K-Shaped Recovery

Weekly Reflections

A K-shaped recovery refers to a situation where, after an overall decline, one part rebounds and rises while another part remains at a low level, forming a divergent trend similar to the letter K. The concept of a K-shaped recovery was proposed by JPMorgan Chase. According to their analysis, the recovery path after COVID-19 is divided into two directions: one is for large enterprises and public sector institutions that can directly obtain stimulus plans from the government and central bank; the other is for small and medium-sized enterprises (SMEs), blue-collar workers, and the dwindling middle class who are excluded from the stimulus plans.

A K-shaped recovery is actually economic differentiation. “Economic differentiation” is a neutral term that reflects an objective economic phenomenon. The K-shaped recovery is mainly manifested in regional differentiation, industrial differentiation, class differentiation, and financial market differentiation. According to Yi Gang, former chairman of the China Securities Regulatory Commission, China’s economy does not belong to K-shaped development, but an overall upward trend, but there are also imbalances. According to the analysis of Zhu Min, former vice president of the IMF, from the perspective of the total supply side, the industrial rebound is strong, while the service industry rebound is very weak because the service industry is contact-intensive. From the perspective of the total demand side, investment accounts for more than 52% of the entire GDP, import and export contribute 13%, and consumption is very low. From the perspective of growth, consumption is still a negative contribution. In the future, there will be three main themes on the K-shaped rapid growth pole: coping with an aging population, carbon neutrality, and digital transformation.

Weekly Events

The State Administration for Market Regulation imposed a penalty on Alibaba’s “choose one of two” monopolistic behavior, with a fine of 18.228 billion yuan.

Weekly Market

Period: 2021-04-05 ——— 2021-04-11

4-week review: The decline expanded this week, and A-shares fell for three consecutive weeks. The top three Wind industries in terms of gains were electric power, steel, and coal; the top three decliners were aerospace, semiconductors, and agriculture. The top three Wind concepts in terms of gains were thermal power, electric power, and coal-fired power restructuring; the top three decliners were aviation, planting, and marketing communication.

3-week review: The decline expanded this week, and A-shares fell for four consecutive weeks. The top three Wind industries in terms of gains were home furnishing, shipping, and retail; the top three decliners were insurance, semiconductors, and energy equipment. The top three Wind concepts in terms of gains were digital currency, liquor, and mobile payment; the top three decliners were rare earth, tungsten ore, and ultra-wideband technology.

2-week review: On the last trading day of this week, the three major indices rose together. Whether this is a periodic low or a rebound remains to be verified next week. The top three Wind industries in terms of gains were daily chemicals, gas, and office supplies; the top three decliners were oil, chemical fiber, and motorcycles. The top three Wind concepts in terms of gains were removing caps, UHV, and air transport; the top three decliners were rare earth, carbon black, and propylene.

1-week review: On the last trading day of this week, the three major indices rose together. It can be basically confirmed that it is a rebound rather than a periodic rebound. The top three Wind industries in terms of gains were semiconductors, alcohol, and water affairs; the top three decliners were forestry, environmental protection, and cultural media. The top three Wind concepts were semiconductor packaging, semiconductors, and the National Big Fund Index; the top three decliners were Beautiful China, PM2.5, and Elevator Index.

This week’s review: The three major indices fell together this week. The top three Wind industries in terms of gains were shipping, steel, and leisure products; the top three decliners were catering and tourism, aviation, and power generation equipment. The top three Wind concepts were hydrogen energy, semiconductors, and Hainan Free Trade Zone; the top three decliners were trust heavy holdings, servers, and sewage treatment.

Market (%)	Index	This Week	1 Week Ago	2 Weeks Ago	3 Weeks Ago
Shanghai Composite Index	3450.68	-0.45	1.93	0.4	-1.4
Shenzhen Component Index	13813.31	-1.19	2.56	1.2	-2.09
ChiNext Index	2783.33	-1.14	3.89	2.77	-3.09
Hang Seng Index	28698.8	0.42	3.73	-2.26	0.87
HSCEI	1096.21	-1.04	1.87	-1.04	0.76
Hang Seng China-Affiliated Corps	4067.66	-2.33	0.94	-0.68	1.99
Dow Jones Index	33800.6	1.95	1.64	1.36	-0.46
Nasdaq	13900.19	3.12	3.87	-0.58	-0.79
S&P 500 Index	4128.8	2.71	2.82	1.57	-0.77

Market (CNY, Billion)	This Week	Previous Week	2 Weeks Ago	3 Weeks Ago
Shanghai Stock Connect	-57.57	-3.16	84.60	6.76
Shenzhen Stock Connect	4.32	-96.23	57.04	80.32
Hong Kong Stock Connect	14.6	40.48	-64.38	40.59

Positions

Code	Name	Current Period Dynamic
SH600526	Feida Environmental Protection	Hold
LKCO	Luokung Technology	Hold
F260104	Invesco Great Wall Domestic Demand Growth	Hold
F002083	Xinhua Xin Dongli Flexible Allocation A	Hold
F166301	Huashang New Trend Flexible Allocation A	Hold
F163406	Xingquan Herun Hybrid	Hold
F005534	Huaxia New Era Hybrid	Hold