where has the valuation been transferred
Recently, A-Shares / Hong Kong shares were corrected due to internal and external factors China International Capital Corporation Limited(601995) believes that the market valuation has experienced a significant correction, and most indicators have reached the medium and low level of the historical range. Affected by the geographical situation and the impact of the supply chain, the tightening of monetary policies in the United States and some European countries, China's growth is still weak and other factors, the market rise may need the support of positive catalytic factors. From the main characteristics of current A-share / Hong Kong Stock Valuation:
a-share market valuation has returned to a relatively low level in history, and Hong Kong stock valuation is at an extremely low level in history as of March 9, 1) in the A-share market, the forward P / E ratio of the CSI 300 index is 10.1x and the forward P / B ratio is 1.2x, down 12.4% and 13.4% compared with the beginning of the year (11.5x and 1.3x), which is also significantly lower than the historical average (12.6x and 1.8x). Among them, the forward P / E ratio of the non-financial part is 15.6x, which is near the historical average (16.1x); The forward price to book ratio is 2.2x, which is near the historical average (2.2x). The equity risk premium of CSI 300 / entrepreneurship trigger index is 7.2% / 0.7%, both exceeding the average value and approaching one time of the standard deviation upward. 2) In terms of Hong Kong stock market, the forward P / E ratio of MSCI China except A-share index is 8.4x, which is near 1.1 times the standard deviation of the historical average, and the quantile level is 3.9% (since 2006); The forward price to book ratio is 1.0x, which is near 1.2 times the standard deviation of the historical mean. The forward P / E ratio and forward P / B ratio of Hang Seng index are also flat, slightly lower than the position of doubling the standard deviation of the historical mean (the current P / E ratio / P / B ratio is 9.7x/1.0x, the historical mean is 11.8x/1.4x, the doubling standard deviation is 9.8x/1.0x, and the quantile is 6.7% / 6.9%). The forward P / E ratio and P / B ratio of Hang Seng state-owned enterprises index are 8.0x/1.0x respectively, which is 0.6/0.7 times the standard deviation of the historical average, with a quantile of 38.1% / 29.2%, close to the low in 2008. The valuation level of Hong Kong stocks has been at an extremely low level in history.
The valuation of small and medium-sized companies is again lower than the historical average. At present, the forward P / E ratios of China Securities 500 / small and medium-sized composite index / gem index are 13.6x/21.9x/28.6x respectively, which are lower than the historical average (the historical average is 21.7x/24.8x/30.6x respectively, the downward doubling standard deviation is 15.0x / 18.3x / 22.0x, and the quantile is 4.9% / 36.2% / 46.6%).
The valuation of the top 100 companies with foreign shareholding ratio returns to near the historical average. The overall performance of companies with a high proportion of foreign ownership (which also has a high degree of coincidence with Baima blue chips generally recognized by investors) has declined by 29.3% since February 2021 and 19.9% since the beginning of 2022. From the perspective of valuation level, there is also obvious convergence. At present, the forward P / E ratio of these companies is 21.1x and the forward P / B ratio is 4.0X, which is slightly higher than the historical average of 18.8x/3.7x and the quantile is 67.5% / 59.0%.
The valuation of most industries has been lower than the historical average. The forward P / E ratio of most industries has been below the historical average. The forward P / E valuation of leisure services, media, computers, military industry, agriculture, household appliances and other sectors is below the historical 25th quantile (since 2006).
Comparison of major categories of assets: the relative attractiveness of stocks and bonds is at a relatively high level. The relative attractiveness index of stocks and bonds calculated according to the dividend yield and treasury bond yield is now 68%, higher than the average level of 53% since 2005, in the historical 78% quantile, and the relative cost performance of equity assets is at a high level.
International Comparison: the overall valuation of A-Shares is in the middle and low position of major global markets, and the Hong Kong stock market is in the low position. Compared with the predicted P / E ratio in 2022, the valuation of A-share market is at a medium low level in major global markets; The valuation of Hong Kong stocks is only slightly higher than that of Brazil in 16 major markets, at the second lowest level.
be patient and wait for the "bottom of the mood"
Although the valuation has limited indicative significance for the short-term market trend, the attractiveness of medium and long-term valuation in the market has further increased after the recent correction. We suggest investors to wait patiently for the market to stabilize gradually. The supply risk caused by short-term geographical events and other factors may continue to ferment, aggravating the market's concern about "stagflation". At the same time, the short-term sharp rise and potential high level of commodity prices continue to aggravate the risk of inflation, which may also suppress the total global demand in the future, and the risk of decline of major overseas economies in the second half of the year has also increased. These factors may still need to be digested. In the medium term, China is an important manufacturing country in the world and has the world's largest and relatively complete industrial chain. As long as China continues to pursue scientific and technological innovation and industrial upgrading, China may be relatively more resilient in the global supply risk, just as the resilience shown by the stock market and exchange rate of Japan and other major manufacturing countries at that time in the impact of "stagflation" in the 1970s. At the same time, China's market inflation is generally controllable, and the reserve space for the "steady growth" policy is relatively sufficient. The follow-up "steady growth" policy will continue to work, and the growth prospect may gradually improve; In addition, the absolute valuation of China's market valuation is at a relatively low level in history, and the relative valuation is also attractive compared with other major markets.
On the whole, although the short-term global fluctuations are contagious and it still takes time to repair the sentiment of the Chinese market, we judge that the Chinese market is expected to show relative resilience in the global fluctuations in the medium term. In the follow-up, we will wait for the Chinese market to enter the "emotional bottom" depending on geographical events, epidemic situation and other factors; As the steady growth policy continues to work, we believe that the "bottom of growth" is expected to be seen around the second quarter. From the perspective of sectors, the undervalued "steady growth" sector may have relative benefits, and the entry time of manufacturing growth style will wait for the marginal easing of "inflation expectation". In the future, we will continue to track geopolitical events, overseas policies, epidemic situation and the landing of China's steady growth to comprehensively evaluate the potential path and structure of the market
Summary of brokerage information: A shares welcome the rebound and pay attention to the undervalued high-quality target
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