Since this year, the volatility of A-share and Hong Kong stock markets has intensified, with the Shanghai index falling 11.77%, the gem index falling nearly 26% and the Hang Seng index falling 8%. Recently, the reporter of China fund daily interviewed Zhou Liang, the founder of shaosou group investment, Li Mo, the general manager of Shanghai Baoyin investment, Wang Yiping, the founder of evolutionism assets, Yuan Wei, the investment director of Hua'an Hexin, Renqiao assets and other high performing private placement investment researchers to jointly feel the market situation in the second quarter and explore future investment opportunities.
They believe that the current market is in the bottom area, the valuation of most industries has been more reasonable, and they are cautiously optimistic about the second quarter; We need to pay attention to the repeated epidemic situation, downward pressure on the economy, as well as risk factors such as the Fed's interest rate hike, Russia Ukraine conflict and stagflation. At present, we should appropriately allocate additional value stocks, and reserve some "bullets" to wait for the opportunity to increase positions; Hong Kong stocks have limited downward space and are optimistic about the valuation and repair opportunities of technology Internet companies.
current market is at the bottom
cautiously optimistic about the market in the second quarter
China Fund News: do you think this round of adjustment of A-Shares is coming to an end? How to judge the market performance in the second quarter and beyond?
Li Mo: this round of A-share adjustment is mainly due to multiple factors such as the conflict between Russia and Ukraine, the US interest rate increase and the epidemic situation. In fact, compared with several market adjustments in history, this round of A-share adjustment is not large. The current valuation of A-Shares has moderately fed back the current adverse factors, but the market will pay attention to the recovery of the post epidemic situation. The profit in the second quarter may be the bottom of the whole year. The recovery speed in the second half of the year remains to be seen. It should recover at a faster speed in 2023, which is worth waiting for.
Wangyiping: statically, the valuation level of A-Shares is currently in a relatively reasonable range. However, dynamically, due to the disturbance of the epidemic and geopolitics, stock pricing will be negatively affected by the uncertain profitability of enterprises and the rising interest rate environment. It is also necessary to continuously track the changes of the external environment and epidemic related policies.
Zhou Liang: at present, the market is in the bottom area, and the market risk is small. The risk we feel is not the actual risk. From the perspective of behavioral finance, it is called "proximate effect". It is these recent events that have a great impact on us, so we will pay special attention to it. We will give more weight when making investment decisions, or even linear extrapolation.
The overall market was weak in the first quarter, which has reflected everyone's expectations for future risks. The more the market falls and fluctuates, everyone will become more pessimistic and feel that the market risk is great, but in fact, it is not the case. For example, in January and February last year, the market was very optimistic. Everyone thought it was a time when the risk was very small, but looking back, it was a high period of the market and a time when the actual risk of the market was very high. When everyone feels that the risk is great and dare not invest, in fact, the market is in a low-level area, and the actual risk becomes smaller.
Yuan Wei: it is difficult to judge the volatility of the short-term market. From the perspective of valuation, the valuation of most industries may be more reasonable. We are cautiously optimistic about the market in the second quarter and beyond.
Renqiao assets: on the whole, the probability of further systemic risk in the market is low.
First, the overall growth of the current market is not high, and systemic risk is not large, which is more reflected in structural overestimation and foam. From the bottom up, after this round of adjustment, many companies have very little downward space. At present, there is more volatility risk than loss risk, and the volatility risk is not large.
Second, since this year, A-Shares have led the decline in the global market, and the main indexes have fallen by more than 15% this year, which has reflected the pessimistic expectation of risk events. From a relative perspective, the pressure of "inflation" in China is much better than that in Europe and the United States, and the policy environment is also relatively better. Therefore, on the whole, we are not so pessimistic about the market. If we lengthen the perspective a little, there is still a great opportunity to achieve relatively good returns.
