Near the end of the year, some new phenomena appeared in the A-share market, and the performance of overvalued and undervalued sectors was very different. For a long time, the trend of financial stocks with dull performance has become increasingly active, bank stocks have risen, securities companies and insurance stocks have risen, real estate stocks have also ushered in a long-term rise, while some growth leaders of key positions of foreign capital and public funds have retreated, Contemporary Amperex Technology Co.Limited(300750) , Longi Green Energy Technology Co.Ltd(601012) have retreated from the high point.
What is the reason for this change? Will there be style change in the market? The author believes that this trend is a natural correction after the differentiation of the market. Whether the style conversion can be realized in the future depends on many factors.
Since 2015, the valuation of traditional blue chip sectors has been declining, especially the overall valuation level of financial and real estate sectors is low. The P / E ratio and P / B ratio of the insurance sector are only 10 times and 1.33 times respectively, at a 10-year low. Institutions continue to sell all the way. In 2021, the proportion of insurance allocation in the mid-term report was only 0.88%. The allocation of bank shares also continued to decline. The proportion of mid-term report allocation in 2021 was only 4.51%, down 2.82 percentage points from the end of 2019. The valuation level of the banking sector also dropped to a 10-year low, with a P / E ratio and a P / B ratio of only 5.37 times and 0.64 times respectively.
On the other hand, after the continuous rise of “track stocks”, the valuation is getting higher and higher. In addition to the growth characteristics, “track stocks” also have cyclical characteristics.
The valuation contrast caused some changes in the market. In addition, the fund ranking war near the end of the year will also lead to asset allocation adjustment. It is worth mentioning that the proposed adjustment of the investor range of Shanghai and Shenzhen Stock connect has had a certain psychological impact on the market. Recently, the net inflow of funds to the North has slowed down, and even a small net outflow has occurred. To some extent, the policy tone of restricting external leverage will cause high-risk preference and periodic risk avoidance of funds.
Recently, many overseas investment banks issued reports, vigorously sing more Chinese assets and suggest over allocation of Chinese stocks. They expect that China’s macro policy will usher in an inflection point, which will be more relaxed and positive. Whether the market style will eventually change depends on many factors: first, whether the undervalued sector, especially the traditional blue chip sector, can benefit from active and loose macro policies, resulting in double improvement of performance and valuation. Second, whether the “track stocks” will have poor expectations. The “track stocks” sector still has growth potential in 2022, but whether its growth can meet market expectations is worthy of attention. Third, the focus of overseas capital inflows is still “track stocks”. Whether its future layout will change will also have an impact on market psychology.
(Securities Times)
