From the analysis of the long-term trend of economic restructuring and industrial upgrading, I believe that in the future, the market will still present structural opportunities in two major areas: first, consumption upgrading; second, scientific and technological progress. These two plates will breed a large number of excellent growth enterprises.
Pursuing long-term development of enterprises from the perspective of industry
In the first year of 2020, a shares continue the structural market trend of 2019, and consumer electronics and semiconductors of science and technology perform better. However, on the eve of the Spring Festival, a new epidemic broke out in China, and the market as a whole retreated. From the Spring Festival holiday to the beginning of March, the subdivision plate represented by cloud computing and home consumption has gone out of the structural market. With the further spread of the overseas epidemic, in the first three weeks after March, the major global stock indexes have set a record correction, and a shares have also undergone a significant adjustment in the short term. Among them, the pharmaceutical sector benefited from the epidemic situation showed a strong performance against the trend.
In the second quarter, the domestic epidemic situation was under control, and economic activities began to recover gradually. Subsequently, the overseas epidemic situation entered a stage turning point, with the introduction of stimulus policies in various countries, the market risk preference rebounded, the A-share market rose as a whole, and the performance of consumer goods, new energy electric vehicles and other sectors was eye-catching.
Looking back on the first half of the year, investors have higher requirements for the safety of assets and the certainty of performance due to the uncertain prospect of the epidemic. The consensus expectation of the market has given birth to the structural market of the pharmaceutical, consumer and technology industries. The performance of the mainstream index is also significantly divided. The gem index rose 35% in half a year, far exceeding the Shanghai and Shenzhen 300 and Shanghai composite indexes.
Entering the third quarter, a shares once ushered in the taste of comprehensive bull market in July. The undervalued plate represented by finance and real estate made up for the rise, and the vaccine plate rose rapidly. However, the subsequent Huawei incident made the science and technology sector suffer a heavy setback. In addition, the first batch of science and Technology Innovation Board companies faced with the pressure of lifting the ban, the market atmosphere was relatively light, the trading volume was rapidly declining, and the overvalued pharmaceutical and consumer goods were under adjustment pressure. Only some high-profile manufacturing industries, such as photovoltaic, engineering machinery, automation, and automobile, performed better.
As a fund manager, I always adhere to the principle of industry decentralization and individual stock concentration in the construction of portfolio, trying to select excellent alpha companies in different industries, and achieve good returns for the holders based on the continuous growth of fundamentals.
In the first three quarters of this year, in the face of such a complex market, I adopted the main method of responding to changes with constancy. The so-called invariance is to adhere to the stock selection principle of optimizing the track and selecting individual stocks, adhere to the first principle to make decisions, dilute the short-term fluctuation of stock prices, and pursue long-term development enterprises from the perspective of industry.
Grasp the general direction of industry from a long-term perspective
For investors, the fourth quarter of each year has always been a special period of uncertainty in the history of a shares. At this stage, the factors affecting the market are more complex and there are many variables. From the fundamental point of view, most listed companies will enter a long period of performance vacuum after disclosing the third quarter report at the end of October; from the perspective of market participants, some of the participating funds need to be settled before the end of the year, and may choose an opportunity to cash in floating profits; some participating groups may also have some game trading based on the factors of annual ranking. In terms of the external environment, the Sino US relations may have incident shocks from time to time.
The second is the uncertainty brought about by the US election. The relationship between big powers is complex and changeable, so it is difficult for investors to predict the evolution of the situation accurately. However, a consensus has been reached that external trade frictions will be normalized, and China must rely on its own strength to resolve the neck sticking problem of various technologies. At present, the key factor is time. With the support of the current industrial policy, we believe that the time to break through the blockade of science and technology is just around the corner, but it will also experience more twists and turns.
On the whole, we believe that it is very difficult to predict the short-term market trend and direction. If we look at the problem in the long run, it will be much simpler. From the long-term trend analysis of economic restructuring and industrial upgrading, the market will still present structural opportunities in two major areas in the future: the first is consumption upgrading, the second is scientific and technological progress. These two plates will breed a large number of excellent growth enterprises.
This is because China has a population of more than 1.4 billion and over 400million middle-income groups. This is a unified large market. Our language, culture and values are converging. Therefore, mature business model can rapidly realize the cross regional replication and development, especially in the context of the rise of Internet, the differences between urban and rural areas are rapidly narrowed, which will bring huge growth space and stability to enterprises Fixed profitability.
Secondly, the progress of science and technology brings convenience to peoples life, work and study, especially represented by informatization and intelligence, which can effectively improve the efficiency of the whole society and reduce costs, thus bringing explosive growth of performance to related enterprises.
