Summary of Institutions' Views on Financial Markets on November 25

On November 25, the institutions summarized their views on the outlook for the stock market, commodities, foreign exchange, and central bank policy.



1. Goldman Sachs: The Shanghai and Shenzhen 300 Index is expected to challenge 5,500 points next year;

In 2022, Goldman Sachs maintains its recommendation on the high allocation of the A-share market, and it is expected that the valuation of A-shares will rebound significantly in 2022. It is predicted that the Shanghai and Shenzhen 300 Index will reach 5,500 points by the end of next year, with a potential return of about 12%. In terms of sector allocation, Goldman Sachs believes that it can focus on the five major sectors of automobiles, consumer goods, media, e-commerce, and semiconductors. In addition, under the framework of solidly promoting "common prosperity", the concept stocks of consumption, technology, new energy, and state-owned enterprise reform are expected to generate excess returns

2. Bank of China Securities: optimistic about the growth of the brokerage industry, and continue to recommend leading brokerages and wealth-featured brokerages that benefit the most;

Persisting in optimistic about the growth of the brokerage sector in the context of continuous reforms on the supply side of the capital market and increasing residents’ wealth management demand, it has high investment value in the structural market that fluctuates within the market. In the future, wealth management is expected to remain the main driving force for the growth of securities firms’ performance. We will continue to recommend wealth management-driven wealth-specialized securities firms and leading securities firms that have both robustness and growth in the context of performance differentiation. Focus on recommending CITIC Securities, Huatai Securities, Orient Securities, Industrial Securities, Orient Fortune

3. JPMorgan Chase: Tesla's stock price will plummet by 77% in the next 12 months;

① In the past two weeks, the conflict between the US investment bank JPMorgan Chase (JPMorgan) and Tesla began to become public. The former sued the electric car manufacturer, and the CEOs of the two companies also broke out behind the scenes;
② But leaving aside the discord between the two executives, JPMorgan Chase analysts are also one of the Wall Street people who have been the least optimistic about Tesla stock for a long time. The company’s research department recently estimated that Tesla’s stock price for the next 12 months is $250, which is much lower than Tesla’s Wednesday’s closing price of $1,116. This means that Tesla’s stock price may plummet by 77% in the next year.

4. Credit Suisse: rising U.S. bond yields suppressed gold prices;

① The basic assumption is still that inflation expectations are close to the peak, and the real yield of 10-year U.S. Treasuries is forming a huge and important negative reversal to the price of gold. If our view is correct, it will indicate that gold may actually be forming a huge and significant top;
②The risk of a recent sharp drop in gold prices may be low. The next support level is at 1759 US dollars per ounce. If it falls below, it may test the long-term key support levels of 1677-1691 US dollars per ounce. The upward trend of gold price is subject to USD 1,877 per ounce, and the upward trend can only be reconfirmed if it rises above USD 1,917 per ounce

5. Citi: US 7-year Treasury bonds should outperform the market in the next few weeks;

Citi strategist Jason Williams and others wrote in a report on November 24 that after this week's downsized new bond issuance has received strong demand, the US 7-year Treasury bonds "should outperform the market in the next few weeks." According to Citi’s simple average z-score model, the November 23 issuance is the strongest 7-year bond issuance this year. The yield of the US$59 billion issuance winning bid is 1 basis point lower than the yield before the issuance, and direct bidders received 23.3%, the highest level since December 2019. It is expected that the scale of 7-year treasury bond issuance will decrease by USD 3 billion each month until the middle and late next year, alleviating the pressure on this period

6. Citi: OPEC+ is expected to stick to its production increase plan;

① Citigroup stated in the report that although major consumer countries plan to release strategic crude oil reserves, OPEC+ may stick to its plan at the December 2 meeting to increase its supply by 400,000 barrels per day in January next year. In the case of a market-priced oil price of US$80/barrel, if OPEC+ cuts its production quota, it seems to be an overreaction, and it is obviously contrary to its proposition to maintain the public interest by stabilizing the market;
②As some oil-producing countries cannot meet the ever-increasing quotas, the actual monthly output increase of OPEC+ is usually less than 250,000 to 300,000 barrels per day. The output of OPEC+ in November is expected to be 39 million barrels per day, which is approximately 650,000 barrels per day lower than the 39.7 million barrels quota.

7. Capital Investment Macro: Floods reduce the possibility of the Bank of Canada becoming more hawkish;

① The currency market predicts that the Bank of Canada will start raising interest rates in March 2022, and will raise interest rates five times next year, but Stephen Brown, senior economist at Capital Macro Canada, questioned this rate.
②Brown stated in a report, “The devastating floods in British Columbia this week have hit economic activity, reducing the possibility that the central bank will soon become more hawkish.

9. Scotiabank: With the tightening of major central banks, the dollar's gains may peak;

① Scotiabank said that as major central banks such as the European Central Bank, the Bank of Japan, and the Swiss National Bank begin to tighten policies, the dollar's gains may peak in the second half of 2022; strategists Shaun Osborne and Juan Manuel Herrera wrote in the report , By then, the Fed’s tightening cycle should already be underway, and the market may already have certain expectations;
②Although the market is "seriously anticipating the risk of the Fed's early start of the tightening cycle", the European Central Bank, the Swiss National Bank and the Bank of Japan may also start at a later date, and the Bank of England delayed the start of tightening. These may not yet be fully reflected in the dollar pricing. , As risk sentiment weakens and a new wave of epidemic strikes, the dollar still has room to rise in the next few months. In the next 1-2 years, the US dollar index may rise to 104/105.