At a time when the market is stuck, Liu Gesong, vice president of trillion public offering GF and head of top flow fund, rarely makes a sound.
On the afternoon of March 24, Liu Gesong, the top flow fund manager, appeared at a live exchange meeting. In view of the changes in the A-share market this year, Liu Gesong pointed out that the trading behavior of some funds at the time of market fluctuations exacerbated the callback of some sectors.
Liu Gesong bluntly said that although it will take time for market confidence to recover, the resumption of the past market. After each round of sharp decline, high-quality stocks can provide more attractive buying opportunities and return on investment than ever before. Therefore, after the deep correction, there is no need to continue to be pessimistic at the bottom stage of the market.
amplifying pessimistic expectations at the bottom grinding stage
after the beginning of this year, the A-share and Hong Kong stock markets as a whole have experienced a significant pullback, which is the most concerned issue of almost all investors and basic people
In this regard, Liu Gesong, deputy general manager of Guangfa fund, believes that the market retreat 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, in terms of capital, when the market fluctuates, the trading behavior of some funds intensifies the callback of some trading crowded sectors.
The Chinese reporter of the securities firm noted that in this round of withdrawal, many investors are pessimistic. The spread of this sentiment has affected the confidence of the market in the past period and is also a major factor causing the continuous adjustment of the market in the early stage. When can the sentiment recover? Liu Gesong said that each round of market adjustment will actually bring investors worry and anxiety. Previously, the position of the market reflected the impact of multiple bad superposition, including macroeconomic expectations, repeated outbreaks, overseas interest rate hikes, Russia Ukraine conflict and so on.
"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, it is very few." Liu Gesong stressed that 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 to continue to be pessimistic in this position?
The trillion public fund manager said frankly that every time there is an extreme adjustment in the market, looking back on the cycle of one or two years may be a good layout opportunity. He believes that the current 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 sentiment will also change.
mispricing in high boom industries
Not long ago, the State Finance Commission held a special meeting to emphasize that relevant departments should actively introduce policies conducive to the market. Liu Gesong believes that the meeting of the financial committee has given the market a clearer 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 October 2018. At that time, after a long period of adjustment, the end of the policy was ushered in October. After the process of grinding the bottom in November and December, the equity market performed better in 2019, 2020 and 2021." Liu Gesong believes that 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.
Liu Gesong has repeatedly emphasized looking for industries with demand expansion in quarterly and annual reports, which is also the driving force for Liu Gesong to obtain rich returns on long-term performance in the past few years. Then, specifically reflected in the stock selection and investment of fund managers, how is this method carried out?
He answered that although there are many fund managers in the market who are in the direction of growth, many fund managers 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.
But the key question is, which indicators can be used to observe the prosperity in a forward-looking way? Liu Gesong reviewed the performance of many industries in the past decade and found that the medium and long-term trend change of supply and demand pattern will lead to the change of prosperity. The investment research team of Guangfa fund often deeply studies the supply and demand pattern of the sector from the perspective of the 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.
Liu Gesong said that his investment framework is to start from 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 the investment demand, and find the industry with the best cost performance according to the verification of high-frequency data and the logical judgment of fund managers. On this basis, the investment research team will conduct in-depth research on the industrial chain, fully cover the upstream, middle and downstream companies, verify the judgment of the fund manager from the industrial level, and learn from the entrepreneur to see whether the entrepreneur's judgment on the industry is consistent with the investment research team's own logical judgment, and whether the fund manager is too optimistic or too pessimistic. According to the field research, revise the methods and judgments, and select the industries with high cost performance for medium and long-term investment.
In terms of value investment, he believes that there are many methodologies in value investment. Some people do industry rotation with high cost performance and high prosperity, and some investors like to make undervalued investment. However, 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 at this stage. 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.
"I hope to use the method of value investment to invest in growth. I think there is only one method of value investment, which is to study the potential value of the enterprise," said Liu Gesong. Looking for industries whose current market value is lower than the potential value of the enterprise, matching the industry and seeing the industrial trend correctly, we will 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 fund managers to find assets with higher cost performance for value investment.
"global comparative advantage" means what investment advantages
Liu Gesong has repeatedly emphasized "global comparative advantage manufacturing", which advantages and attractiveness can be reflected in the investment and stock selection
In this regard, he stressed that this is because the moat is relatively wide in industries that have established global comparative advantages. 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.
For example, although there are disturbing factors of the epidemic this year, and the industrial chain links of the manufacturing industry will also face difficulties, including the shutdown of key links affected by the epidemic, the impact of supply, etc., from the perspective of demand, the growth is still relatively good. Once the supply problems are alleviated, the suppressed demand may recover quickly. This is a major investment advantage of such enterprises.
Specifically, in Liu Gesong's eyes, those industrial chains that meet the requirements of "demand facing the world and supply in China" are the more deterministic directions that fund managers can grasp. If the moat of these industries is deep enough, there is no need 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. At the same time, such enterprises can also greatly alleviate the impact of upstream price disturbances. Liu Gesong also revealed that from the perspective of industrial research, the assets representing this direction include photovoltaic, power cells and energy storage, including new chemical materials. This year, the growth of global comparative advantage manufacturing leading companies in terms of volume is relatively certain, and the performance elasticity may be better than expected by fund managers.
large funds make money by seizing opportunities in the industrial chain
It is noteworthy that Liu Gesong also answered the profit-making methods when managing large-scale funds.
"for large-scale funds, mining one or two listed companies makes relatively 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 contributions to the portfolio." Liu Gesong believes that managing large-scale funds well may need to work 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.
Based on the investment discipline of being patient with the short-term market, Liu Gesong judged that the current market is at the bottom of the stage. Jimin also needs to understand the investment style and investment history of the fund manager he chooses. Considering that the restoration of confidence in the overall market, the optimization of microstructure and the improvement of market funds are not achieved overnight. He believes 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. At this stage, many assets have fallen to the range of high cost performance. After the bottom is worn out in the future, the subsequent market may be worth looking forward to.
