Liu Gesong, deputy general manager of GF fund, who holds more than 77 billion yuan, is the focus of attention from the outside world.
Standing at this critical time point, Liu Gesong made a voice in a live broadcast recently, saying that we should cherish the A-share assets at this point. This fluctuation also exists in history, but not everyone can grasp it. At present, we should think more about which assets have been "wrongly killed".
When it comes to short-term fluctuations, Liu Gesong also said frankly that everyone will suffer and the pressure of fund managers is also very great, but in the long run, this fluctuation may be only a small splash in the growth process of the A-share market. "We have experienced many difficult stages in the past. It is precisely because we have survived that we have a large market for equity growth in the past three years."
fund Jun arranges Liu Gesong's wonderful views:
1. Each round of market adjustment will actually bring investors worry and anxiety. The previous position of the market reflects the impact of multiple bad superposition, including macroeconomic expectations, repeated outbreaks, overseas interest rate hikes, Russia Ukraine conflict, etc. I think this position may have reflected most of the pessimistic expectations we can imagine. Looking back, what else can affect the downward expectations of the capital market? At present, there are very few.
2. The current situation is similar to that in October 2018. After a long period of adjustment, the end of the policy came in October. After the end of the grinding process in November and December, the equity market performed better in 2019, 2020 and 2021.
3. I agree with some strategic analysts that we should cherish the A-share assets in this position. This fluctuation also exists in history, but not everyone can grasp it. At present, we should think about which assets have been "wrongly killed".
4. In the face of short-term fluctuations, everyone will feel uncomfortable and the pressure of fund managers is also very great, but in the long run, this fluctuation may be only a small splash in the growth process of A-share market. We have experienced many difficult stages in the past. It is precisely because we have survived that we have a large market for equity growth in the past three years.
5. The configuration in the past year was mainly high-end manufacturing. I introduced the global comparative advantage manufacturing industry in detail in the first quarterly report of 2021; At present, I am still optimistic about this direction. From the micro survey data and high-frequency data, the prosperity of our selected industries may be better than that in the third and fourth quarters of last year.
6. I think there is only one way of value investment, which is to study the potential value of the enterprise, find the industry whose current market value is lower than the potential value of the enterprise, match the industry, see the industrial trend correctly, and get excess returns in the next two or three years. This way is value investment. On the contrary, the market adjustment stage is conducive to us to find assets with higher cost performance for value investment.
The following is the live record:
I. market view:
this position has reflected
most pessimistic expectations
Q: since the beginning of this year, the market as a whole has experienced a significant retreat. What factors do you think are the main factors affecting this round of decline
Liu Gesong: I think the market retreat since the beginning of the year reflects several expectations of market concern: first, the expectation of macroeconomic growth this year. The market generally believes that it is still in the stage where credit relief has not fully played its role; Second, worry about the impact of overseas interest rate hikes, especially by the Federal Reserve; Third, the uncertainty of the international environment caused by the conflict between Russia and Ukraine and the rapid rise of energy prices are worried about the pressure of rising global costs in the future. Fourth, on the capital side, when the market fluctuates, the trading behavior of some funds intensifies the callback of some trading crowded sectors.
Q: in this round of pullback, many investors are pessimistic. What do you think of this sentiment
Liu Gesong: every round of market adjustment will actually bring investors worry and anxiety. The previous position of the market reflects the superposition of multiple negative and positive effects, including macroeconomic expectations, repeated outbreaks, overseas interest rate hikes, Russia Ukraine conflicts, etc. I think this position may have reflected most of the pessimistic expectations we can imagine. Looking back, what else can affect the downward expectations of the capital market? At present, there are very few.
Therefore, in this position, we do not need to amplify our pessimism and panic. Instead, we should calm down and think about whether the direction and foundation of the industries we choose, including those with comparative advantages in China, have changed. If not, is it necessary for us to continue to be pessimistic in this position?
I think every time there is an extreme adjustment in the market, looking back on the cycle of about one or two years may be a good layout opportunity. At present, the market sentiment is relatively pessimistic. In this environment, some high-quality assets will be mispriced. With the gradual disclosure of the first quarterly report of listed companies, people will further restore confidence in industries with good growth and high prosperity, and the market pessimism will also change. In the medium and long term, the market will still respond in a basically good direction.
the impact of the Fed's interest rate hike needs more observation
Q: the Fed's expectation of raising interest rates many times due to the intensification of US inflation has gone through a similar stage before. The capital market usually makes a certain response. What is the impact of overseas policies and markets on a shares? Are there any more uncertain external factors worth investors' attention in the follow-up
Under the premise that the Fed will raise interest rates continuously, there are several factors that may affect the U.S. market. Second, there are currency devaluations in emerging countries. Only when this happens will it affect the expectation of overseas funds on China's asset allocation. Since the fourth quarter of last year, including the beginning of this year, the RMB exchange rate has remained stable under the extreme circumstances of the market. I think in the future, it depends on the rate increase range and rhythm of the Federal Reserve.
