“Stability” and “tackling key problems in reform” are the two key words mentioned in the central economic work conference held at the end of 2021. Yi Huiman, chairman of the CSRC, said that in 2022, the work of the CSRC will focus on these two keywords. As for the capital market, “we will take comprehensive measures with relevant departments to promote the smooth operation of the market and resolutely prevent big ups and downs and urgent ups and downs.”
In fact, if only from the surface data, the A-share market in 2021 has shown the characteristics of “stability” to some extent, and the annual amplitude of Shanghai stock index is only 12.06%, a record low.
However, under the appearance of “stability”, the undercurrent is surging in many corners of China’s capital market. Taking the 50 stocks with the largest market value of public positions at the beginning of 2021 as an example, in 2021, the lowest amplitude was 34.49%, the highest reached 136.79%, and the maximum pullback range was – 19.07% to – 58.47%. Some media quoted the non-public data of a securities firm as saying that 78% of shareholders recorded negative returns in 2021.
public funds are not happy
For example, among the 4191 equity funds (including stock funds and hybrid funds) established earlier than 2021, 1185 had negative performance in 2021, accounting for 28.27%, and 292 were even lower than – 10%, accounting for 6.97%. If 2360 of them are equity and partial equity hybrid funds, 852 have negative performance in 2021, accounting for 36.10%; There are 224 with performance below – 10%, accounting for 9.49%.
However, on the contrary, in 2021, more than 70% of equity funds and more than 60% of equity and partial equity funds obtained positive returns. Further data is that among the 4191 equity funds, 1586 with performance exceeding 10% and 806 with performance exceeding 20% in 2021, accounting for 37.84% and 19.71% respectively. In equity and partial equity hybrid funds, the proportion of performance exceeding 10% and 20% in the same period is higher, 40.72% and 20.89% respectively.
The cruelty of the market has awakened many investors, many of whom have washed their hands in gold pots, and many have joined the “foundation” trend and become public fund holders.
For public fund managers, on the one hand, their comparative advantages in the market – mainly the advantages of obtaining data and data research – certainly make their scale larger and larger (reaching 24.59 trillion yuan by the end of 2021); On the other hand, with the continuous improvement of the institutionalization and internationalization of the capital market, its internal volume will inevitably become deeper and deeper. In other words, the capital market is entering a new era. With the increasing “people-oriented” of investors, the “leek” is also becoming more and more institutionalized.
The rally that began at the end of 2020 and disintegrated after the Spring Festival in 2021, as well as the subsequent crazy track rotation with new energy as the main melody, are largely the performance and results of institutional involution. Then, in 2022, in this increasingly inward market, under the policy background of “stability first”, how will public funds perform? Will we get together again? Who will be the “king of the track”?
steady word head
At the end of December 2021, Yi Huiman, chairman of the CSRC, said in an interview with Xinhua news agency that in 2022, the CSRC will focus on two key words, such as “stability first” and “tackling key problems in reform”, and put forward the working principle of “three stability and three progress”.
In terms of “stability” of the market, Yi Huiman said, “we will take comprehensive measures with relevant departments to promote the smooth operation of the market and resolutely prevent big ups and downs and urgent ups and downs”. In terms of policy “stability”, we will carefully evaluate the conditions and timing of the introduction of major policies and measures in the capital market, take the initiative to strengthen communication with the market, and adhere to standing first and then breaking, steady and steady. In terms of expected “stability”, we will actively strengthen policy coordination and information sharing with relevant departments, launch more policies and measures conducive to stable growth and stable expectations, and carefully introduce policies with contraction effect to prevent individual correctness and synthetic fallacies.
Generally speaking, the above statement of the CSRC has both constraints and imagination.
As for the central bank, the working meeting held at the end of December 2021 proposed that “prudent monetary policy should be flexible and appropriate” in 2022, which is similar to the setting tone of the same period last year (“prudent monetary policy should be flexible, accurate, reasonable and appropriate”), but the difference is that, This time, it is clearly proposed to “comprehensively use a variety of monetary policy tools, maintain reasonable and sufficient liquidity and enhance the stability of total credit growth”. After the main tone was determined, the market’s concern about liquidity was greatly alleviated.
Both the statement of the chairman of the CSRC and the tone of the central bank’s work meeting are the implementation of the spirit of the central economic work conference held in mid December 2021. The meeting once again made it clear that “adhering to economic construction as the center is the requirement of the party’s basic line” and required that “economic work should be stable and seek progress while maintaining stability… Policy force should be appropriately advanced” in 2022.
For public funds, under the constraints and guidance of the above policy spirit and relevant statements – expectations related to policy and capital, it is undoubtedly necessary to carefully consider what investment strategy should be adopted in 2022.
Will the rally repeat itself?
So, will the high-profile public offering group holding market in 2021 repeat?
From the specific performance of individual stocks, the deep public offering seems to be inconsistent with the “stability” spirit of the CSRC to “prevent big ups and downs and urgent ups and downs” – although there is no clear quantitative standard and there is room for discretion.
