Core question 1: can the high growth expectation strategy achieve high excess returns? Under the background of the decline of annual profits in 2022, what strategies to combat the decline of profits with the industry has always been the core issue of market attention, and high prosperity is one of the strategic directions with high market attention. In hindsight, high prosperity can indeed achieve high excess returns. But in advance, the performance of companies with high growth expectations is not outstanding. This is mainly because market expectations usually have systematic errors, and companies with higher expectations tend to overestimate profits, which is the same in different industries. Therefore, it is a risky strategy for companies with high growth expectations at the end of the year and the beginning of the year. Especially during the decline of corporate profits, industries with stable growth deserve more attention.
Core question 2: will the market style change? Since December, the overall performance of the consumption and steady growth industry has been outstanding, and the market's attention to style switching has also increased. We believe that the style transformation of the market has just begun. Overall, the turnover gap between consumption and growth is still high. From the perspective of fund heavy position stocks, there is still a significant difference between the trading heat of growth and consumption sectors. Considering the proportion of positions and trading heat, the heat of the consumer sector is near the historical average, while the growth sector is still at a historical high. Therefore, we believe that it is still in the early stage of style switching.
Core question 3: what are the key factors in the market in the future? It is expected that economic data will rebound marginally in the future, but price data may fall back. It is expected that the profit growth rate of listed companies will gradually decline, but the profit structure will be improved, and the performance of the middle and lower reaches will be improved. The policy is expected to continue to exert force, but the short-term data still lack flexibility. It is necessary to continue to observe the implementation of demand side policies.
Market view: no fear of fluctuations, stick to the double main line. Recent micro performance expectations are still rising, and funds going north have also turned into substantial inflows. Superimposed on the force of the policy, it is expected that the "spring agitation" will still arrive as scheduled. The investment direction is concerned with two main lines, the consumption line concerns Baijiu liquor, and consumer incentives and consumer goods under the price increase. The main line of steady growth focuses on traditional infrastructure (machinery, building materials and construction) and new infrastructure (wind power and photovoltaic).
Risk tip: the economic growth is less than expected, resulting in poor performance of the A-share market; The fluctuation of Sino US relations suppresses market risk preference; The covid-19 epidemic has deteriorated significantly.
