Xu Weihong: how to value the leading white horse in Chinas A-share market?

category:Finance
 Xu Weihong: how to value the leading white horse in Chinas A-share market?


Chinas economy recovered strongly in the third quarter, with RMB appreciation of nearly 10%. The stock market was also very strong, holding the bull market of gem for two years. The valuation of leading stocks of Baima shares on the main board went up all the way, and the investment style of professional institutions gradually took the upper hand. In other words, the bull market of gem in the past two years does not belong to retail investors - most of the stocks on GEM belong to small and medium-sized market value companies. Although the stock price is active, the enterprise profits fluctuate greatly and the fluctuation of stock price is even greater. Retail investors have been cut leeks by the so-called theme stocks for many times in recent years, so it is difficult to participate in it.

In the first half of 2020, the issuance scale of public funds broke through the trillion mark, and it is basically safe to break through 2 trillion in the whole year, which means that the strength of institutional investors in Chinas stock market will be further strengthened. On the one hand, the structure of investors in the stock market will be optimized, and on the other hand, the valuation of investment plate favored by professional institutions will be exaggerated The valuation of all kinds of blue chip stocks with stable growth and benefit from consumption upgrading has basically exceeded 50 times P / E ratio. In the retail dominated market a few years ago, Im afraid it means a new round of stock disaster is brewing! This is also the beginning of the third quarter, many institutions prefer to hide in relatively safe bank stocks, anyway, the logic of economic recovery is clear, less loss is to earn.

It has been more than two years since the stock of leading enterprises with profit making effect has risen strongly, not from the enthusiasm of ordinary retail investors, but from the rational allocation of institutional investors, including funds with foreign capital background. If investors investigate the listed companies in the Yangtze River Delta and Pearl River Delta, they will find that after 40 years of reform and opening up, and after many business cycles, Chinese entrepreneurs have long known the fluctuation risks of the business cycle, and have prepared necessary strategies for the Sino US trade war and other macro risks. Therefore, there is no lack of high-quality listed companies in Chinas stock market, and industry leaders have high-quality growth genes.

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