In the complex and changeable domestic and foreign market environment, the market in the first three quarters of this year has quietly come to an end. Looking back on the market situation since this year, the domestic epidemic situation has been effectively controlled since the second quarter. With the resumption of work and production, Chinas economy has entered the recovery channel. However, the overseas epidemic situation is still fermenting, and the new cases continue to increase in many countries and regions.
The value and growth of a shares are actually growth. The key is the matching degree of valuation and growth. The investment should be forward-looking and the future stars should be explored. Therefore, in the investment layout of the fund, I have always adhered to the investment style of growth oriented and value supplemented. Starting from the three dimensions of business model, competitive advantage and industrial trend, I have selected excellent stocks and arranged in high-quality companies that can continuously improve their internal value with a longer investment vision.
Specifically speaking, in terms of business model, I focus on the transaction structure of relevant market entities, involving the dimensions of enterprise positioning, business system operation mode, key resource capacity, profit model, cash flow creation and other dimensions, so as to find good business. Generally speaking, a good business model is easier to obtain excess profits, because such enterprises are generally in a relatively favorable position in the industrial chain, such as the bargaining power of the upstream suppliers, the pricing ability of the downstream customers, the ability to create cash flow, and the dependence on capital consumption.
Finally, it is the industry trend, which needs to judge the development stage, business cycle and growth space of the industry from the perspective of industry supply and demand, competition pattern, market space, technological progress and change, and policy guidance, so as to avoid falling into the value trap.
These are also my basic investment methodology. They can also be summed up in 12 words: quality first, valuation second, long-term, then short-term. This order is very important. If it is reversed, the meaning will be completely different.
In the portfolio construction, I aim at making money for the growth of corporate performance. I use stocks with long-term value growth characteristics as strategic assets, and stocks with stage growth characteristics as tactical assets, and less involved in style or theme rotation.
In the operation strategy, we maintain a low turnover rate for a long time. Unless we are faced with systemic risk, we will not do large position operation. We mainly rely on adjusting the position structure to cope with the change of market style. In the aspect of risk management, we attach importance to potential risk factors such as corporate governance structure, report quality, historical integrity records, social public opinion, etc., pay attention to safety margin and risk return ratio, and pay attention to the liquidity risk of individual stocks.
Looking forward to the future, we are optimistic about the medium and long-term A-share market. We believe that the medium-term growth style is expected to be dominant as a whole, with significant structural opportunities. As the overseas epidemic situation has not been effectively controlled, the global economy is still facing great pressure. Affected by this, although Chinas economic recovery trend is clear, it is still in a weak recovery situation, and domestic liquidity is difficult to significantly tighten. From the medium and long-term perspective, with the domestic financial market breaking through the rigid exchange, residential asset reallocation demand will be conducive to the stock market. Although the market does not rule out periodic shock consolidation, but in the medium term, the market is still in a positive stage.
Previous statistics have shown that A-share asset growth + undervalued advantage is relatively obvious, from the market valuation changes in the past decade, the long-term allocation value is outstanding. Although various factors in the future international market and the possible recurrence of the epidemic situation will form interference to a certain extent, the long-term healthy and optimistic trend of a shares will not be changed on the whole.
Based on the above analysis, in the medium and long term, we are optimistic about the four major investment directions, focusing on core assets in the four major fields of science and technology, large consumption, big health and advanced manufacturing.
In terms of technology, we are optimistic about the investment opportunities of main equipment suppliers, terminal replacement cycle and downstream applications including cloud games, intelligent cockpit and VR / AR brought by 5g construction;
In terms of large consumption, they are more optimistic about the consumption upgrading of traditional consumption and the opportunities of emerging consumption and service fields, such as testing service, education service, food and beverage, retail, insurance and other industries;
In terms of big health, we are more optimistic about medical services, innovative drugs and other characteristic varieties and rich pipelines of generic drug leaders;
In advanced manufacturing, we have a better look at industrial control automation, new chemical materials, new energy automobile industry chain, etc.