To be sure, there are more uncertainties in the fourth quarter, market volatility is expected to increase, and the challenges faced by fund managers will also increase. However, as professional investors, after more than ten years of professional training, our own investment framework and style have been relatively stable, and we will not frequently change positions and exchange shares due to short-term market fluctuations. Because the stock price may fluctuate every day, but the operation of the enterprise will not change greatly in the short term. More importantly, when we think from a long-term perspective, we tend to be able to grasp the direction of the trend more clearly.
In my opinion, investment is not only a job, but also a part of life. Only by adopting a long-term attitude can we deal with it calmly, see the essence of things and grasp the main contradictions. Specifically, the long-term doctrine of A-share requires investors to think from the perspective of industrial development and enterprise management, grasp the development law of objective things, maintain evolution and realize self transcendence, and the final implementation and implementation are implemented to people, specifically, the pattern of entrepreneurs. Therefore, the essence of investment is to choose to walk with great enterprises and be friends of time.
Brief introduction to fund manager: Qiu Jingmin, fund manager of growth and Investment Department of GF fund, has 11 years experience in securities industry and 5 years experience in investment management, managing gfs new economy, GF Jufeng and gfs advantageous growth. Galaxy Securities statistics show that, in the latest year as of September 18, GF new economy ranked sixth among 473 partial stock funds (stock upper and lower limit of 60% - 95%) with 87.64% yield; the cumulative yield of the past three years and the past five years were 111.43% and 163.87%, respectively, and obtained the five-star rating evaluation of Galaxy Securities in three-year and five-year periods.
Looking at the core value of enterprises through K line
Tao can, executive general manager of Equity Investment Department of CCB
Looking back on the past three quarters of 2020, both the global social phenomenon caused by the new crown epidemic and the trend of capital market still give us a sense of unreality. Everything is beyond the expectation at the beginning of the year. Fortunately, we are still focusing on the competitiveness of the investment portfolio, and the most important thing is that we still focus on the diversification of investment portfolio.
For the real economy, the actual role of the epidemic is no less than a supply side reform, eliminating the weak and retaining the strong. In the stage of returning to work and production, the companies with strong competitiveness recover better than the industry, so as to obtain more shares of the industry.
In fact, since the implementation of the supply side reform economic policy in 2016, the survival of the fittest market competition environment created by various industries has made the leading companies in the industry stand out from the aspects of business development, company profitability and market value. We have made statistics on the return on net assets (ROE) of the leading companies in various industries. Since 2016, the roe of the top quarter of the companies in each industry has remained at a high level, while the other three quarters have seen a significant decline.
In the medium and long term, good earnings drive up the K line of stock price. For the short-term rise and fall of K-line, we should pay more attention to the company behind the K-line, whether it has strong competitiveness to obtain market share and industrial chain value.
There is no doubt that the supply side reform avoids the phenomenon of bad currency expelling good currency. Enterprises that pay more attention to environmental protection investment, human resources, product standards and patent rights can obtain a more sustainable market environment, and gain market share and industrial chain value through proper competition. At the same time, the higher market value of the company can be obtained through the transmission of capital market. So better investment opportunities should focus on more competitive enterprises. While weakening the fluctuation of K-line, we should focus on the analysis of enterprise competitiveness, or more precisely, alpha discussed in capital market is the competitiveness of the company.
As we all know, Chinas economy has been in the state of three periods superposition in the past five years, and the endogenous kinetic energy of the economy is more bursting at the structural level. In the stage of economic structure transformation and industrial upgrading, the opportunities in the capital market are more reflected in structural opportunities. If summed up in one sentence, it is: to achieve the goal of industrial upgrading by means of scientific and technological innovation, so as to increase the disposable income of residents, and finally realize the purpose of consumption upgrading. More specific keywords are technological innovation, industrial upgrading and consumption upgrading.
In the actual investment and research process, we have indeed found a large number of manufacturing enterprises, through the means of scientific and technological innovation, to improve the performance and quality of products, to achieve domestic substitution, and even to enter the international market. Scientific and technological innovation is not only a short board industry in the economic structure, but also a driving force for all walks of life to enhance the competitiveness of the industry in the global industrial chain.
Since the opening of the science and technology innovation board in 2019, the accumulated financing has exceeded 250 billion yuan. The six major industries of the science and Technology Innovation Board: new generation information technology, biological medicine, high-end equipment manufacturing, energy conservation and environmental protection, new materials and new energy. The main purpose of financing is mainly on capital expenditure. Most of the capital expenditure of these industries has higher requirements on the upstream industrial control, automation and intelligent equipment, which directly promotes the prosperity of advanced manufacturing industry. Under the impact of this years epidemic situation, the growth rate of investment in manufacturing industry has declined by single digit, but the growth rate of investment in advanced manufacturing industry has been nearly equal.
