Interpreting the 2021 No. 1 Central Document

Weekly Reflections

In the article “Finding Technology for the Industry”, it was predicted that the theme of the 2021 No. 1 document would be “Opinions on Comprehensively Promoting Rural Revitalization and Accelerating the Modernization of Agriculture and Rural Areas”, and might focus on three aspects. Today, Xinhua News Agency authorized the release of the full text of the document, and all predictions were verified.

Looking at the full text, there are some key points worth noting.

General Requirements
- Insist on the integrated design of agricultural modernization and rural modernization (Separation of agriculture and rural areas, a new formulation).
- Fully utilize functions such as agricultural product supply, ecological barriers, and cultural inheritance (Functions of rural areas).
- Grain output must reach more than 1.3 trillion jin (650 million tons). This is the first time a specific figure has been set for the grain output target, and the non-grain use of arable land must be resolutely curbed. The pig industry needs to develop smoothly (Due to the production cycle, the law of agricultural product supply has become a roller coaster industry. In the future, appropriate adjustments will be made to ensure the stability of the number and scale of enterprises, stable pork supply, and prevent pork prices from skyrocketing and plummeting).
- Launch agricultural and rural modernization planning (What is agricultural and rural modernization with Chinese characteristics? Focus during the 14th Five-Year Plan. By 2025, significant progress will be made in agricultural and rural modernization (Will areas with favorable conditions basically achieve agricultural modernization? What is agricultural modernization?), agricultural infrastructure modernization will reach a new level, rural living facilities facilitation will be preliminarily realized, and the level of equalization of basic public services in urban and rural areas will be significantly improved).
Achieve Effective Connection between Consolidating and Expanding Poverty Alleviation Achievements and Rural Revitalization
- A 5-year transition period, to help send them off. The next step after poverty alleviation is to achieve a moderately prosperous society and rural revitalization, and rural revitalization funds will be transferred to poverty-stricken counties.
- Implement and promote “relief-for-work” in the field of agricultural infrastructure, just like during the urbanization process, local infrastructure companies will benefit.
Accelerate Agricultural Modernization
- Shared responsibility of the Party and government for food security, which was originally the governor’s responsibility system. Improve the governor’s responsibility system for food security and the mayor’s responsibility system for the “vegetable basket”. All provinces (autonomous regions and municipalities directly under the central government) must stabilize the grain sowing area and increase the yield per unit. Previously, requirements were looser for economically developed areas. Now, districts, counties, and cities that still have agricultural arable land in economically developed areas will become the main force of agricultural production.
- Establish a national food security industrial belt to ensure that grain farmers have reasonable returns.
- Four major crops to watch: rice, wheat, corn, soybeans, and rapeseed and peanuts whose areas will explode. Will the southern rice-growing areas implement rice-wheat rotation or rice-oil rotation in the future?
- Pilot full cost insurance and income insurance for the three major staple grains: rice, wheat, and corn (Who will benefit?).
- Deepen the high-quality grain project: What project is this?
- Protect the basic production capacity of pigs: Will it be in the form of subsidies and national inventory regulation? Which companies will be included?
- Pork substitutes: Cattle and sheep industry.
- Fight a good battle for the seed industry turnaround.
  - Establish crop, livestock and poultry, and marine fishery germplasm resource banks.
  - Long-term support for basic research in breeding and key breeding, universities and research institutes will not lack scientific research funding.
  - Emphasize respecting science and recommending biological breeding, anti-GMO diehards can rest.
  - Support leading seed industry companies to establish commercial breeding.
  - Study post-subsidy policies for the R&D and promotion of major varieties.
- Stick to the 1.8 billion mu red line: The terms used in this paragraph are the strictest, having teeth, resolutely curbing, etc. The opportunity lies in the construction of new high-standard farmland.
- Insist on self-reliance in agricultural technology and green agricultural development: Intelligent equipment and domestic substitution of green agricultural materials have become the trend and mainstream, foreign brands are no longer effective.
Vigorously Implement Rural Construction Actions
- Implement the digital countryside construction and development project. Promote the simultaneous planning and construction of rural gigabit optical networks, fifth-generation mobile communications (5G), and mobile Internet of Things with cities. Accelerate the construction of space-based facilities such as agricultural and rural remote sensing satellites. Develop smart agriculture, establish an agricultural and rural big data system, and promote the deep integration of new generation information technology with agricultural production and operation. Improve the agricultural meteorological comprehensive monitoring network, and enhance the ability to prevent agricultural meteorological disasters.
- Carry out reading and farming education.
- Accelerate the implementation of the agricultural product cold chain logistics facility construction project, and promote field small-scale warehousing and preservation cold chain facilities.
- Promote urbanization with the county seat as an important carrier, and build the county seat according to the standards of small cities in areas with favorable conditions.
- Support cities and counties to build a shared agriculture-related credit information database within the domain, and basically build a relatively complete new agricultural operation entity credit system within 3 years. Develop rural digital inclusive finance. Vigorously carry out small credit loans for farmer households, insurance policy pledge loans, and agricultural machinery and greenhouse facility mortgage loans. Encourage the development of exclusive financial products to support new agricultural operation entities and rural new industries and new formats, and increase first loans and credit loans.
Strengthen the Party’s Leadership over Rural Work
- Actively promote village party organization secretaries to serve as directors of village committees through legal procedures in places with favorable conditions.
- Strengthen emergency management and fire safety system construction in counties, townships, and villages, and do a good job in risk assessment, monitoring and early warning, and emergency disposal of major incidents such as natural disasters, public health, and safety hazards.

