Song Xuetao: A shares are in the bubble stage. These risks and opportunities should be noted.

 Song Xuetao: A shares are in the bubble stage. These risks and opportunities should be noted.

Song Xuetao

The market is in the early stage of bubble.

On the whole, the market is still at the beginning of the bubble, and bubbles are often formed by mutual reinforcement of emotion and capital. The fundamentals of the market generally recovered, and the overall recovery rate in the second quarter was very good, but there were still some problems in the structure.

These foundations form a bubble state, but in the end, they need the cooperation of capital and emotion.

The market sentiment before last weeks big fall was relatively high. The short-term sentiment index rose very quickly, from 40% to nearly 90%. However, the position is not particularly crowded. The proportion of open-end fund positions is slightly higher than the historical median level. Many newly issued funds have not yet completed their positions, and some over-the-counter funds are waiting to enter the market. For example, at this time, the market state is similar to a pot of water. It rapidly heats up to about 80 degrees, and it begins to show signs of boiling, but it is not boiling. This is the current state of the market.

The market has not changed at the beginning of the bubble, and the overvaluation of assets from a high level often brings about a rebalancing of style. After the decline, the capital is not willing to leave the market, and will be more inclined to underestimate the value, especially in the second half of the year with better performance guidance, such as building materials, nonferrous metals and other industries related to construction industry and real estate completion. Some optional consumption will continue to repair in the second half of the year.

In the second half of the year, we still make alpha money

Making money is just three parts. The first part is to make money for Fundamentals, that is, to make money for economic growth, industrial trend, industry cycle and company management; the second part is to make money for liquidity or central bank; the third part is to make money for risk preference, or money for game. This part is often more evident in the bubble market, because bubbles are emotionally dominant.

First, fundamentals beta is not the main source of revenue in the second half of the year. In the second half of the year, the recovery rate will slow down, and demand will determine the economic recovery slope in the next stage. The industries that can be recovered are recovering well, such as infrastructure, real estate and other construction industries. However, the recovery of traditional manufacturing and service consumption and optional consumption is relatively slow, which will restrict the slope of economic recovery in the second half of the year.

Economic recovery may bring some periodic opportunities, but on the whole, u03b2 income is relatively small, and the main source of income is u03b1. From the perspective of industry prosperity, TMT, electronics, new energy vehicles, computer industry prosperity is upward, and the performance growth rate is higher than value stocks. The demand for medicine in the epidemic environment may last for a long time. The epidemic situation only disturbs the consumption and will not affect the overall consumption upgrading trend. The alpha of white horse, the leading consumer, is still relatively obvious.

Therefore, the second half of the year is basically dominated by alpha opportunities in industries such as scientific and technological growth, pharmaceutical consumption and cyclical Baima enterprises. It is difficult for economic recovery to bring about sustained u03b2 - income.

Second, liquidity is generally loose, only returning from the most loose state to normal neutrality. In this process, it should be more difficult to earn liquidity driven money brought about by further central bank easing. Of course, there may be periodic opportunities. But judging from the overall trend in the second half of the year, making liquidity money is not a particularly certain opportunity.

For investment, response is greater than forecast. We are now at a high level and tend to be more risk sensitive. We need a degree of balance. Balance growth and value in style.

To sum up, basically speaking, in the second half of the year, we should make structural money and earn industry alpha; for liquidity, we should balance growth and value; in external risk events, response should be greater than forecast, and we need to avoid completely exposing the risk to stocks in the whole asset allocation, and we need to hedge with precious metals and bonds.

The current market is different from 2014-2015

From the fundamental point of view, the current economic fundamentals are better than those in 2014 and 2015. At that time, the economy obviously entered a stage of recession and deflation. Now the economy is coming out of the recession caused by the epidemic and entering the recovery stage.

The economic structure is also different. At that time, the economic structure was mainly driven by the traditional real estate cycle, which has been flattened. The returns of some emerging industries, the quality of companies, and even the traditional industries, after the supply side reform in 2016 and 2017, the concentration degree was improved, the quality of listed companies was further improved, and the roe level was improved. Therefore, the market structure and fundamentals were better than at that time.

In 2014 and 2015, the currency was looser than it is now, and the credit conditions at that time were also looser than now. At that time, the over-the-counter capital allocation and leverage were more turbulent, and the current liquidity environment and credit environment were not so strong support.

Therefore, this means that the current market performance is more fundamental and performance driven than at that time.

To avoid risks, we should start from the following three aspects:

Second, the allocation of stocks should also be dispersed, and a moderate balance should be made between value and growth. The long-term trend of all in growth is right, but if it is too expensive in the short term, the withdrawal may be large; the value of all in is smaller than the withdrawal, but the long-term return may not win.

Third, we need to be sensitive to liquidity management and risk events.

In the long run, it is suggested to pay attention to u03b1 in structure. For example, in the development of science and technology, we can see that the industry trend and competitiveness are improving, such as electronics, semiconductor, cloud computing and new energy vehicle industry chain. Second, there are long-term investment opportunities in medicine and biotechnology after the outbreak. In addition, it is the dominant enterprises with relatively definite competition pattern in the consumption competition channel. Periodic attention to real estate after the cycle, building materials and furniture, household appliances optional consumption direction of the periodic opportunities.

This article is the exclusive contribution of Netease Research Bureau and does not constitute investment decision.

Netease Research Bureau is a financial and professional think tank created by Netease News. It integrates the original multimedia matrix of NetEase Finance and economics, relies on the wisdom of hundreds of top economists at home and abroad, conducts rational and objective analysis and interpretation on hot topics of economics, and creates a leading financial think tank with attitude. Welcome to contribute (contribution email: [email protected] uff09u3002

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