Of course, it is inevitable that due to the overall improvement of valuation, many stocks have been overdrawn to a certain extent when profits have not been recovered or accelerated, and the market volatility may be enlarged at this time. In the fourth quarter of the year, we will be in a market with increasing volatility, looking for companies with timely growth and sustained competitiveness, which will constitute the core variety of our portfolio and strive to create alpha earnings for the holders.
Introduction to fund manager: Mr. Tao can, executive general manager of Equity Investment Department of CCB, masters degree. He joined CCB fund in July 2007, successively served as a researcher, assistant fund manager, fund manager, senior fund manager, assistant general manager of equity investment department and Chief Strategic Officer of research department. Now he manages several equity funds, including CCB reform dividend, CCB modern service industry, CCB high dividend, CCB new energy and other equity funds.
High quality companies aiming at deterministic investment opportunities and sticking to emerging industries
Du Meng, deputy general manager and investment director of Shanghai Investment Morgan
In the first half of this year, the global spread of the new epidemic has had a great impact on economic activities, and the capital market has also been greatly shaken. With the gradual remission of the epidemic situation, economic activities began to recover in the second quarter, and the market also returned to the upward trend. The pharmaceutical, consumer, science and technology industries continued to rise. Looking back on the years operation, we focused on investing in high-quality companies in emerging industries based on the long-term growth of stock selection logic, and achieved good investment returns in the first half of the year.
Looking forward to the future, the impact of the epidemic on the market will gradually weaken. Judging from the current situation, although the domestic epidemic situation has been repeated, it is still preventable and controllable, while the overseas epidemic situation is still continuing, and it is still necessary to track the development of the incident. In the future, the impact on the global economy will be closely related to the duration of the epidemic, and we will continue to pay attention to this. Although the global economy will face greater challenges this year, we are not pessimistic.
Since the third quarter, growth stocks have experienced a big correction, which is mainly due to the large increase in the early stage. We believe that in the future, the market should also focus on the performance of the company, not just the valuation. In the past two years, the rate of return of institutions is very high, and the annualized return can reach 50-70%. Such a high return is unlikely to last in the future, so investors should reduce the expected return rate. The u03b1 income of investment in the next year depends on the matching of valuation and performance. Typical examples include the recent photovoltaic industry, which has an upward boom, low valuation and good performance; the electric vehicle industry, whose valuation is acceptable in a long time dimension; and the leading companies in the software industry, whose industry status is very high, but the valuation range fluctuates greatly. Moreover, the evaluation of valuation depends on the general environment, even if the performance is positive, but if the valuation convergence may not be able to obtain excess returns.
For the judgment of the market next year, the situation may be similar to that in 2012, with the overall index weakening and only a small number of stocks rising. Under the background of differentiation, investment emphasizes bottom-up and individual stock selection, and stock selection is carried out through industry allocation. Specific to the stock selection criteria, we should focus on three aspects: first, companies with an upward trend in the industry; second, companies with matching valuations and performance; third, selecting companies with stronger positions and better fundamentals in the industry.
At present, we are optimistic about the investment opportunities in the following directions in the future:
The first is photovoltaic, which may have entered the forefront of explosive growth. China has basically occupied the leading position in the global photovoltaic industry chain, with a market share of 80% - 90%. By investing in Chinas photovoltaic enterprises, we can fully enjoy the dividend of global photovoltaic development.
The second is electric vehicles. The current market value of Tesla has reached 360 billion US dollars, which is about twice that of Toyota. This means that the rate of electric vehicles is the general trend of future travel. We believe that with the development of electric vehicles, the industry may undergo a redefinition, including the remodeling of the entire industrial chain. In this process, many new applications will be generated iteratively, and a lot of value will be created. Chinas electric vehicle enterprises are in a favorable position in the global competition pattern, and many enterprises are in the forefront of the global ranking or market share. In the future, with the development of the industry, Chinas electric vehicle enterprises will have greater growth space.
The third is 5g, which is likely to change our communication mode, but the main result is the increase of data volume. The impact of 5g development is not only mobile phone change, including in the future Internet, but also a lot of applications. We will also closely track the development direction and changes of 5g industry.
Introduction to fund manager: Du Meng, deputy general manager, investment director and fund manager of Shanghai Investment Morgan. Since October 2007, he has joined Shanghai Investment Morgan Fund Management Co., Ltd. as an industry expert, fund manager assistant, fund manager assistant, general manager assistant, director and senior fund manager of the first domestic equity investment department, and now serves as deputy general manager and investment director. He has been a fund manager since July 2011, and is now the fund manager of Shanghai investment banks emerging power hybrid securities investment fund and Chinas advantageous securities investment fund of Shanghai investment bank.