In addition, we also pay attention to the Internet, smart cars, medical services, food and beverage, tax-free, game video, household optional consumption that will make consumer life better, as well as software informatization, intelligent industrial control, testing services and new materials to make industrial and commercial operation more effective.
Personal profile: Gui Kai, growth style investment director of Harvest Fund, 13 years of securities investment experience, is the fund manager of many star products such as harvest Taihe, harvest emerging industries, harvest growth and so on. Guikai adheres to long-term value growth investment, and its unique investment methodology makes its long-term performance outstanding. In the past five years, the performance of the active equity funds in the whole market has remained at the top of the list. At the same time, the five-year and three-year mixed five-star ratings of professional rating agencies such as Haitong have been won by his management of Jiashi Taihe and harvest emerging industries.
The recovery of enterprise profits and the steady development of capital market
Li Jian, investment director (equity) and general manager of Equity Investment Department of BOC
In the face of the once-in-a-century epidemic, countries around the world have introduced large-scale fiscal and monetary stimulus policies, and the capital market also shows obvious liquidity driven characteristics. As of the writing date (September 23, 2020), the wind all a index has still achieved an increase of nearly 20%, which is inseparable from the global liquidity flooding and the micro capital activity of the stock market on this basis.
From the perspective of operation rhythm, the rise of the market also mainly occurred in the second quarter of loose liquidity margin and the first ten days of July. Since the middle of July, with the liquidity from wide to stable, the market fell into turbulence. From the perspective of industry performance, it can also be clearly found that some weak cyclical industries even benefited from the outbreak of the epidemic, and the long-term growth space was determined, so as to enjoy the valuation premium brought by loose liquidity. The growth rate of medical biology, food and beverage, and electronics, etc., which were obviously damaged in the epidemic situation, lagged behind.
Looking forward to the fourth quarter, we believe that the core logic of the market will gradually shift from the outbreak of the epidemic and loose policies to the recovery of the epidemic situation and the withdrawal of policies. The corporate profit recovery brought by the sustained economic recovery will replace the valuation expansion brought by the loose liquidity and become the core variable driving the market. The market style is expected to be more balanced.
In the short term, under the pressure of uncertainty in Sino US relations, the market may still need to be shaken and consolidated in the short term. However, after November, if a safe and effective new crown vaccine can be released, or if the results of the U.S. general election come to light, the Sino US relations will gradually ease up, and the RMB tends to appreciate, residents wealth will move, and the A-share will have a prominent performance price ratio in the global stock markets We will usher in better structural performance opportunities.
From the perspective of liquidity, the gradual economic recovery determines that monetary policy will be normalized. However, it should be noted that there is still obvious structural imbalance in the current economic recovery, and the losses caused by the epidemic are not fully compensated.
From the perspective of risk preference, we believe that before the US presidential election, there will be constant friction between China and the United States in various fields, which will always suppress risk preference. However, since the economy is still the most important factor in the general election, the trump administration will be very cautious in playing the economic and financial cards. It is expected that the two sides will continue to implement the first phase of the economic and trade agreement. The impact of Sino US friction on market fundamentals before the election is partial and controllable. When the boot of the general election is completely on the ground, Sino US relations may be gradually relaxed.
Finally, we keep a close eye on the potential risks in overseas markets. The recent rebound of overseas epidemic situation, the gap period of incremental easing of fiscal and monetary policy, and the obvious overbooking in the early stage and other factors made the European and American stock markets adjust to a certain extent.
However, we believe that the current recovery trend of overseas economy is still continuing. Once the production of vaccines or the implementation of fiscal stimulus policy, the economy is still likely to go up. The implementation of the new monetary policy framework of the Federal Reserves average inflation targeting ensures the medium and long-term relaxation of the liquidity environment. Of course, the policy uncertainty close to the election is indeed a very obvious suppressor, but in general, the overall situation is not It is still not our benchmark judgment to see a substantial adjustment in the overseas market.
Under the general trend of Chinas stable and good economy, medium and long-term A shares will certainly bring rich returns to investors. The industry leaders with good competition pattern, non replicable business model and strong profitability have the ability to go through the economic cycle and establish a stronger competitive advantage in the process of the waves scouring the sand. In emerging industries, there will inevitably emerge a number of great companies that can lead the development of new technology, build new business models and shape new consumer culture.