Events This Week

NASA’s Perseverance rover successfully landed in Jezero Crater on Mars.

Market This Week

Period: 2021-02-14 ——— 2021-02-21

4-week review: The ChiNext Index surged 8.68% in a week, and the three major indices showed an overall upward trend this month. Stock Connect showed net inflows for four consecutive weeks, and it can be concluded that there is incremental capital flowing into the stock market. Wind industry sector top 3 gainers were petrochemicals, chemical fibers, power generation equipment; top 3 losers were telecommunications, insurance, beverages. Wind concept sector top 3 gainers were rare earths, CRO, medical services; top 3 losers were insurance, mining services, cement index.

3-week review: All major global indices fell this week. The main reason for A-shares is that the central bank started “mini” reverse repos and withdrew funds, and market liquidity suddenly appeared tight. US stocks were mainly due to WSB chasing and beating Wall Street. For the first time in 4 weeks, Stock Connect showed a net outflow, and Hong Kong Stock Connect net inflow this month exceeded 250 billion RMB. Wind industry sector top 3 gainers were airports, catering and tourism, and alcohol; top 3 losers were motorcycles, shipping, and aerospace. Wind concept sector top 3 gainers were air transport, HNA series, and rare earths; top 3 losers were aero engines, third-generation semiconductors, and aviation equipment.

2-week review: All global indices rose this week, gains: US > Hong Kong > China, Stock Connect resumed net inflows, and Hong Kong Stock Connect continued large net inflows. Wind industry sector top 3 gainers were catering and tourism, banking, and office supplies; top 3 losers were airports, shipping, and leisure goods. Wind concept sector top 3 gainers were medical, CRO, mining services, top 3 losers were ETC, HNA series, and semiconductors, and the local Chinese New Year effect was obvious.

1-week review: All global indices rose this week, gains: A-shares > H-shares > US stocks, Stock Connect showed net inflows for two consecutive weeks, and Hong Kong Stock Connect continued large net inflows. Wind industry sector top 3 gainers were alcohol, catering, and daily chemicals; top 3 losers were shipping, Internet, and gas. Wind concept sector top 3 gainers were medical beauty, PTA, and vaccines, top 3 losers were online games, rare earth permanent magnets, lithium battery electrolyte. The local Chinese New Year effect is still obvious. It is expected that chips and chemicals will continue to boom after the new year, and vaccines and testing will go down.

This week’s review: The A-share market differentiated obviously after the Spring Festival holiday. Although market trading is still active, the leading stocks where funds huddled continued to correct, and small and medium-cap stocks rose generally. Wind industry sector top 3 gainers were precious metals, coal, petrochemicals; top 3 losers were office supplies, education index, home furnishings. Wind concept sector top 3 gainers were financial participation, Chengdu-Chongqing economic zone, smart grid, top 3 losers were tungsten ore, rare earths, industrial metal electrolyte.

