Since this year, all kinds of bad news have been intertwined, and the A-share market has been subject to continuous shock correction. Many old fund managers are facing great pressure. Why does the market weaken? What is the sustainability of the banking and real estate sector with relatively strong performance? Is there any chance? The reception hall of the times specially invited Zhou Liang, the founder of minority investment, to share his views and strategies on the current market.
the following is part of the interview:
securities Times reporter: why do you call minority investment
Zhou Liang: minority reflects our investment philosophy. We have a saying that excess return comes from the misunderstanding of most people. We understand the market from the perspective of behavioral finance. Market prices rise and fall every day, reflecting most people's expectations for the future. Only when most people have some deviation in their expectations for the future, can you find the time point of pricing error in the market and make excess returns at this time. Fortunately, there are often deviations in the market response. Sometimes it is overreaction. For example, we are particularly optimistic about some industries, which makes the valuation of some industries particularly low. Sometimes it is underreaction. For example, there are some improvements in the margin of some industries, but the market does not respond in place. The time points of underreaction and overreaction are the time points when we can make excess returns. On the one hand, we will look for opportunities for overreaction in the undervalued sector; On the other hand, we will also look for opportunities for insufficient response in industries with partial growth and high prosperity.
now is a time to boldly enter full positions to invest in stocks
Securities Times reporter: why is the market trend so weak this year
Zhou Liang: I think it's the comprehensive result of various factors. The first quarter of this year was the biggest decline in the past few years. There are geopolitical factors, downward pressure on the economy, and factors that kill the valuation of high valuation sectors, which lead to the weak market. No one knows when the lowest point of the market will appear. We can only see whether the current return risk ratio is good. We think the current return risk ratio is better. Although the turbulence of the market will make investors panic, and you may feel that the risk is great now. This is an intuitive feeling, but the intuitive feeling is often different from the actual situation of the market. Now the actual risk of the market is actually getting smaller.
Why do you say that? Judging from the rise and fall of the market, this round of high point appeared in February last year. In February last year, the CSI 300 was 5900 points, and now it is about 4000 points, down more than 30%. There are many varieties whose share prices have fallen by half. You said the risk was high at 5900 last year? Or is it risky at 4000 now? Stocks have fallen, and everyone's risk of loss actually becomes smaller at this time. In addition, the policy background has been very clear, which can be proved by various recent statements; From the perspective of valuation, the overall valuation level is close to the end of 2018, which is the starting point of the last bull market. Now the P / E ratio of CSI 300 constituent stocks is 10 times, and the lowest point in 2018 is 9.8 times, which is basically the same. With the policy bottom and valuation bottom, the market bottom is not easy to predict, but what you can see is that the market as a whole is in the bottom area. You should understand that the more you fear, the smaller the risk becomes, the smaller the downward space is, and the larger the upward space is. As long as you have a clear understanding of the cycle of the market and everyone's investment psychology, now is actually a time to boldly enter the market and invest in stocks.
the strength of undervalued style is behind the marginal changes in the industry
Securities Times reporter: if you can be greedy at this time, where is the direction? Will stronger banks and real estate be a good opportunity this year
Zhou Liang: in the past year or two, growth stocks have gone strong. This year, the style has reversed. It is obvious that the value style is getting stronger. Behind this style change, there are actually some different marginal changes in various industries.
The reason why the value style began to strengthen is that there have been some marginal improvements or more than expected improvements in sectors such as real estate, banking and coal in these industries. For example, the policy of real estate is improving rapidly. From the very strict regulation six months ago to the cancellation of purchase restrictions in provincial capitals, this marginal improvement in the industry makes real estate stronger and stronger.
Where is the marginal improvement of banks? The bank's profit growth was good last year, but we are worried about the low growth rate of bank profits for many years. Is the good profit growth last year due to the relatively low base in 2020? Until the fourth quarter of 2021 and the first quarter of this year, we slowly see that the bank's profit growth is still maintained, while the valuation level is still at a historical low, and everyone's expectations are slowly improving, so the bank is also doing well. The reason for coal is that there has been no new production capacity in recent years. Due to energy conservation, emission reduction and carbon neutralization, the production capacity of the coal industry is limited and the supply has not increased, but the demand is still increasing slowly, which makes the coal supply and demand pattern very tight. The coal price is at a high level. In the past, the coal price fluctuated periodically, but now the coal price is at a high level and the production capacity can not come up, so the coal price is stable at a high level. The profits of the coal industry will remain high for a long time, which is the marginal improvement of the coal industry. These industries were not optimistic about in the past, but we found that the market overreacted.
Securities Times reporter: Banking and real estate are strong cyclical industries. In the past, only investing in the economic recovery cycle can bring excess returns. Although they are now in a strong trend, will they only rebound periodically and their sustainable performance be optimistic
Zhou Liang: the trend of such cyclical industries has a certain correlation with the macroeconomic cycle, but it is not only related to this factor, but also affected by other factors. Take the bank as an example. Which cycle does the bank have the highest correlation with? It has a high correlation with the outbreak and disposal cycle of bank non-performing assets. When the disposal pressure of bank non-performing assets is very high, it has to make a large amount of provisions every year, which will erode its profits and reduce the growth rate of bank profits. At this time, the performance of banks is not good. When a round of explosive disposal cycle passes and the quality of bank assets is good, its income and profit can be fully transformed into net profit. At this time, its performance is often very good.
In addition to being related to the macroeconomic cycle, the real estate industry is highly related to the policy cycle.
It takes four years for developers to acquire land, build houses, pre-sale and deliver buildings. The land I now acquire can not be recognized as my income and profit until four years later. The annual report of the real estate we see now actually reflects the gross profit margin and profit status of land acquisition four years ago. This annual report is delayed to a certain extent. Therefore, what determines the strength of the stock price of the real estate industry is often not its current net profit performance, but everyone's psychological expectation. The real estate industry was at a low point at the end of July last year, and it was also the time when the policies of the real estate industry were the most stringent. I think real estate is still a unique pillar industry in China. Now the land transfer fees and taxes related to the real estate industry account for about half of the financial expenditure of local governments. If the land and house cannot be sold, the financial expenditure of local governments will be affected. Therefore, in order to maintain steady growth, I think the real estate industry must receive certain policy support. The marginal improvement of the policy has not only improved everyone's psychological expectations, but also brought changes in the essence of the industry. For example, in the first half of last year, when everyone had high enthusiasm for land acquisition, the gross profit margin of land acquisition was generally only about 20%, or even less than 20%. However, since the fourth quarter of last year, due to the weak willingness of developers to acquire land and the reduction of land price, the gross profit margin of leading real estate enterprises has increased from 20% to 30%, which has improved the performance of leading real estate stocks. Although the gross profit margin will not be reflected in the financial report until three or four years later, this is an expected marginal improvement, which has led to the rise of real estate stocks.
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