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.
Under the influence of the epidemic, the global stock market experienced a sharp decline in March. However, with the injection of liquidity by the European and American central banks, the main stock indexes began to rise sharply in the second quarter, and then resumed the trend of correction at the end of the third quarter. Under the expectation of economic recovery and relatively loose liquidity environment, the overall performance of domestic stock market in the first three quarters is better, among which growth stocks represented by gem and SME board perform well.
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.
Secondly, in terms of competitive advantage, we will consider the layout when the companys fundamentals show the following characteristics. These characteristics mainly include: significant intangible asset barriers, such as brand, patent, franchise, etc.; significant cost advantages, such as scale, process, raw material cost, etc.; in addition, they also include strong user stickiness or switching costs, technology leading, unique products, and significant network effects.
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 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
In 2020, the sudden outbreak of the new crown has brought the global economy and social life to a standstill. There have been rare fluctuations in US stocks, US debt, crude oil, gold, emerging markets and other major types of assets. Behind these phenomena, the global economic growth is weak, the effectiveness of monetary policy is declining, the trend of anti globalization, and the changes of traditional life and consumption patterns are becoming more and more prominent. Efforts to see these changes and accurately judge their impact on the economy and enterprises is the work that our investment managers must do.
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.
Looking forward to the fourth quarter, we believe that the core logic of the market will be from outbreak of epidemic situation, policy easing to recovery of epidemic situation and policy exit. The recovery of corporate profits brought by sustained economic recovery will replace the valuation expansion brought by liquidity easing, and become the core variable driving the market, and the market style is expected to be more balanced.
From the perspective of fundamentals, we expect that GDP in the third quarter is expected to recover to about 5%, which also means that there is still a distance between economic growth and potential growth, which is expected to continue the recovery trend. In addition, we think that we need to pay special attention to the research and development progress of new coronal vaccine at home and abroad in the fourth quarter. At present, it is likely that a safe and effective new crown vaccine will be available in China by the end of the year, and the vaccine may be launched overseas by April next year, which will bring about a further resonance recovery of the global economy in the whole year of next year.
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.
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.
Looking forward to the medium and long term, we are confident of Chinas and global economic growth in the future. Despite the impact of the black swan incident, such as the epidemic situation and Sino US friction, Chinas economy is resilient enough, there is room for structural upgrading, and the quality of development will continue to improve. Chinas economy is bound to shift from the development mode driven by foreign trade and investment to the mode dominated by domestic demand.
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.
However, the most fundamental decision to judge whether it is right or wrong depends on the depth of fund managers understanding of the industry pattern, business model, technology trend and enterprise operation. Therefore, the investment in growth stocks requires fund managers to be more diligent, more focused, and have the enthusiasm and ability to continue learning.
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.
At present, the valuation of the subject matter of medicine is too expensive. Many people ask whether they want to consider financial real estate and whether to consider the cycle after the economic recovery? In fact, if you think like this and adjust with the market trend, the starting point is not to make real value investment, but to make relative income. We think we need to think about whether to make differentiation. Guessing the psychology of the market is goal-oriented behavior. If we hold the goal of becoming the first echelon of the year, we will be divorced from the essential pursuit of value investment. In the field of investment, the pursuit of sharpness and difference deviates from the essence of making money, which just leads to investment failure, because the process of human psychological speculation is particularly prone to failure.
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.
In terms of investment strategy, although our stock selection scope is relatively concentrated, the types of stocks we invest in are relatively diversified. Whether it is a long-term growth, broken wing angel type or inflection point type company may appear in our portfolio. In terms of investment, we advocate to act according to our ability, act within our own circle of competence, and earn money that we can see clearly.
We always believe that fund managers are a bridge between listed companies and fund holders. They should not only help the holders share the business results, but also have the responsibility to help the holders shield part of the risks of enterprise operation and market fluctuation as much as possible, so as to improve the holding experience. Only in this way can we truly help the holders obtain medium and long-term stable returns.
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.
Chinas social economy is in a critical period of transformation. The main characteristics of Chinas social economy are slowing down, high-quality development and internal and external circulation. In recent years, the market-oriented system reform of A-share and the continuous inflow of funds from medium and long-term institutions such as foreign investment, insurance and public funds have also been complementary to the transformation of social and economic structure, and become an important part of high-quality development.
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.
Since the beginning of the year, the issuance of equity funds has shown a blowout trend, and residents assets are accelerating to flow into the equity market through public funds. Like most industries, the public fund industry has also entered the stage of high-quality development with concentrated heads. The concept of value investment has become the mainstream, and the market has formed that funds are concentrated in value investment products and invested in value creating enterprises. The positive feedback of investment returns can be obtained by sharing the value returns continuously created by excellent enterprises.
As a public fund manager, I feel particularly lucky to be in the best equity era in Chinas capital market. What we should do is to seize the opportunity of the times, establish correct values, stick to the concept of value investment, and adhere to a stable investment style. Through in-depth excavation of high-quality enterprises and their long-term growth, we can create stable and sustainable investment returns for the holders, so as to obtain more investors trust, and better play our professional functions of public funds in the allocation of social resources and the appreciation of residents assets!
(He Jie, the author of this article, is the head of Equity Investment Department of Qianhai United fund.)
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.
Second, the vast domestic demand market still provides the most fertile soil for the development and growth of domestic enterprises. Chinas huge economic aggregate and escalating consumer demand, on the one hand, has brought huge market space to domestic enterprises, on the other hand, it has enabled the best companies among them to accumulate global leading competitiveness.
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.
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:
First, new energy is a typical representative of Chinas manufacturing industry, which is absolutely leading in the world. Energy transformation has gradually reached a consensus in the world, and China has the most complete industrial chain competitive advantage. In a sense, the global new energy industry (whether photovoltaic or lithium battery) will fall into a development bottleneck without the participation of Chinese enterprises. In the past two days, I saw economists calling on social media not to develop chips into photovoltaic and new energy vehicles. I deeply felt the difficulty of new energy entrepreneurs and practitioners. With so many misunderstandings, they still created a business card of Chinas manufacturing globalization.
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
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.