Lead: Once the market forms deflation expectation and pre-deflation, cyclical industries should be avoided, and there will be structural opportunities in the defensive sector. On the other hand, in the later period of deflation, it is necessary to explore cyclical industry opportunities and avoid the risks of defensive sectors. In the context of deflation expectations, we should pay more attention to defensive sectors such as medicine, food and beverage, and some cyclical industries with serious overcapacity should be avoided because the bottom point of their industry profits has been seriously delayed. However, in the later period of deflation, with the decline of food prices, the value of food and beverage as a defense plate has declined, and it should also be avoided appropriately. Introduction of investment strategies in different stages of deflation: during the deflation cycle, there are structural opportunities in the market. There is no problem in choosing defensive sectors in the early stage of deflation, but we can turn our attention to cyclical industries and emerging industries in the later stage of deflation. In the deflation cycle, some enterprises are struggling in the difficult deflation abyss, and some enterprises have investment opportunities, which are structural opportunities in the market. In the deflation stage, that is, the expected deflation or the pre-deflation, the greatest opportunities come from enterprises with increased demand and capacity, such as medicine, food and beverage, public utilities and other industries, while the greatest risks come from industries with the most prosperous economy in the early stage, such as steel, cement, non-ferrous metals and infrastructure construction. Operationally, bonds and cash are attractive. Investors are advised to keep some assets in the form of bonds and cash and allocate defensive stocks against deflation, such as medicine, food and beverage, cultural media and tourism. In the later period of deflation, with the recovery of macro-economy, the performance of cyclical stocks bottomed out, so we can gradually turn our attention to cyclical stocks, such as steel and chemical industries, and also pay attention to emerging industries such as new energy, energy conservation and environmental protection. China's real estate industry will be a freak in the history of deflation. If deflation occurred in Japan and Hong Kong in the last century, the real estate industry would plummet. At present, China's urbanization rate is only 5 1%, which is far lower than the urbanization rate of 70% in developed countries. China's economic development in the next decade is inseparable from urbanization. Therefore, deflation in China is unlikely to be accompanied by a sharp drop in house prices, and there are still opportunities in the real estate sector. Introduction to the three sectors benefiting from deflation: under the expectation of deflation, the defensive sectors such as medicine, cultural media and food and beverage will perform well, but in different stages of deflation, sub-sectors also have different performances. Pharmaceutical industry: With the global economic slowdown, the domestic economic downturn and the slow recovery of the real economy, the pharmaceutical industry has two major characteristics: rigid consumption of daily necessities and increased investment guided by policies, and it is a necessary variety in the case of deflation. Although the growth rate of the pharmaceutical sector is relatively high in the short term, in the medium and long term, the rigid demand driven by the aging, rising incidence and the policy transformation of the country that emphasizes people's livelihood determines the general trend. From a cross-industry perspective, the pharmaceutical industry is one of the strategic investment industries with the clearest long-term growth. If there is a correction in the pharmaceutical sector, it will be a good time to buy. At present, the valuation level of the pharmaceutical sector is not low. At present, the idea of stock selection should focus on the stocks with clear medium-and long-term growth logic and definite interim performance in 20 12 years, such as Tasly (600535, stock bar), Hengrui Pharma (600276, stock bar), Yunnan Baiyao (000538, stock bar) and other first-line pharmaceutical stocks. Second-and third-line pharmaceutical stocks such as Shuanglu Pharmaceutical (002038, Guba) and Kunming Pharmaceutical (600422, Guba). Cultural media: From the development experience of foreign countries, the cultural industry has typical characteristics of counter-economic cycle, and the depressed economy can enhance the demand for spiritual culture. The Great Depression in the United States gave birth to the "golden age" of Disney animation. During the Great Depression in the 1930s, after the bursting of the Internet bubble in 265438 and the terrorist attack of "9 1 1" in the early 20th century, and during the subprime mortgage crisis in 2009, the movie box office revenue increased obviously against the trend. Japan's economy fell into a long-term downturn after 1990, but the animation and game industries developed against the trend. From the news, the cultural industry has the following advantages. Last year, the total revenue of the national press and publishing industry exceeded 1. 4 trillion yuan, China Cultural Industry Investment Fund plans to spend more than 654.38+0 billion yuan in the next six months to encourage private capital to enter the cultural industry in many domestic cultural media enterprises and central high-level. Policy support is the most important reason why the industry trend is improving. In the field of industry segmentation, it is recommended to pay attention to the company stocks of smart TV, animation and film concepts. Food and beverage: The food and beverage industry has the characteristics of weak cycle, and its performance is relatively predictable. In the context of deflation expectation or pre-deflation, it can participate in safety, and meat products, beer and wine in low-end mass consumer goods can participate. However, in the later period of deflation, due to the decline in income and purchasing power, the industries involved need to be subdivided. For example, second-line liquor in liquor may be more defensive, while first-line liquor and luxury liquor may not perform well.