From the analysis of the factors affecting the Fed's decision to raise interest rates, one is to look at the rising range of energy prices, and the other is the basis of the U.S. economic recovery. In the second half of the year, the Fed also needs to consider whether the basis of economic recovery can withstand the rhythm of substantial interest rate hikes, which still needs to be observed.
policy bottom or appearing
the current situation is similar to that in October 2018
Q: in the first quarter of this year, the market volatility increased compared with last year.
In mid March, the National Finance Commission held a meeting to emphasize that relevant departments should actively introduce policies conducive to the market and carefully introduce contractionary policies. What impact may this meeting have on the market
Liu Gesong: financial committee meeting gave the market a relatively clear expectation. At present, the market is still in the process of grinding the bottom, because the microstructure has not been repaired, the pessimism of the market has not been completely reversed, and the market lacks incremental funds. The next thing to do is to wait for the direction of the industry. Investors will study the performance of Listed Companies in the first quarter, including tracking the high-frequency data in the second quarter for verification, so as to find "real growth" in those industries with high prosperity.
I personally understand that the current situation is more similar to that in October 2018. At that time, after a long period of adjustment, the end of the policy came in October. After the process of grinding the bottom in November and December, the equity market performed better in 2019, 2020 and 2021.
Looking back, after the disclosure of the first quarterly report of Listed Companies in April, investors will follow the performance of listed companies to find some assets worthy of allocation. After the adjustment since the beginning of the year, some high-quality assets have a relatively good investment value.
Q: you mentioned that October 2018 is also a similar policy end stage. Could you please review the difference between China's monetary policy orientation in 2018 and this year
Liu Gesong: compared with now, it is more confident to look at the basis of future economic growth at the end of 2018, and there was no epidemic at that time. At present, the epidemic situation in key cities in China is repeated, and investors are worried that it will affect the effect of the steady growth policy.
In fact, I think this is a race against time. At this time point, the epidemic situation is completely different from that in 2020 and 2021. Although the transmission speed of Omicron virus is relatively fast, the severe rate and symptoms are completely different from Delta and the first virus. In the future, with the advent of specific drugs one after another, people's pessimistic expectations of economic recovery will be greatly repaired.
at present, the market is at the bottom of stage
need to think about which assets were killed by mistake
Q: after the adjustment, the market differentiation is also obvious. What do you think of the next market
Liu Gesong: I personally judge that the market is at the bottom of the stage, but the restoration of confidence in the overall market, the optimization of microstructure and the improvement of market capital are not achieved overnight. I agree with some strategic analysts that we should cherish the A-share assets in this position. This fluctuation also exists in history, but not everyone can grasp it. At present, we should think about which assets have been "wrongly killed".
In the medium and long term, such assets that are "wrongly killed" in extreme market environment are often in the stage of high cost performance. In the future, you will get some enlightenment from the first quarter report, including some directions from the high-frequency data of the second quarter.
I am optimistic about the medium and long-term market. This position is the bottom of the superposition of multiple bad news. Now many people are in the wait-and-see stage based on their concerns about the epidemic, economic recovery and steady growth pressure. For us, at this stage, many assets have fallen to the range of high cost performance. After the bottom is worn out in the future, maybe the subsequent market is worth looking forward to.
investors are advised to extend their investment period
Q: it is difficult to invest this year. Do you have any suggestions for investors
Liu Gesong: first, we should extend our investment period. Only long-term investment can better deal with the volatility of the stock market. Second, we should think about what direction we want to allocate and understand the fund manager we choose. Third, short-term fluctuations are difficult to avoid, and investors can choose their own response methods in combination with their own risk tolerance.
In the face of short-term fluctuations, everyone will feel uncomfortable, and the pressure of fund managers is also very great, but in the long run, this fluctuation may be only a small splash in the growth process of the A-share market. We have experienced many difficult stages in the past. It is precisely because we have survived that we have a large market for equity growth in the past three years.
II. Keep an eye on the direction
continue to be optimistic about the global comparative advantage manufacturing industry in the future
Q: in the past few years, you have started from the meso perspective and closely followed the changes of industrial trends, such as reconfiguring technology in 2019 and configuring photovoltaic and chemical industry since 2020. From the current point of view, which industries do you prefer in the future
Liu Gesong: the configuration in the past year was mainly high-end manufacturing. I introduced the global comparative advantage manufacturing industry in detail in the first quarterly report of 2021; At present, I am still optimistic about this direction.
