Citic Securities Company Limited(600030) pointed out that in 2020, the profit growth rate of A-Shares will rise steadily after bottoming out; In the second quarter, the steady growth policy will be put into force, and the capital market reform will advance by leaps and bounds; Internal and external liquidity tends to be loose throughout the year, and it is relatively better in the second and third quarters; External disturbance is mainly reflected in the second half of the year. Industrial capital has ushered in the medium-term inflection point, and the initiative of foreign capital inflow has been enhanced. They are expected to become the main source of A-share incremental funds. In 2020, A-Shares will enter the second stage of the 3-5-year bull market opened in 2019. In the macro-economic decisive victory, capital market reform and enterprise profit recovery environment, A-Shares are expected to usher in a “well-off cow” for 2-3 years.
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the “well-off cow” in the new era: A-share investment strategy in 2020
We comprehensively use the quantitative analysis system and behavioral finance methodology to study and judge the trend of A-Shares with a new strategic framework. In 2020, the profit growth of A-Shares will rise steadily after bottoming out; In the second quarter, the steady growth policy will be put into force, and the capital market reform will advance by leaps and bounds; Internal and external liquidity tends to be loose throughout the year, and it is relatively better in the second and third quarters; External disturbance is mainly reflected in the second half of the year. Industrial capital has ushered in the medium-term inflection point, and the initiative of foreign capital inflow has been enhanced. They are expected to become the main source of A-share incremental funds.
In 2020, under the environment of macroeconomic decisive victory, capital market reform and enterprise profit recovery, A-Shares will usher in a “well-off cow” for 2 ~ 3 years; In terms of rhythm, it is expected to perform well in the second and fourth quarters, with market risk appetite significantly improved in the second quarter, led by TMT and consumption; In the fourth quarter, fundamentals are expected to open space, industry and finance are fully started, and the index rose more than in the second quarter.
from “rejuvenating a new starting point” to “striving for a new era”
The theme of our annual strategy in 2019 is “a new starting point for rejuvenation”, and it is proposed that A-Shares will usher in a bull market for 3 ~ 5 years in 2019. In 2020, with a decisive macroeconomic victory, capital market reform and enterprise profitability warming up, our annual strategic theme is “striving for a new era”. After the rapid repair of valuation in 2019, A-Shares will enter the second stage of this round of medium-term bull market in the next 2-3 years.
methodology: with a new strategic framework
three dimensional research and judgment on the trend of A-Shares
On the basis of the traditional framework, we added quantitative and behavioral financial analysis to make a three-dimensional study and judgment on the trend of A-Shares with a new strategic framework: first, we independently study and judge the annual trends and highlights of the four main lines of fundamentals, policies, liquidity and overseas factors, and refine them to quarterly quantitative scoring; After analyzing the behavior of various investors under the common influence of these main lines; Finally, the core indicators supporting the research and judgment of the general trend of A-Shares and industry allocation are obtained in a quantitative way (see the attached table for details).
Fundamentals: profit growth rebounded steadily after bottoming
In 2019, the main macro factors that suppress the earnings of A-Shares will be significantly reduced in 2020, and the fundamentals will stabilize and recover under the action of counter cyclical policy, credit expansion and inventory replenishment:
1) It is estimated that the non-financial profit growth rate of CSI 800 will rise from – 3% in 2019 to 11% in 2020. The overall trend is low before and high after. The year-on-year growth rate from 2019q4 to 2020q4 is – 6% / + 9% / + 6% / + 12% / + 18%;
2) It is estimated that the financial / non-financial / overall profit growth rate of CSI 800 will be 8% / 11% / 9% in 2020;
3) By industry performance, the focus in the second quarter was TMT, and the focus in the fourth quarter was the weight plate.
policy: steady growth in the second quarter
capital market reform breakthrough
In 2020, the policy sought to create a macro environment for reform, real industry and Industry: 1) the policy focus was stable growth and structural adjustment. The two quarter was the strongest in terms of fiscal and counter cyclical strength, and the fourth quarter was in the 14th Five-Year plan. 2) Capital market reform has made a breakthrough: it is expected that the gem registration system, refinancing, reduction of holdings, information disclosure, expansion of opening-up, listing / delisting and other systems will be mature, one will be launched, and the implementation will be more intensive in the first half of the year; 3) Industrial policy or focus on industrial strength; 4) Population and regional policies deserve attention.