Market (%)	Index	This Week	1 Week Ago	2 Weeks Ago	3 Weeks Ago
Shanghai Composite	3696.17	5.72	3.92	0.38	-0.63
Shenzhen Component	15823.11	5.44	4.79	1.25	-0.61
ChiNext Index	3285.53	2.88	5.89	2.07	-1.04
Hang Seng Index	30644.73	2.02	3.64	3.55	-0.94
HSCEI	1104.07	5.13	3.15	1.48	-1.22
Hang Seng HK Chinese Enterprises	4223.95	4.94	1.24	2.40	-1.18
Dow Jones	31494.32	0.2	1	3.89	-2.03
Nasdaq	13874.46	-1.08	1.73	6.01	-2.00
S&P 500	3906.71	-0.28	1.24	4.65	-1.93

Market (CNY, Billion)	This Week	Previous Week	2 Weeks Ago	3 Weeks Ago
Shanghai Connect	44.72	16.84	74.97	-56.95
Shenzhen Connect	101.54	70.89	74.97	-56.95
Hong Kong Connect	149.07	96.56	485.13	664.22

The table data is actually the 5-day change, not the change for this week. On Feb 18-19, the Shanghai Composite Index rose 1.12% cumulatively, the Shenzhen Component Index fell 0.87% cumulatively, and the ChiNext fell 37.6 cumulatively

Positions

A-shares: Zhongjia Bochuang cleared the risk of greater losses after a one-time provision for goodwill impairment in 2020. Although the three businesses of 5G messaging, base station maintenance, and credit card collection were affected by the epidemic in 2020, they are developing overall. According to its description in the private placement application, after April 2021, the three major operators will restart base station operation bidding, and the bottom line performance is guaranteed. During the Spring Festival, whether operators and merchants will test 5G messaging on a large scale is worth watching. I believe the company will have good performance under the leadership of Wu Ying, a bigwig in the telecommunications industry.

Buy Guangqi Technology, a new material core technology company. I once heard a sharing by Dr. Liu Ruopeng in early 2016. At that time, he and his team were still determined to do civilian use, but the road to commercialization was not smooth. Now with the support of large military orders, the focus is on military use, and performance is guaranteed.

Buy Polyfluorodof, a leader in lithium hexafluorophosphate raw materials, and prepare to hold it for a long time. Looked carefully, gave up.

Buy oversold Weichai Heavy Machinery. Starting from summer, the temperature rises, the epidemic is eliminated, domestic seafood demand gradually increases, and ocean fishing prosperity recovers. Coupled with the post-trade war period, global shipping prosperity recovers, and Weichai Heavy Machinery’s performance recovery is expected. Looked carefully, gave up.

Hong Kong and US: It is estimated that fintech will take a long time to recover, and clear positions at a loss. Buy Luokung Technology, which is sanctioned by the US, has established cooperation with multiple car companies, and has been unable to pay wages for 5 consecutive months.

Funds: Try the person investment + track investment mode. Person Investment Mode:

Like Xie Zhiyu’s (Xingquan Herun Graded) capability boundary circle view.

Liu Yanchun is a stability player (Invesco Great Wall Domestic Demand Growth Mixed).

Zhou Haidong (Huashang Trend Flexible) is a big open and close player, betting heavily on optimistic industries, such as mining in the fourth quarter.

Liu Bin (Xinhua Xin Dongli Flexible Allocation Mixed) is a PhD in materials science. All technological disputes, mapped to the industry, are ultimately material disputes.

Track Investment Mode:

Optimistic about medical (GF Medical Health A) in 2021.

Technology (E Fund Information Industry Selected Stocks).

Military Industry (E Fund National Defense Military Industry Mixed).

High-quality technology companies (Huaxia New Era Mixed).

Code	Name	Current Period Dynamics
SZ000889	Zhongjia Bochuang	Flat
SZ.002407	Polyfluorodof	Flat
SZ000880	Weichai Heavy Machinery	Flat
SZ002625	Guangqi Technology	Flat
LKCO	Luokung Technology	Flat
F260104	Invesco Great Wall Domestic Demand Growth Mixed	Flat
F163406	Xingquan Herun Graded	Flat
F166301	Huashang Trend Flexible	Flat
F002083	Xinhua Xin Dongli Flexible Allocation Mixed	Flat
F004851	GF Medical Health A	Flat
F010013	E Fund Information Industry Selected Stocks	Flat
F005534	Huaxia New Era Mixed	Flat
F001475	E Fund National Defense Military Industry Mixed	Flat