From the micro survey data and high-frequency data, the prosperity of our selected industries may be better than that in the third and fourth quarters of last year. Why does this happen? This is because the moat of industries that have established global comparative advantages is relatively wide. The leading companies in these industries have experienced different industry fluctuations in the past development. Entrepreneurs have a deep understanding of the price disturbance and demand change of the industrial chain and can make a forward-looking layout to a certain extent.
In addition to the business itself, the moat of an enterprise also depends on the industrial agglomeration effect brought by the entrepreneur's leadership in the long run, which strengthens his enterprise moat. Although the supply chain will be affected by the epidemic situation, the supply chain will still be affected by the rapid growth of the epidemic situation. Once the supply chain is disturbed, the supply chain will still be affected by the epidemic situation, but it will also be affected by the supply chain. Once the epidemic situation recovers, the supply chain will still face difficulties. Therefore, I think this direction still deserves special attention.
Q: how do you define "manufacturing industry with global comparative advantage"? Which industries can be called manufacturing industry with global comparative advantage
Liu Gesong: the first is the direction of demand growth with high certainty. The second is that most of the supply links are in China, while the demand is in the world. Enterprises are currently in the process of globalization. There may be few such directions. Once there is such a direction, it is relatively scarce.
The demand is global and the supply is in China. This industrial chain is a relatively deterministic direction that we can grasp. If the epidemic eases in the future and the global economy continues to recover, the industry demand may be more optimistic than we judge. If the moat of these industries is deep enough, we don't have to worry too much that the market demand will be replaced by foreign competitors or new Chinese entrants. This dividend is expected to be shared by leading companies in the industry.
Last year, the profits of the global comparative advantage manufacturing industry were affected by the upstream price disturbance, which will be gradually alleviated this year. From the perspective of industrial research, the growth of global leading manufacturing companies with comparative advantages in terms of volume this year is relatively certain, and the performance elasticity may be better than we expected. This is the main logic for us to choose this direction.
optimistic about photovoltaic and other fields
Q: can you give an example of the advantages and prospects of one or two industries in the world
Liu Gesong: there are many such industries. I am more optimistic about the photovoltaic direction. The assets representing this direction include photovoltaic, power cells and energy storage, including new chemical materials.
Why do I think photovoltaic is an industry that represents China's manufacturing characteristics with global comparative advantages? First, most of the photovoltaic industry chains are concentrated in China. More than 90% of the links from upstream silicon materials to silicon rods, silicon wafers, batteries and modules are in China, which is less affected by overseas supply chains. Second, under the trend of "carbon neutralization", the growth certainty of this direction in the next few years is relatively strong. Last year, the price of silicon material rose from 50000 / ton at the beginning of the year to 270000 / ton at the end of the year. The short-term price rise has a certain impact on the growth of volume, and the profitability of the whole industry has been suppressed. With the continuous release of the production capacity of leading upstream silicon companies, it is expected that the increase in silicon price this year may not be as large as last year. If the silicon production capacity is released more, the silicon price may return to the historical central position, which is still at an all-time high. Under this trend, leading companies may have a better situation than we expected this year from the perspective of profitability.
Energy storage and power batteries also have this feature. Recently, because the price of lithium carbonate has increased more, the price of battery has increased. The market is worried about whether the demand of terminal vehicle enterprises for batteries will be affected. At present, some new power auto enterprises, including traditional auto enterprises, have begun to raise prices in the direction of new energy vehicles. On the one hand, this is caused by the rise in the price of upstream resources; on the other hand, it is caused by the increase in the price of some key parts caused by the "lack of core" of cars. Now it is a short-term price disturbance. Looking back, with the continuous exploration of China's salt lakes and new lithium resources, the power battery industry may usher in a better situation of volume increase and profitability growth like the photovoltaic industry.
Q: you mentioned that the pressure of upstream prices may be relieved. Will it be easier for middle and downstream enterprises in the industrial chain
Liu Gesong: neither, because the upstream price rises more, the middle and downstream enterprises will also face the pressure of price transmission, because the middle and downstream directly face the terminal demand, which may be a phased process.
III. investment methodology
research from the perspective of industry neutrality and make industry non neutral configuration
Q: your investment framework is characterized by cross industry comparison according to the pattern of supply and demand, and finding the industry with demand expansion by relying on in-depth research on the industrial chain. This method of meso allocation is what you often call "non neutral allocation from the perspective of industry neutrality". Can you give us an in-depth analysis of your investment framework
Liu Gesong: there are many fund managers in the market who are in the direction of growth. We focus on the prosperity of the industry. On the one hand, the prosperity plays a driving role in the short-term growth rate of listed companies and the industry, on the other hand, it is the continuous cycle of prosperity; If both are available, this sector often has better investment value.