Under the pressure of many events, the overall short-term market risk appetite is still relatively low. Whether it is undervalued or other sectors, the market consensus may not be fully formed, but the spark of some industries can be seen, which requires us to do individual stock research and portfolio management more patiently and carefully.
valuation has fallen to a relatively reasonable level
fundamentals are still in the risk range in the short term
China Fund News: after this round of decline, do you think the valuation has reached a reasonable level? What do you think of the fundamentals of the enterprise and whether it has changed?
Yuan Wei: the market has fallen to its current position, and the valuations of most industries, including some industries that we thought were more expensive, have fallen to a reasonable level. Of course, due to the repeated epidemic and high inflation, the fundamentals of many enterprises may be damaged to a certain extent in the short term.
Zhou Liang: the current valuation level is close to the lowest point in 2018. Let's look at the valuation levels of four styles: large market growth, large market value, small market growth and small market value. Because the trend of large market value in the past two years is relatively weak, the current valuation has broken through the lowest point in 2018. The small market value stock index and small market growth stock index are also similar to the lowest point in 2018. Only the large market growth stock index is still at a relatively high level, but compared with the high point in February last year, In fact, the adjustment range is also relatively large. At present, the market as a whole is in the bottom area, especially for stocks other than the growth style of the market, it is in a relatively low area.
Li Mo: compared with last year, the valuation at this time is relatively reasonable, but the market needs to adjust this year's profit forecast to more objectively reflect the profitability in the second quarter and even the second half of the year. Affected by the disturbance of the epidemic, the current downward pressure on China's economy, especially in the first quarter, is higher than expected. The fundamentals are still in the risk range in the short term, and then show a gradual recovery trend.
additional value shares
keep cash waiting for position increase
China Fund News: how to view the current macroeconomic environment of the market? What are the main risk points and how to deal with them in the next investment process?
Li Mo: We analyzed the economic data after the Xi'an epidemic in March. The impact of the epidemic on consumption and investment is obvious. It remains to be seen whether macro policies can fully respond to the impact on many large cities in this round. We pay more attention to whether the adjustment direction of policies in economic operation can open up the supply chain and bring economic activities back to the normal track, which is related to the future operation status and profitability of enterprises.
Zhou Liang: if the epidemic continues to spread and a large proportion of cities are closed, the transmission impact on relevant industries and steady growth policies will exceed expectations.
Wang Yiping: there are two core influencing factors overseas. One is that the United States has entered the interest rate hike cycle, which has brought pressure on emerging markets and growth tracks for capital outflow and downward valuation; Second, the conflict between Russia and Ukraine may also bring potential risks of trade and geopolitics to the market.
China's core risk point lies in the downward pressure on the economy. GDP growth fell in the third and fourth quarters of last year. In the first quarter of this year, the medium and long-term loan data of residents and enterprises were weak, and the credit demand was still weak. Superimposed on the repeated outbreaks in many places since March, it brought great pressure on economic growth. At present, we still maintain a cautious attitude. Under the overall risk controllable position, we increase the position of value stocks and reduce the position of growth stocks. At the same time, we keep a certain amount of cash and wait for the emergence of enterprises with both development prospects and excellent valuation after the elimination of market uncertainty.
Yuan Wei: in this year's macroeconomic environment, the core of China is stagnation, while the core of overseas is inflation. China's economic performance is poor due to the repeated epidemic and the sharp year-on-year decline in real estate investment and sales; China's monetary and fiscal policies will be relatively loose, and the core of the policy is stable growth. Overseas asset prices rose sharply, and the core CPI of some developed countries hit a 40 year high. We believe that in the future, the risk point of China lies in the recurrence of the epidemic and the occurrence of systemic risks in the real estate industry, while the overseas risk lies in the fact that the schedule of interest rate increase and contraction of the Federal Reserve caused by inflation continues to exceed expectations.
finance, real estate and other undervalued sectors
welcome opportunities
China Fund News: since this year, the undervalued sectors such as real estate and finance have performed strongly, and the performance of large cap stocks is better than that of small and medium cap stocks. What do you think of this? Will this style continue in the future?
