What to Do in 2021

Thoughts of the Week

Following the special analysis and study of economic work for 2021 on December 11, the 2021 Central Economic Work Conference was held from the 16th to the 18th.

The key factors for achieving phased results in 2020 are 5 aspects: authoritative leadership, people first, institutional advantages, scientific decision-making and creative response, and scientific and technological self-reliance. The main challenges in the future are: repeated epidemics and the prevalence of unilateralism.

Next year is of great significance, and the keywords for work are: supply-side structural reform, domestic demand, and technology. Macroscopically, we will continue to implement a proactive fiscal policy and a prudent monetary policy, without making sharp turns. “Double reform” and “double cycle” complement each other. Expanding domestic demand internally, enhancing industrial chain security externally, breaking through key core technologies, and solving the “stranglehold” problem. The core is to expand domestic demand internally and enhance industrial chain security externally. The key is three major starting points: “new infrastructure”, urban agglomerations, and liberalizing childbirth. Basic sciences such as mathematics, physics, chemistry, and biology may usher in a golden development period of ten years. Domestic substitution has turned from passive to active, and a batch of invisible champions may be born in industries such as basic components, processes, and materials, competing with Japanese, German, and American companies internationally.

Expanding domestic demand is an important basis. It is explicitly proposed to cancel some administrative restrictions on consumption, the first of which is the car purchase restriction and traffic restriction policy. In order to cooperate with carbon peaking, it is very likely to be replaced by levying congestion charges and promoting new energy. County and township consumption has saved the auto industry in 2020, and county and township consumption will save more industries in 2021. After the epidemic, China’s economy recovered, and infrastructure investment was one of the main driving forces. The growth rate of infrastructure investment reached 10.9% in May, and has maintained a growth rate of more than 5% since then. Investment in new and old infrastructure continued to increase, especially “new infrastructure” which takes into account both short-term expansion of effective demand and long-term expansion of effective supply, and has a comprehensive and important role in stabilizing growth, stabilizing employment, adjusting structure, promoting innovation, and benefiting people’s livelihood, but it will stop the big chip making. It may join the CPTPP before the United States. In-depth implementation of the three-year action for state-owned enterprise reform, improving the quality of listed companies, from overcapacity to supply clearing, survival of the fittest, increased industry concentration, continuous repair of the balance sheets of industry leaders, leading companies that survive as kings are regarded as core assets in the capital market and obtain obvious premiums and substantial increases, while new infrastructure, new economy, and new technologies are booming.

The rental market may be the focus of regulation next year. In terms of direction, we must “attach great importance to the construction of subsidized rental housing and accelerate the improvement of long-term rental policies.” In terms of methods, first, we must promote equal rights for renting and purchasing, and “gradually make renting and purchasing housing enjoy equal rights in enjoying public services.” Second, we must increase land supply support, “land supply should be inclined towards the construction of rental housing, list rental housing land plans separately, and explore the use of collective construction land and idle land owned by enterprises and public institutions to build rental housing.” Finally, we must “rectify the order of the rental market” and “reasonably regulate the rent level.” The improvement of the rental market may also have a certain curbing effect on the rise of housing prices in some cities.

China has suffered from Dupont, Bayer, Syngenta, and Monsanto for a long time. We are determined to fight a turnaround battle in the seed industry. State-owned seed companies, listed seed companies, and seed industry R&D institutions with R&D capabilities can be expected to develop. In addition, it is proposed to respect science and promote the industrial application of biological breeding in an orderly manner. Action will be taken to stop all kinds of anti-GMO remarks. Cui Yongyuan should be careful.

Anti-monopoly and anti-disorderly expansion of capital were proposed twice in a row, and it was clearly proposed that financial innovation should be carried out under the premise of prudent supervision. Three horses lost two horses, will Lufax, which takes the lead, become a scarce resource for fintech?

Events of the Week

Chang’e-5 returned successfully, and CNSA is very likely to focus its resources and energy on unmanned Mars sampling, becoming the first country to return samples from Mars. After all, the principles of lunar sampling and Mars sampling are mostly the same in technology, and it is also more meaningful.

Market of the Week

Period: 2020-12-13———2020-12-19

The three major indices all fell slightly this week, but structural opportunities exist. Shanghai Stock Connect continued to have net inflows, and consumer stocks were favored. Sectors continued to rotate. This week, liquor, batteries and materials led the gains. Approaching the annual report disclosure season, concerns about face value delisting led to low-priced stocks leading the decline. In addition, helmets and small base stations also fell significantly.

Market (%)	Index	This Week	1 Week Ago	2 Weeks Ago	3 Weeks Ago
Shanghai Composite	3394.90	-0.29	-0.77	1.06	0.91
Shenzhen Component	13854.12	-0.26	-1.28	2.450	-1.17
ChiNext Index	2780.73	-0.18	-1.13	4.7	-1.8
Hang Seng Index	26498.60	-0.67	0.36	-0.22	1.68
HSCEI	979.57	0.67	0.14	-1.71	2.49
Hang Seng China-Affiliated	3702.49	0.02	0.39	-3.35	0.69
Dow Jones	30179.05	-0.41	0.16	1.03	1.45
Nasdaq	12755.64	-0.07	-0.23	2.12	2.53
S&P 500	3709.41	-0.35	-0.13	1.67	1.58

Market (CNY, Billions)	This Week	Last Week	2 Weeks Ago	3 Weeks Ago
Shanghai Connect	79.13	73.27	164.48	115.09
Shenzhen Connect	5.71	-3.67	80.92	7.51
Hong Kong Connect	9.77	63.01	193.43	126.21

Positions

Code	Name	Current Dynamics
SZ000889	Zhongjia Bochuang	Flat
LU	Lufax	Flat
F260104	Invesco Great Wall Domestic Demand Growth Mixed	Increase
F001668	E Fund Global Internet Mixed	Flat
F163406	Xingquan Herun Classified	Flat
F008238	Zhongtai CSI 300 Enhanced A	Flat
F166301	Huashang Trend Flexible	Flat
F004997	GF High-end Manufacturing	Flat