[Morning Meeting Minutes] Strategy Ding Wen Morning Meeting Minutes of Galaxy Securities 20181008

Today's Viewpoint

The People's Bank of China reduced the reserve requirement and released incremental liquidity to help stabilize market expectations and financing demand. Through this RRR reduction, the central bank has released liquidity to the market. In addition to 450 billion yuan for replacing MLF, 750 billion yuan is new money. On September 26, the Federal Reserve announced an interest rate increase of 25 basis points. Compared with the monetary policy practice of the Central Bank of China and the United States, it is not difficult to find that the Central Bank of China and the United States have chosen different monetary policy paths (the United States has withdrawn from easing, while the Central Bank of China has further established the policy orientation of moderate easing). This is mainly because of the differentiation of the economic cycle between China and the United States, and China's monetary policy should focus on domestic equilibrium. Under the current situation, we believe that China should adhere to the independence of monetary policy and maintain moderately loose monetary and financial conditions. At the same time, the exchange rate should be flexible enough to float according to market rules.

We are optimistic about the pharmaceutical sector, where there are many companies with high cost performance, and we select stocks from the bottom up. On the one hand, we continue to be bullish on leading companies in various sub industries, and on the other hand, we are bullish on undervalued stocks with PEG less than 1, such as OTC sector Renhe Pharmaceutical 。

This report is excerpted from the morning meeting research report released on October 8, 2018

Editor in charge: Ding Wen Practicing Certificate No.: S0130511020004

Rating system:

Galaxy Securities Industry Rating System: recommendation, cautious recommendation, neutral and avoidance.

Recommendation: It means that in the next 6 to 12 months, the industry index (or the industry index composed of companies covered by the analyst team) will exceed the average return of the exchange index (or the main index in the market) by 20% or more. The rating is given by analysts.

Caution: The industry index (or the industry index composed of companies covered by the analyst team) exceeds the average return of the exchange index (or the main index in the market). The rating is given by analysts.

Neutral: the average return of the industry index (or the industry index composed of companies covered by the analyst team) is equivalent to that of the exchange index (or the main index in the market). The rating is given by analysts.

Avoidance: The industry index (or the industry index composed of companies covered by the analyst team) is 10% or more lower than the average return of the exchange index (or the main index in the market). The rating is given by analysts.

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