Zhou Liang: the leading varieties in banking, real estate and coal will reach a record high or a ten-year high. Real estate is a pillar industry in China. Recently, some provincial capitals cancelled purchase restrictions. A very important point that determines the rise and fall of the real estate industry is the real estate policy, and its margin is still improving. In terms of banks, from the annual report and the expectation of the first quarter, the asset quality of banks is still improving, and the provision is decreasing, so that the profits of banks can be reflected. In the case of high base last year, it is still growing this year. It is expected that the growth rate of large banks will be close to 10% this year, and the growth rate of net profits of joint-stock banks and some local commercial banks will be close to 20%, so its margin is still improving. This year or even next year, the tense situation of supply and demand in the coal industry cannot be alleviated, so the coal price will remain high for a long time. The profitability of the coal industry last year has been very good, and this year will be better, and there will be high dividends.
Li Mo: we think this is a normal style change. The valuation of some industries is rising and the risk return ratio is declining. The market begins to explore sectors and varieties with higher cost performance. However, the stable products of BOCOM do not care whether the style will continue. We always strive to find companies with alpha in the sector and hope to maintain stable returns in various styles.
Wang Yiping: with the continuous decline of the market and the decline of risk appetite, the stock capital has switched from the growth sector with high valuation to the traditional undervalued finance, real estate and other sectors. The safety margin of these sectors is relatively high, and there is a driving force for valuation repair under the expectation of steady growth. In the short term, the market is still relatively depressed, and this style may continue to exist. After some signs of recovery in the market, risk appetite will improve, and growth stocks such as small and medium-sized stocks may usher in rare layout opportunities. Therefore, at present, our portfolio is balanced between value and growth, and maintains a certain attack while doing a good job in defense.
Yuan Wei: this year's macro environment is the long-term undervalued asset valuation caused by rising inflation, and the undervalued industry can avoid this risk to a certain extent. At the same time, the valuation of some industries was indeed low to an attractive position before that. We seldom judge the style of large or medium-sized market, and the core of the research is the enterprise value itself.
Renqiao assets: due to the uncertain decline of the overall economy and corporate profits in 2022, the opportunity to earn performance growth will obviously become more and more difficult. Companies with high valuations and high expectations will probably become a new "disaster area" in the process of performance slowdown. Companies with low valuations and low expectations tend to perform better. We are still relatively optimistic about the investment opportunities of undervalued sectors represented by real estate, construction and non bank, and the undervalued style will be relatively dominant.
stick to the undervalued sector
reduce the allocation of overvalued growth stocks
China Fund News: the market fell sharply in the first quarter. What did the company do in investment? Specifically, what adjustments have been made in terms of position control and strategy optimization? What kind of risk control measures are mainly adopted?
Wang Yiping: at the beginning of the year, we believed that there were two problems that would put great pressure on market valuation: first, the Fed's table contraction and interest rate increase caused by inflation exceeded expectations; In addition, the tightening of the real estate market may cause concerns in the market. On this basis, on the one hand, we have increased the proportion of resource stocks and undervalued stocks, and reduced the proportion of overvalued growth stocks greatly affected by the negative effect of interest rate increase; On the other hand, through appropriate position net position risk management, the loss is within a controllable range.
Yuan Wei: the core of the sharp decline in the market in the first quarter was the rising global inflation level. The Federal Reserve quickly entered the cycle of raising interest rates or even shrinking its balance sheet. Therefore, overvalued and long-term assets are falling, killing valuations; At the same time, the conflict between Russia and Ukraine has also reduced the risk appetite of global capital markets to a certain extent, and exacerbated the rise of commodities. Last year, we judged that inflation may exceed expectations, so we allocated some sectors benefiting from inflation, which brought good positive returns.