Therefore, in terms of industry allocation, we believe that science and technology, consumption and medicine are still the main lines of the market in the medium and long term, and we will stick to the core varieties among them. In addition, as mentioned above, we expect that style equalization will be a high probability event in the fourth quarter, so we will focus on building materials, chemical industry, machinery, etc., which are growing in cycles, and large financial sectors with undervalued procyclical values.
(Li Jian is the investment director (equity), general manager of equity investment department and fund manager of BOC)
Looking for opportunities from a long-term perspective to grasp the development trend of consumption upgrading and industrial upgrading
Chen Peng, general manager of Anxin fund research department
In a flash, I have been in the mutual fund industry for more than ten years. On the way of investment, I advocate the growth investment style under the guidance of value investment concept, and prefer to invest in stocks with relatively high growth. In my mind, the growth stock investment under the guidance of the value investment concept is to make a logical inference on the profit prospect of the enterprise through the in-depth study of the industrial trend and the value creation process of the enterprise, and then form a view of the companys value, and then buy it at a reasonable price.
A little different from value stocks is that investment in growth stocks is very dependent on the judgment of the future, and the future is always full of many uncertainties, so the investment in growth stocks is bound to be more difficult and risky. In addition, we need to closely track the changes of industry companies to constantly verify our judgment and manage positions accordingly.
There is a big gap between I want and I can because everyone has the short board of ability and the defect of personality. In addition to continuous efforts to improve, I feel that it may be more important for me to know clearly the boundary of my ability and face myself honestly, because the more I understand my ability, the more I can avoid making mistakes. Making fewer mistakes is the most effective way to improve investment performance. After ten years of exploration and evolution, I hope that what I can dedicate to the holders in the future is a stable and sustainable return on investment.
For the next market judgment this year, we believe that if the epidemic does not recur, the impact of the epidemic on Chinas economy will gradually fade. In terms of external factors, the visible range of risks such as the adjustment of US stocks and the rise of global interest rates is unlikely to have a greater impact on A-shares and Hong Kong stocks. At present, we still need to pay close attention to some uncertain factors, the impact of the development of the second epidemic, whether it will reverse or continue to differentiate in the future. We adhere to the framework of value investment and prefer to invest in stocks with relatively high growth.
Under the trend of consumption upgrading and industrial upgrading, the long-term layout opportunities of high-quality assets in the science and technology industry have emerged. After stage adjustment, some valuations have been squeezed out, and the new funds with a growth style will also usher in better opportunities for building positions. The varieties with high growth potential are still worth looking forward to. We prefer to look for opportunities from a long-term perspective. Consumption upgrading and industrial upgrading are the main development trends in China in the next 30 years, and are also the historical opportunities for growth stocks. It is believed that long-term bull stocks will be born in the three fields of consumption, medicine and science and technology closely related to it.
At present, the future expected valuation of many companies is still OK, and there is no obvious risk state. However, from the perspective of value investment, the biggest risk in the stock market is the excessive rise of stock price. All risks rise and opportunities fall out. On the whole, there is a large differentiation of valuation and valuation quantile among industries. The valuation of some companies in pharmaceutical, food and beverage, and science and technology industries was basically in the top 20% of the history, while the market performance of Companies in traditional cyclical industries such as finance, real estate, mining, construction and other industries was average in the first half of the year, and their valuations were basically in the last 20% of the history. Although the business model and long-term growth space of the former is better than that of the latter, the obvious short-term market performance difference and valuation gap deserve close attention.
Benefiting from the recovery of economic fundamentals, leading valuations in the current cycle may have a mean regression, so you can choose the target of deep value investment style and grasp the opportunity of high-quality leading valuation repair.