Liquidity: internal and external year-round loosening
the second and third quarters were relatively better
It is expected that the global currency will continue to loosen in 2020, and the volume and price trend will be relatively better in the middle of the year: 1) the central banks of Europe, America and Japan will expand their tables as a whole, with an average monthly scale of about US $100 billion, and the pace is relatively faster in the first half of the year; 2) The RMB exchange rate is generally stable, and the initiative of foreign capital to allocate additional A-Shares is improved; 3) It is expected that the MLF interest rate will be reduced by 10bps in the second and third quarters, and the reserve ratio will be reduced twice in December 2019 and April 2020; 4) China’s long-term interest rate has a “V” trend, with an obvious decline in the second quarter and a relatively low level in the middle of the year.
overseas factors: external disturbance
is mainly reflected in
The impact of external factors on A-Shares in 2020 is weaker than that in 2019, and the Sino US negotiations and US general election in the second half of the year are the focus: 1) China and the United States have entered a pragmatic negotiation window, and it is expected to reach the first and second stage economic and trade agreements in 2019q4 and 2020q3, but the uncertainty will increase after the US general election in 2020q4; 2) The UK agreement “brexit” is expected to be implemented in the first quarter, and the uncertainty will be gradually reduced in the subsequent transition period.
investor behavior: industrial capital ushers in
At the mid-term inflection point, the initiative of foreign capital inflow has increased
Based on the above four main lines, considering the investment style and taking into account the game, we look forward to the investor behavior in 2020: 1) the adjustment of new regulations on refinancing and reduction of holdings is expected to repair the market mechanism and strengthen the willingness of industrial capital to enter the market, in which state-owned capital will take the lead; 2) The initiative of foreign capital to allocate A-Shares is strengthened, and the preference is to underestimate the value first and then consume more; 3) The public offering maintains the “group” of heavy position stocks, and the flexible position swings between undervalued value and technology; 4) Insurance and social security will slowly add undervalued and high dividend sectors; 5) Private placement and hot money are more driven by short-term themes and transactional opportunities.
general trend research and judgment: A-Shares will usher in in 2020
2 ~ 3 years of “well-off cattle”
After quarterly scoring and weighted calculation of the market impact of the above factors, the long short score of A-Shares from 2019q4 to 2020q4 is 0.5 / – 1.6 / 2.8 / 1.1 / 3.9, and the A-Shares market will be better in the second and fourth quarters of next year. to sum up, after the great repair of valuation in 2019, A-Shares will usher in a “well-off bull” for 2 ~ 3 years in 2020, which has three characteristics: 1) the market upward is driven by the fundamentals of steady recovery rather than valuation; 2) The capital market reform has consolidated the institutional foundation and continuously optimized the investor structure; 3) Macro leverage, financial risks and production capacity have basically improved. “well-off cow” is not only a healthy, steady and sustainable slow cow in a share market, but also a “well-off” cow in the new era after China’s comprehensive realization of a well-off society.
configuration suggestions: technology and consumption led the rise in the second quarter
oversupply industry and finance in the fourth quarter
1) in the first quarter, we insisted on the plate defense with undervalued value. fundamental expectations and inflation suppression are the main contradiction, and policies including capital market reform are also the focus of attention; There is a certain adjustment pressure in the market. It is suggested to wait for the opportunity and adhere to the allocation of finance , consumption and medicine .
2) focus on science and technology consumption in the second quarter. the steady growth policy has been strengthened, the internal and external liquidity has been improved, and the capital market reform has been intensively implemented; Risk appetite repair drives the market upward. Although the index space is limited, it is expected that TMT and consumption will lead to higher market activity and obvious profit-making effect.
3) slowly switch styles in the third quarter. basically, the focus of policy has shifted to structural adjustment, and the two have their own advantages and disadvantages; As the U.S. general election approaches, the importance of external factors increases, the market fluctuates, and the TMT and consumer markets are divided. It is suggested to gradually switch styles and add industrial and financial sectors at the end of the quarter.
4) in the fourth quarter, it was over equipped with weight sectors such as industry and finance. the elasticity of profit growth has improved, and it is expected to continue to improve. The 14th five year plan is gradually approaching, and the fundamentals and policies have become the focus again. After the macro decisive victory, driven by weight plates such as industry and finance , it is expected that the upward space of Shanghai Composite Index will be greater than that in the second quarter.
risk factors
Sino US differences have intensified, and the progress of economic and trade negotiations has been slower than expected; Monetary easing was significantly lower than expected, and the progress of capital market reform was weaker than expected; China’s fundamental data continued to decline more than expected.
decisive year: China’s macroeconomic outlook in 2020
global economic weakness stabilizes: Overseas macroeconomic outlook and asset allocation in 2020
seize the opportunity of “revaluation” and “new growth”: 2020 investment strategy of overseas Chinese stocks
Liu Yinhua Ming: fixed income investment strategy in 2020
ready for development: investment strategy of major assets in 2020
“bull” turns the world: A-share investment strategy in 2020
(Securities Times)