Li Mo: the main products of Baoyin investment are products with neutral strategy, and strive to create stable absolute returns by means of hedging individual stocks in the industry. The main operation is based on in-depth fundamental research. In the same industry, long industry leaders and short industry laggards, hedge market and industry beta risks, and strive to obtain stable alpha income regardless of whether the market rises or falls. This kind of neutral strategy can well avoid the systematic risk of the market. Not only the exposure of the net position of the position is limited, but also the exposure risk factors are limited, and consistent pre event and post event risk control measures are adopted from beginning to end.
Zhou Liang: at the lowest point of value style last year, we didn't catch up with popular tracks, but adhered to the strategy of undervaluing value. This year, we finally ushered in the return of value style. This year, when the market fell sharply, most of our products made a slight profit. It is precisely because we adhere to the value strategy of undervaluing and can calmly deal with it when the market is panic.
In the first quarter, we did not reduce our positions, but insisted on full positions, and the stock selection strategy changed from cautious to more active. Taking advantage of the recent adjustment opportunities of growth stocks, we have increased the allocation of high boom growth sectors, which currently accounts for about 20%. It has formed an investment strategy based on value and supplemented by growth.
Renqiao assets: the market was disturbed by many emergencies in the first quarter, and the overall fluctuation did exceed expectations. In terms of strategy, when making the annual outlook at the beginning of the year, we clearly mentioned that the most certain variable in the market throughout the year is the quarterly decline of the economy and the continuous decline of enterprise profits, and the most uncertain variable is inflation. Historically, due to the deterministic decline of the overall economy and corporate profits, it is obviously more and more difficult to earn money for performance growth. Companies with underestimated value and low expectations tend to have better relative performance. Therefore, since the beginning of the year, we have been relatively optimistic about the opportunity of undervalued sectors in terms of structure. At the same time, we have arranged the risk of "inflation" in advance. Based on Renqiao's reverse strategy, through the selection and layout of structure, improve the stability of portfolio to deal with market fluctuations.
short term bullish and undervalued value sector
new energy track deserves long-term attention
China Fund News: what is your overall planning and context of future investment layout? Specific to the industry or segment track, what do you think deserve attention?
Zhouliang: our current strategy is to focus on value, supplemented by growth.
The value biased sectors in the first direction continue to be firmly held, and their shareholding has been adjusted, accounting for about 80% at present. We believe that the second direction of stock growth is to gradually reduce the overall growth level of the boom, especially with the maturity of the stock market. Since the end of February, on the basis of continuing to hold large cap value stocks such as banks and real estate, we have added coal, infrastructure and Hong Kong stock Internet stocks with improved fundamentals, and also added configuration in the second direction, covering industries such as coal, Internet, nonferrous metals, chemical industry, electronics, computer and medical devices.
Wang Yiping: we are a multi market and Multi Strategy private equity fund. In the current complex market environment, we will make full use of the breadth of the market and strategy to deal with it. Specifically, the allocation weight of each market is determined by observing the valuation, policy stability and capital flow direction of different markets. In addition, we will pay close attention to the macro cycle and interest rate increase cycle. We will focus on the allocation of value stocks. After the expectation of interest rate increase is sufficient and the correction of growth stocks is sufficient, we will look for high-quality growth industries for style switching.
In the short term, companies that underestimate the value cycle deserve attention. Thanks to the persistently high inflation, if the undervalued cyclical companies can still usher in product price increases, they are expected to outperform the market average. In the long run, the track of photovoltaic and new energy vehicles deserves continuous attention. After the marginal easing of interest rate hike pressure and inflation pressure, these growth tracks will usher in better investment opportunities. At the same time, the callback of some technology Internet stocks in the Hong Kong stock market and China concept stocks has been relatively sufficient. After the policy is further clarified, we also need to pay attention to the valuation repair and exhibition space of relevant companies.
Li Mo: we will carry out the layout of the whole industry, pay special attention to companies with natural monopoly advantages, brand strength and cost advantages, and actively layout consumer goods with considerable product pricing ability, new energy vehicle brands with strong product strength, auto parts and intelligent driving fields with great room for improvement in penetration, as well as companies with outstanding cost advantages in various fields.