Market review and investment outlook in the fourth quarter
He Xiaochun, assistant general manager of Morgan Stanley Huaxin Fund
Under the impact of the epidemic, domestic policies have been adjusted, and the impact of the epidemic on different industries has also been differentiated. The funds under management have been changed in time in terms of portfolio construction. Specifically, under the influence of the epidemic situation, the prosperity of the pharmaceutical industry was improved, and the allocation of the pharmaceutical industry was increased in the first quarter. Compulsory consumption is less affected by the epidemic situation, and the performance is more certain, and the allocation of compulsory consumption is increased simultaneously. At the same time, the financial sector has been greatly reduced.
The economy began to recover continuously in the second quarter. By tracking the medium-sized data and combining with the direction of industrial policies, we focused on screening out high-tech sectors with high-quality and increased the allocation of science and technology sectors. Since the middle of July, the relatively overvalued sector has experienced a shock adjustment, while the undervalued sector has risen. The margin of incremental capital inflow weakens, the external risk continues to disturb, and the portfolio allocation is more balanced than the previous period.
As a whole, the equity investment team of the company has achieved good returns since the beginning of the year. The main reason is that we attach great importance to the in-depth study of the fundamentals of various industries and select industries with high prosperity and strong performance certainty to allocate.
Looking forward to the fourth quarter, it is expected that the overall market will maintain a volatile pattern, and the focus of portfolio management is to do a good job in industry and style configuration.
In terms of positive factors, the domestic economy continued to recover, corporate profits improved quarter by quarter, and the fundamentals were well supported. In the aspect of stock market policy, the capital market is in the positive cycle of policy reform, which can continuously boost the activity of A-share market and enhance the risk preference of market participants. The formulation of the 14th five year plan is imminent, and the introduction of industrial policies has greatly promoted the A-share related industries, and there are more thematic investment opportunities. The sustained repair of fundamentals superimposed on the favorable release of policy has strong support for a shares.
The negative factors are mainly reflected in the unfavorable external environment, the uncertainty in the US election, the impact of the second epidemic in Europe on the economic recovery, etc., which continue to suppress investors enthusiasm for going long. Secondly, since the beginning of this year, some sectors of A-shares and US stocks have achieved good growth, the marginal weakening of core driving factors, the relatively high valuation of some industries, and the short-term further upward movement is restricted.
On the whole, it is more difficult for the short-term market to rise sharply, and the market is more structural opportunities. In the latter part of the fourth quarter, it is expected that with the landing of the US election and the progress of vaccine research and development, the market expectation may be more optimistic. Rhythm on the fourth quarter A-share market may be the early shock, late optimistic.
First, the consumer medicine technology industry, which has high performance certainty and long-term high prospect, pays attention to the opportunities for industry layout adjustment. In the medium and long term, this kind of industry is basically oriented to good and has higher certainty. In the process of market adjustment, if the valuation returns to a reasonable level, it is worth seizing its allocation opportunities. The science and technology sector has continued to adjust since July. The upward pressure of long-term and long-term interest rates on valuation has weakened, and the negative effects such as external uncertainties have been gradually digested. The allocation opportunities of consumer electronics and new energy sectors with higher prosperity are also worthy of attention.
The second is the benefit direction of economic recovery, which can focus on Pro cyclical manufacturing industry and optional consumption. With the resonance recovery of domestic and foreign economy, the demand for midstream manufacturing and optional consumption is improved, and the profits can be continuously restored. The focus is on household appliances, automobiles, construction machinery, building materials and chemical industry.
The third is to actively arrange the thematic investment opportunities of related industries under the guidance of the 14th five year plan. On the whole, the factors affecting the market in the fourth quarter are more complex. While ignoring the index, the allocation will focus on structural opportunities.
(the author is assistant general manager, director of equity investment department and fund manager of Morgan Stanley Huaxin Fund)
It is the cycle that never stops and changes
Liu Xin, deputy director of TEDA Manulife investment
In 2020, the most influential factor on the market is the new epidemic, which has a profound impact on all countries in the world. Its impact on the economy, the duration, the spread, and even the impact on geographical relations are beyond expectations.
Global stock markets performed poorly in the first quarter with the outbreak of the new crown outbreak. In response to the economic impact of the epidemic, the upward impact on the stock market brought by the loose monetary policies of various countries in the world also exceeded expectations in the second quarter. With the domestic epidemic situation being controlled first, the impact is gradually reduced, and various economic indicators have been restored, and the relatively mild monetary environment is superimposed. Although there are some shocks in the middle, the overall A-share still continues the upward pattern in 2019.
