工 rates). AI-driven growth in air conditioning exports adds savings, recommending white appliance sub-sectors.
• Power equipment: Valuations are near decade lows, particularly for new energy sub-sectors like photovoltaics and energy storage, which show strong growth potential due to policy support and cost reductions.

Theme Focus

• Artificial intelligence: Led by AI+ applications in sectors like出行,电商, and industrial production, with ongoing infrastructure development and investment.
• Central state-owned enterprise (SOE) valuation adjustments: SOEs with stability and high dividends may see re-rating, especially those in national security and digital economy sectors.

Risk Factors

Potential economic slowdown, liquidity tightening, fiscal policy underperformance, global recessions, geopolitical tensions, or delays in AI adoption could affect the outlook, requiring vigilant monitoring.