Is there any index to observe the prosperity prospectively? I reviewed the performance of many industries in the past decade and found that the medium and long-term trend changes in the supply and demand pattern will lead to changes in prosperity. Our company deeply studies the supply and demand pattern of the sector from the perspective of industrial chain. Under what kind of supply and demand pattern will there be a continuous upward stage? First, the demand is in the stage of rapid expansion and sustainability; Second, the supply pattern is relatively stable, and the dividend of demand expansion will not be shared by new entrants or companies in foreign industrial chains.
If these conditions are met, the sustainability of prosperity can be expected from the perspective of supply and demand pattern. From this perspective, as long as we grasp the changes in the supply and demand pattern through in-depth analysis, we can grasp the changes in the landscape prospectively.
My investment framework is to follow the idea of medium and long-term investment in the industrial chain, strive to study the supply and demand pattern of each industry that meets our investment needs, and find the industry with the best cost performance according to the verification of high-frequency data and our logical judgment. On this basis, we will conduct in-depth research on the industrial chain, fully cover the upstream, middle and downstream companies, verify our judgment from the industrial level, learn from entrepreneurs, and see whether entrepreneurs' judgment on the industry is consistent with our own logical judgment, and whether we are too optimistic or too pessimistic. According to the medium and high cost performance of the investment, we will select the industry for correction.
In fact, it is difficult to predict the short-term performance of the market, including the rise and fall of the market. In the long run, the thing we can do with relatively high accuracy and high winning rate is to study the industrial trend. In the long run, fundamental research on A-Shares is very effective. The pricing of A-share listed companies is highly related to industrial development trend, industrial growth and prosperity. Of course, there must be decoupling and irrelevant times. For example, when the market is relatively extreme, we will increase research to further confirm whether the prosperity and growth of the industry have changed; Often at this time, it is also an opportunity to find an industry configuration with high cost performance.
Q: your methodology is "industry neutral research and industry non neutral configuration". Has your personal investment style changed from 2019 to now
Liu Gesong: the big style framework has not changed. The change is that more industries are included in the framework and the coverage of industries is wider. Because investment is a process of continuous learning and realizing my cognition. Now, compared with the past, my own research coverage and the coverage of the company's investment research team are wider and deeper than before, so I can better practice the method of "doing industry neutral research and industry non neutral configuration".
invest in growth by value investment
Q: you mentioned "investing in growth by value investment". Can you share your understanding of value and growth with us
Liu Gesong: there are many methodologies in value investment. Some people work in sectors with high cost performance and prosperity, and do industry rotation. Some investors like to invest in undervalued investments. I think the difference between value and growth is nothing more than the grasp of different stages of DCF model. Growth will be more inclined to the explosive and continuous range of medium and short-term performance growth, and pay more attention to what speed and way enterprises will approach potential value. Value investment pays more attention to the stable industry pattern, and the growth is in the steady-state stage, so it has a greater grasp of enterprise growth prediction.
There is no contradiction between the two methods. In my previous communication, I said "invest in growth by value investment". I think there is only one method of value investment, which is to study the potential value of the enterprise, find the industry whose current market value is lower than the potential value of the enterprise, match the industry, see the industrial trend correctly, and get excess returns in the next two or three years. This method is value investment.
On the contrary, the market adjustment stage is conducive to us to find assets with higher cost performance for value investment.
managing large funds requires efforts in three directions:
expand coverage, be diligent and have stronger endurance
Q: the fund you manage now has a large scale. On the one hand, only the fund with good performance can win the growth of scale; On the other hand, holders may also have some concerns about the large scale. What abilities and elements do you think fund managers need to have to manage large-scale public funds well
Liu Gesong: for large-scale funds, mining one or two listed companies makes little contribution to the return of the portfolio. On the contrary, the in-depth research of the industry and the grasp of the industrial chain may bring more excess contribution to the investment portfolio. I think it is possible to manage large-scale funds in these directions:
First, continue to expand industry coverage, do industry neutral research, and look for sectors in the market that meet our framework.
Second, be diligent. You should run more in the industrial chain and learn more from entrepreneurs. This aspect is the same for large and small funds. However, for large funds, because the turnover cost is relatively high, you should have a stronger grasp of the medium and long-term certainty in the future.
Third, we should have stronger tolerance for short-term market fluctuations. There is a lot of noise in the market. At this time, we should be determined and think more deeply at the level of industrial chain
Liu Gesong said for the first time in 2022: the market is at the bottom of the stage and cherish the A-share assets in this position
"Cherish the A-share assets in this position!" Liu Gesong, manager of top flow fund, said: the current situation is more similar to that in October 2018
70 billion "top stream" Liu Gesong rarely makes a sound: what should be considered at present is what assets have been "wrongly killed"