Yuan Wei: we are cautious and optimistic about the future. Stimulated by the policy of steady growth, China's economy may stabilize and recover in the second half of the year. The layout of investment still focuses on the core value of the enterprise and adheres to its own ability circle. At present, the energy mining industry, the centralized transportation industry with extremely low valuation and high demand, and some industries and individual stocks benefiting from China's economic stabilization deserve attention.
Renqiao assets: we are still optimistic about the opportunities of the undervalued sector throughout the year, focusing on construction, real estate, non bank, operators and other directions; At the same time, inflation is still a very important factor affecting the market, but it is very difficult to predict the inflation situation. China may face certain pressure in the second half of the year, which needs further attention and response. Oil price and Shenzhen Agricultural Products Group Co.Ltd(000061) will be important factors.
On the other hand, although from a logical and empirical point of view, undervalued companies will have a higher winning rate in the economic downturn, growth industries or companies with their own strong logic and high growth against the trend will still exist. Compared with the popular sectors with high valuations, we are more willing to look for opportunities from other industries with low market attention and poor phased performance. This is more a bottom-up opportunity, and variety selection requires patient screening.
Hong Kong stocks have limited downward space
optimistic about investment opportunities in the Internet industry
China Fund News: Recently, Hong Kong stocks have been adjusted again after the rebound. What do you think of the investment opportunities and development prospects of Hong Kong stocks? Have you ushered in the configuration window?
Zhou Liang: at the current valuation level, we are optimistic about the Hong Kong stock Internet industry. A year or two ago, the Internet was a relatively high valued industry, but now the price has become very cheap. For example, Tencent's P / E ratio is 13 times.
Wang Yiping: as an offshore market, Hong Kong stocks are greatly affected by international capital flows. Therefore, in the interest rate hike cycle of US stocks, this is a matter of concern. Considering the extremely low valuation of Hong Kong stocks, we don't think we should be overly pessimistic. The downward space of Hong Kong stocks is relatively limited, but the rebound will not be achieved overnight. In the next stage, we will pay close attention to the impact of the Fed's interest rate hike on Hong Kong stocks, and wait for the further clarification of the policies of Internet companies related to Hong Kong stocks and China concept shares.
Li Mo: the nature of funds in the Hong Kong stock market is very complex. The fluctuations of A-Shares and US stocks will have an impact on Hong Kong stocks. In the past two years, the bear market in Hong Kong stocks has been more affected by China US relations. After the introduction of the delisting list of China concept shares, the regulators are making positive efforts, and the problem of China concept shares is expected to usher in good results. From a longer perspective, Hong Kong stocks have ushered in a configuration window after adjustment in the past two years. Hong Kong stock investors are particularly concerned about corporate profitability, rather than factors such as tuyere. Therefore, the market also needs to appropriately adjust the short-term profit risk.
Yuan Wei: in the medium and long term, the Pb level of Hong Kong stocks is about 6% of the historical quantile, which is extremely undervalued; In the short term, the suppression of the Fed's interest rate hike on the valuation of Hong Kong stocks is often in the expected stage. Historical experience shows that the performance of the Hang Seng index tends to rise half a year to one year after the Federal Reserve's interest rate hike. Therefore, we believe that the investment value of Hong Kong stocks is significant.
Renqiao assets: we believe that the Hong Kong market is facing very good allocation opportunities. Over the past few years, Hong Kong stocks have experienced several rounds of substantial decline, and the A / h premium has been at a high level in recent ten years. Hong Kong stocks have significantly lost A-Shares for three consecutive years and maintained a continuous low correlation with a shares, which is unprecedented in history. Since this year, the valuation of Hong Kong stocks has fallen further, and the Hang Seng state-owned enterprise index was once close to the low point of the global financial crisis in 2008. With the gradual release of pessimistic factors, Hong Kong stocks have a very good cost performance advantage, which is our very optimistic investment direction in the next stage.
