On January 5, the index remained depressed in the afternoon. The Shanghai index fell 1.02%, the Shenzhen composite index fell 1.80%, the gem index fell 2.73%, led by traditional Chinese medicine, lithium ore, chip, lithium battery and photovoltaic, and the military industry sector also led the decline.
Since the fourth quarter of last year, the military sector has performed strongly. The yield of some military theme funds is as high as 40% this year, but the military theme ETF has encountered a large amount of redemption. Data show that since the fourth quarter, the net outflow of military ETFs has reached nearly 8 billion yuan, and the share of many products has shrunk significantly.
Insiders said that because the research on military stocks is difficult and cyclical, most profit-making investors choose to put their bags in safety. However, under the catalysis of many factors, 2022 may be the year of military investment.
the higher the price, the more the sale
net outflow of military ETF was 7.7 billion yuan
Looking back on the overall performance of the military industry last year, the military industry was at a low point in May. From May to December, the military industry sector rose by about 40%. On the whole, it rose very well in the third and fourth quarters of this year. Since the fourth quarter of last year, as of January 4, the CSI military industry index has increased by 17.45% and the Shanghai Composite Index has increased by 1.8% over the same period.
Especially since the middle of October last year, the national defense and military industry sector has opened a new round of rising market. Recently, the market’s attention to this sector is also rising.
As of December 31, 2021, the national defense industry has increased by 17.83% in recent 60 days, ranking first among all Shenwan industries.
The overall performance of the military industry sector is strong, driving the corresponding theme funds to earn a lot. The data show that there are 22 funds with the names of “military industry” and “national defense” in the market, and most of them belong to passive index funds. Most of the funds track the CSI military industry index.
Since October last year, the average unit net worth growth rate of 22 military theme funds has been nearly 16%, significantly outperforming the average growth rate of equity funds and hybrid funds.
However, in the past three months, military theme funds have been generally redeemed. According to statistics, at present, there are 6 national defense and military industry theme ETFs, of which 4 have been net redeemed during the period, and their shares have shrunk to varying degrees. Among them, the share of military leading ETF decreased by 23.16%, the share of national defense ETF decreased by nearly 30%, the amount of more than 3 components of CSI military ETF decreased, and the share of military ETF also decreased by 28.79%.
According to the estimation of the average transaction price in the range, about RMB 7.699 billion net outflow of funds from military ETFs, including “blood loss” of RMB 4.5 billion from military ETFs, net redemption of RMB 1.5 billion from CSI military ETFs, and another RMB 1.3 billion outflow from military leading ETFs.
Industry insiders believe that the redemption of ETF funds is mainly something at the capital and transaction level, which has little to do with the fundamentals of the industry. “The basis for our decision-making is still fundamentals, and we will not take the capital side and transaction side as the main factors.”
Another industry source said that in addition to performance and valuation driven, many policy events have a positive impact on the military industry sector. However, due to the great difficulty and high cyclical nature of the research on the national defense and military industry sector, many funds choose to fall into their pockets and continue to wait for the right time to intervene. The net outflow of funds is only a short-term behavior. The historical image of the military industry sector is not good. Investors generally lack confidence in long-term holding and need continuous performance.
the high performance growth in 2021 is expected to continue
In view of the layout of the military industry sector in the new year, Zou Chengyuan, fund manager of the southern military industry reform, said that the high performance growth in 2021 is expected to continue.
Zou Chengyuan believes that the contract liabilities of most main engine manufacturers and system level suppliers in the interim report and the third quarterly report have increased greatly, and the report end of “large military orders and large advance receipts” has been confirmed. In addition, the fourth quarter is the delivery peak of the military industry, and the annual performance growth may be further improved.
In addition, as one of the special racetracks, the military industry is not highly related to the macro. In 2022, the high probability of demand side will strengthen the reverse cycle.
Looking forward to the future of the defense and military industry sector, Chen long, deputy general manager of Penghua Fund quantification and derivatives investment department, said that he was very optimistic about the cross year market opened in mid October. Its essence was the market’s recognition of the prosperity of the defense and military industry next year, which was reflected in the current stock price in advance, also known as “valuation switching”, that is, the performance anchored by the stock price was switched from 2021 to 2022, Thus, the performance growth of next year will be included in the current stock price in advance.
Based on the judgment of the index point of the national defense and military industry sector after the disclosure of the China Daily at the end of August, Chen Long believes that there may be 20% or more space upward from the spatial dimension; In terms of time dimension, it may last until at least the first quarter of next year.
In addition, 2022 is the last year of the action plan for the reform of state-owned enterprises. Specifically, in the national defense and military industry, it is more reflected in the implementation of asset securitization and equity incentive. It is expected to see more equity incentives of listed companies subordinate to military central enterprises, so as to strengthen the upward range of this round of market.
Dai Ruiliang, director of the equity investment department and fund manager, said that the rising logic of the military industry sector has fully entered the fundamental and performance driven mode, and the long-term performance growth in the future is very worthy of expectation. With the growth of manufacturing capacity, the Growth Logic of each link is very clear, and the volatility of the subsequent military industry sector will be significantly lower than in the past.
Based on this, he believes that 2022 may be a year of brilliant performance in the whole military industry chain and a great year for military investment.
optimistic about aviation industry chain and military materials
Zou Cheng prefers “two tracks + two links” to choose the best in the plate. “Two tracks”, namely military aircraft (including engines) and missiles; “Two links”, namely military informatization and military materials.
At the segment track level, the comparative advantages of advanced equipment such as military aircraft (including engines) and missile mainline prosperity are more obvious.
On the other hand, military informatization and military materials are also the key promising directions of the market. Such enterprises not only have a technical moat, but also can be transformed into civilian products. Through the scale effect, they can improve the process level, control the production cost, open the development space and grow into high-quality enterprises.
In terms of specific sectors, Dai Ruiliang is optimistic about the industries with the most clear volume, such as aviation, aerospace and military informatization. In the fine molecule industry, it is most optimistic about aeroengine track, aviation complete machine factory, new materials and other fields.
Another public Funder is optimistic about the high prosperity of the industry under the demand for equipment upgrading during the 14th Five Year Plan period; From the perspective of usage, with the increase of actual training times, the loss of trainer aircraft and missile inventory replenishment are increased, and we are optimistic about the aviation industry chain and the missile industry chain with high consumables.
On the other hand, we are optimistic about the development of Beidou industrial chain under the Internet of things and the development of special chips under the new round of digital currency reform.
Chen long stressed that throughout the 14th Five Year Plan period, the national defense industry is expected to continue a relatively high degree of prosperity. However, considering the large number of sub industries, not all sub industries can enjoy this round of high prosperity.
Based on the above considerations, Chen long focused on seven directions that can benefit from the prosperity of the 14th five year plan, namely: missiles, fighters, UAVs, as well as corresponding supporting engines, upstream electronic components, raw materials and a small number of information targets.
(China Fund News)