Personal profile: Chen Peng, master of Business Administration of Tsinghua University, has 17 years of experience in securities industry. He has successively served as a researcher of United Securities Co., Ltd., researcher of Penghua Fund Management Co., Ltd., fund manager, deputy general manager of fund management department and member of investment decision-making committee. He is now the general manager of Research Department of Anxin Fund Management Co., Ltd. The investment style is stable growth style, focusing on consumer technology track, investment prospects of companies with clear investment prospects under the protection of appropriate valuation, neutral position control withdrawal, and improve the holder experience. The total return of Anxin new return a managed since this year is 50.45%, the total return since its establishment is 170.95%, and the annualized income is 25.46% (data source: wind, as of September 28, 2020, product establishment date: May 9, 2016).
Grasp the opportunity of the times and give full play to professional functions
He Jie, head of Equity Investment Department of Qianhai United fund
In the first three quarters, the sudden epidemic led to the market rhythm of twists and turns: in the first quarter, the global market fluctuated violently with the development of the epidemic; in the second quarter, the epidemic situation was controlled and returned to work, eliminating the pessimistic expectations of fundamentals; at the same time, the global ultra loose monetary and fiscal policies brought sufficient liquidity, and the global market showed a sharp reversal in May to July In the third quarter, with the gradual realization of the optimistic expectation of fundamentals and the marginal tightening of ultra loose liquidity, the market showed a sideways volatility, in which the pro cyclical sector had a significant relative return.
Looking back on the operation of fund products, we improved the overall position and the concentration of certain varieties at the market panic point at the end of the first quarter; at the stage when the market style tended to be extreme around July, we increased the allocation of some pro cyclical varieties. From the net value performance, we can see that the fund products achieved the steady growth of the return under the controllable withdrawal in the first three quarters.
Looking forward to the fourth quarter, we believe that: at present, the full resumption of production and work has been achieved, and the macro fundamentals will continue to return to the growth level before the epidemic; the transmission of monetary policy from broad currency to broad credit is relatively smooth, and the overall liquidity is still reasonable and abundant; and after more than two months of adjustment, the overvalues of some sectors in the early stage have also been digested. Therefore, considering the fundamentals, liquidity and market valuation, we judge that the probability of systemic risk in the market as a whole is small.
The potential risks in the future lie in the second outbreak of the epidemic and the upgrading of the game between China and the United States, but the risk is both a challenge and an opportunity for high-quality companies. It can be seen that under the impact of multiple risk factors this year, on the contrary, a number of excellent companies have achieved significant increase in market share. In particular, Chinas manufacturing industry has not only become the most stable part of the global supply chain, but also accelerated the upgrading of products and the development of high-quality customers, opening up a broader space for growth.
So far, we firmly believe that many excellent enterprises in China will continue to expand the growth boundary and continuously create value returns in the process of transformation; at the same time, under the guidance of medium and long-term institutional funds, more investors will participate in the sustainable growth of these excellent enterprises, so as to usher in the first real slow bull and long bull in the A-share market.
Therefore, we are still optimistic about the long-term structural opportunities of the A-share market, especially the investment line of high-quality development and internal and external dual circulation. We will continue to focus on the scientific and technological innovation direction represented by new energy, cloud computing, 5g, artificial intelligence and innovative medicine, new formats and modes of medical services, brand consumption and mass consumption to meet the needs of a better life, as well as the traditional cycle leading direction that benefits from the supply side reform, market share and continuous improvement of roe.
Believe in the future and share the growth
Guo Kun, fund manager of Changsheng fund company
This year has passed 3 / 4, and the time has passed quickly. The epidemic situation has become the biggest variable in 2020. It affects everyones real life and makes people re-examine themselves and think about the future. The capital market also changes and adjusts in the investors adaptation to reality and future expectations. After experiencing a sharp fluctuation in the first quarter, with the gradual control of the domestic epidemic situation, A-share ushered in a sustained rise from the second quarter to the middle of July, and the market has been in shock since the middle and late July. On the one hand, it is due to the large increase of accumulation in the early stage, on the other hand, it is due to the gradual fermentation of worries about liquidity margin tightening, Sino US game, and the second outbreak of overseas epidemic.
It is extremely difficult to judge the short-term direction of the market. But if we take a longer-term view, Chinas capital market in the post epidemic era is still full of hope.