From the structural point of view, large consumption favored by foreign investors, medical equipment benefiting from foreign epidemic situation, and science and technology stocks supporting national economic transformation increased significantly, while undervalued stocks continued to stagnate. From a global perspective, the capital market has given a high premium to consumption with deterministic growth and high technology, which has reached a historical high level. More and more investors believe that sustained high prosperity and wide global liquidity can get rid of the shackles of valuation. This phenomenon is still worthy of warning.
On the market, we have the following thinking:
First of all, the period return of a stock can be decomposed into changes in valuation and changes in company fundamentals during the period.
In the short term, the former is decisive, while the latter is almost insignificant. The former is hard to figure out due to the influence of capital structure, long-term expected changes of fundamentals, etc.; in the long run, the latter is decisive and researchable. For most enterprises, profits and net assets are continuously upward, especially for good enterprises, and the former valuation is an overall mean recovery On average, the influence tends to zero with the increase of time.
Therefore, the most certain result of our investment should come from the long-term holding of stocks and funds with good fundamentals, and the most uncertain investment is the short-term game behavior. However, in real life, we have observed that many investors, both individual investors and some institutional investors, are still driven by emotions and pay attention to the short-term valuation speculative game, unable to help themselves.
Of course, on the contrary, it also provides a continuous source of excess return for investors who insist on research. Our income comes from reasonably assuming the volatility to obtain the return of the asset itself, rather than trying to eliminate the volatility, looking for the Holy Grail to judge the change of short-term valuation, and doing risk-free arbitrage. This ideal is very good, but it is difficult to achieve, and no one has done it.
Secondly, as Howard Marxs famous book cycle says, the cycle never stops, and changes are constant. The cycle is excessive every time. The market never stops at the equilibrium position, but swings sharply between the extremes. The difference of capital structure in the market determines the amplitude and time length of the cycle swing.
In this years science and technology consumption continues to rise, valuation and undervalued stocks continue to stagnate. It is inevitable that all kinds of investors continue to doubt and some people continue to be bullish. We believe that we should not only recognize that there will always be a reversal in the cycle, the tree can not grow to the sky and can not be driven blindly by market conditions; at the same time, we should also recognize the power of the trend, and we should not be too left-sided in trading and enjoy moderate The valuation bubble controls the upward risk.
Looking forward to the future, although there are some fluctuations in the market, in terms of asset allocation, we maintain the view that a shares have long-term allocation value. In terms of valuation, the Shanghai Shenzhen 300 P / E ratio is about 15 times, which is in the historical center. However, due to the influence of investors behavior, the cycle will always be excessive rather than stop in the equilibrium state. Therefore, we still maintain the relative view and further improve the valuation, but there may be significant changes in the structure. The undervalued stocks that have stagnated may have more short-term potential.
At present, roe of A-share leading enterprises is still above 15%, which is still a rare high-quality asset in the world. The current yield of bonds and other assets is relatively low, ranking after stocks. In the short term, IPO of some large cap stocks in the fourth quarter may divert funds, which needs close attention.
In terms of style, we still maintain the view of relatively optimistic about blue chip stocks in the past, and its core support still comes from the continuous inflow of long-term foreign capital, changing the capital structure of A-share, promoting valuation correction, and the impact of non-standard conversion of large-scale asset management industry under the new rules of asset management. However, the short-term volatility of US stocks may cause liquidity problems, and blue chips with heavy foreign positions will have a short-term impact. We are still prompted to focus on investment opportunities in traditional undervalued industries at the end of the year.
From the perspective of the second half of the year, the positive order is undervalued stocks, high-profit consumption, and technological growth; in the long run, the favorable order is high-profit consumption, scientific and technological growth, and undervalued stocks. The scientific and technological growth category is affected by technological progress and risk preference, and it is difficult to select stocks for individual selection, which needs continuous research and tracking.
Finally, we suggest that investors should read more books on investment history to enrich themselves. It is not conducive to the growth of knowledge, nor conducive to mental stability, learning little; while reading history, people can learn more experience in a short period of time, and see the essence of things through the statistical results, rather than the complexity in front of them. When you read the long-term history, you will understand what the source of investment income is, eliminate the false and retain the true in the investment choice, hold with faith when the investment encounters fluctuations, and finally reach the other side of victory.
We can see that too many investors, seeing the results correctly, lose in the process and cant insist. The essential reason why they cant insist is that they dont fully understand their investment or overestimate their risk-taking ability.