What is a procyclical plate? The market is cyclical, rising when the market is booming, falling when the market is depressed, and the market keeps switching between rising and falling. This is the periodicity of the market. For some sectors, when the market economy is booming, the revenue of the whole industry will be improved to some extent. When the market economy is depressed, these sectors will also be affected by the market. As the market goes down all the way, these sectors are pro-cyclical sectors.

which industries belong to the pro-cyclical sector? Pro-cyclical sectors mainly include finance, real estate, building materials, infrastructure and other industries. The financial industry includes banks, brokers and insurance. When the economy is booming, more enterprises will lend to banks, which will promote the performance of banks. For brokers, if the market economy is good and the market rises, more people will open accounts and invest, and the performance of brokers will be better. The same is true for insurance. When the economy is booming, the state will expand its investment in infrastructure, and the real estate market will flourish, which will also drive the rise of surrounding building materials industries. These industries are greatly affected by the economic environment and advance and retreat with the market economy.

from the perspective of valuation, the investment value of the pro-cyclical sector is relatively low compared with the high valuation of the medical, scientific and consumer industries that have performed brilliantly in recent two years. The pro-cyclical sector represented by traditional industries may benefit from low risk and valuation repair, and the low-risk preference characteristics are expected to continue to exert their strength. Especially for banks, building materials, machinery, household appliances and other sectors. From the perspective of profitability, according to the historical situation, if the economy continues to recover and the profitability of enterprises improves, the pro-cyclical sector will also have an opportunity to rise. The impact of the epidemic has obviously weakened gradually, and the domestic economy is developing in a good direction. It is very possible for pro-cyclical industries to improve their profitability under the background of economic improvement. From the perspective of industry allocation, the allocation of funds needs to spread risks as much as possible. However, under the circumstances that the valuations of hot sectors and pro-cyclical sectors are obviously differentiated, the allocation ratio of most funds to hot sectors is relatively high and at a historically high level, while the allocation ratio of pro-cyclical sectors is at a historically low level. According to specific statistics, the allocation ratio of funds to medical organisms has exceeded 21%. Quite a high proportion, but the allocation ratio of each pro-cyclical plate is basically less than 3%. It is very obvious that if you want to allocate funds, it is necessary to invest some funds in pro-cyclical plates, because the safety margin of these plates is higher.