First, this year, China has undoubtedly performed the most outstanding among the major economies in the world, both in the control of the epidemic situation and in the organization of returning to work and production. Many domestic industries, such as medical devices and industrial automation, are also actively seizing the opportunity. Some enterprises have successfully realized the import substitution in the domestic market, while others have entered the overseas mainstream market. For many domestic enterprises, the process of market cultivation from scratch is often very long, and once entered, its high cost performance, sound service network, rapid response to customer demand and other capabilities will have full play, such a positive impact is long-term and sustained.
Third, with the improvement and maturity of the capital market system, more and more top companies representing the future will choose to land or return to A-shares. The supply quality of A-share listed companies will be further improved, which can better reflect the direction of Chinas industrial change and upgrading.
The focus of investment is on the future, which is undoubtedly positive.
From the perspective of personal investment operation, due to the silent period this year, I began to formally manage the product at the end of May. Therefore, the main problem is that the market has been rapidly repaired and its effectiveness is very high. Most industries and companies with large long-term space or high short-term prosperity are not cheap. Therefore, my choice at that time was to construct a relatively three-dimensional combination.
One is to balance the allocation among the growth sectors of consumption, manufacturing and TMT, with some cyclical varieties as supplement. Second, industries or companies with strong long-term sustainability (often with high valuations) are taken as the main body of the portfolio. At the same time, some sectors with low short-term prosperity and low valuation are arranged on the left, such as industries related to manufacturing investment and real estate post cycle.
Looking forward to the next six months to a year, I think growth will still be the main line. The repair logic of cyclical products is more based on the marginal improvement of short-term economy. If the recovery of demand cannot be confirmed continuously, the supply side is unlikely to contract comprehensively. It is very difficult for the cyclical products to dominate in an all-round way. More opportunities may come from the subdivision fields with their own supply and demand logic. Three types of opportunities will be focused on in growing industries:
Second, consumer goods with broad domestic demand and sustainable development. The demand of many consumer industries is very persistent, and the pattern of supply side is very clear. On the one hand, the growth of top companies in the industry comes from the natural growth of the industry, on the other hand, it comes from the continuous improvement of their own shares.
Third, some industries with strong demands for localization. The investment in this industry is relatively tangled, and the strong demand for import substitution will accelerate its development in the next few years, but the constraints of external environment and the lack of competitiveness of the company itself will increase the uncertainty of investment. In the post epidemic era, opportunities and risks still exist. The performance of Chinas listed companies under the challenge of the epidemic has indeed injected hope into the market. Lets believe in the future and grow together. About the author: Guo Kun, master. He used to be an analyst in the new energy and household appliances industry of sunshine Asset Management Co., Ltd., the leader of the research group of manufacturing industry, and the fund manager of Hongde Fund Management Co., Ltd. He joined Changsheng Fund Management Co., Ltd. in December 2019, and has been the manager of Changsheng Tongsheng growth preferred flexible allocation hybrid securities investment fund (LOF) since May 27, 2020, and also the fund manager of Changsheng manufacturing selected hybrid securities investment fund from August 26, 2020. Source: Yang Qian, editor in charge of China fund daily_ NF4425
Third, some industries with strong demands for localization. The investment in this industry is relatively tangled, and the strong demand for import substitution will accelerate its development in the next few years, but the constraints of external environment and the lack of competitiveness of the company itself will increase the uncertainty of investment.
In the post epidemic era, opportunities and risks still exist. The performance of Chinas listed companies under the challenge of the epidemic has indeed injected hope into the market. Lets believe in the future and grow together.
About the author: Guo Kun, master. He used to be an analyst in the new energy and household appliances industry of sunshine Asset Management Co., Ltd., the leader of the research group of manufacturing industry, and the fund manager of Hongde Fund Management Co., Ltd. He joined Changsheng Fund Management Co., Ltd. in December 2019, and has been the manager of Changsheng Tongsheng growth preferred flexible allocation hybrid securities investment fund (LOF) since May 27, 2020, and also the fund manager of Changsheng manufacturing selected hybrid securities investment fund from August 26, 2020.