On the first trading day (February 18) after the Spring Festival in 2021, when the Baotuan market reached its climax, Kweichow Moutai Co.Ltd(600519) – the largest Baotuan stock – the share price hit a historical record of 2627.88 yuan, driving the Shanghai stock index to the highest record since August 2015 (3731.69 points). Then, the Baotuan market collapsed rapidly. After 13 trading days, that is, on March 9, Kweichow Moutai Co.Ltd(600519) fell to 1882.46 yuan, while the Shanghai index fell to 3328.31 points, with interval amplitudes of 29.98% and 11.04% respectively.
In fact, the amplitude of the Shanghai index in 2021 was only 12.06%, the lowest in history.
If the time is extended to the whole year, the 50 stocks with the largest market value of public positions at the beginning of 2021 also have the lowest amplitude of 34.49% ( Citic Securities Company Limited(600030) ), the highest amplitude of 136.79% ( Ganfeng Lithium Co.Ltd(002460) ), and the maximum pullback range is – 19.07% to – 58.47%. In terms of market value changes, at the end of 2021, the total market value of the 50 stocks was 18.38 trillion yuan, a decrease of 970 billion yuan over the beginning of the year, with a shrinkage of 5.01%, outperforming the Shanghai Composite Index and the Shenzhen Composite Index (an increase of 4.80% and 2.67% respectively in the same period).
Many retail investors who copy the public offering operations, especially the heavy positions of “public offering group shares”, have had poor earnings in the past year. Some media quoted insiders of a securities firm as saying that 78% of shareholders recorded negative returns in 2021.
In fact, even for the public funds involved in the group, there are not a few whose performance has suffered a significant pullback.
For example, several products managed by Wu Chuanyan, such as Hongde Fengrun three years (008545. Of), Hongde Fengze three years (501071. Of), Hongde foresight return (001500. Of) and Hongde Zhuoyuan (010864. Of), dragged down the performance due to heavy positions in Jiangsu Hengrui Medicine Co.Ltd(600276) , Foshan Haitian Flavouring And Food Company Ltd(603288) and other conglomerated stocks. According to wind information, the maximum pullback of these funds in 2021 was – 10.81% to – 28.38%, and the annual performance was – 12.81%, – 14.15%, 0.49% and – 18.16% respectively; The maximum pullbacks of Jiangsu Hengrui Medicine Co.Ltd(600276) and Foshan Haitian Flavouring And Food Company Ltd(603288) in the same period were – 52.72% and – 47.49% respectively, with increases of – 45.28% and – 31.45% respectively.
Ruiyuan growth value (007119. Of) managed by Fu Pengbo also suffered a large pullback due to heavy positions in public offering group shares such as Luxshare Precision Industry Co.Ltd(002475) , Wuliangye Yibin Co.Ltd(000858) . The maximum withdrawal of this fund in 2021 was – 18.28%, and the performance during the year was 2.61%; The maximum pullbacks of Luxshare Precision Industry Co.Ltd(002475) and Wuliangye Yibin Co.Ltd(000858) in the same period were – 47.83% and – 43.14% respectively, with increases of – 12.12% and – 22.97% respectively.
According to the research report released by Soochow Securities Co.Ltd(601555) , at least as of the last few weeks of 2021, “public offering group holding is weakening and there is no consistent style choice”, and the group holding sign is still not obvious.
who will be the king of the track?
If the structural market will continue in 2022, who will be the king of the track?
The king of the track in the past two years is undoubtedly new energy. The growth of CSI Xinneng index in 2020 and 2021 reached 105.29% and 49.35% respectively. Six ETF funds and one index enhancement fund tracking the index brought rich returns to the holders.
The momentum of new energy vehicles is no less impressive. The growth of CSI new energy vehicle index in the past two years reached 101.83% and 42.02% respectively. The performance of four ETF funds and five index funds tracking this index also hit more than 80% of public offering products in the same period.
Can this momentum continue for another year? Although the policy is friendly, for example, the central economic work conference clearly proposed “to correctly understand and grasp carbon peak and carbon neutralization”, and the central bank work conference also said “create carbon emission reduction support tools and set up special refinancing to support clean and efficient utilization of coal”, but can the performance growth of component stocks keep up with the rise of valuation level? From the valuation level, at the end of 2021, the PE (TTM) of CSI new energy index and CSI new energy vehicle index were 57.62 times and 107.79 times respectively, and the median of the past five years were 38.98 times and 39.66 times respectively.
However, from the data of product declaration, the fund company is still optimistic about the new energy track. According to wind information, as of January 4, 14 new energy theme funds were being declared and 2 were being issued.
As for the track of science and innovation, specialization and innovation, high-end manufacturing, consumption, medicine, cycle, big finance and so on, many securities companies, public offering and private investment experts are also optimistic.
Some fund managers believe that the structural market in 2022 “will probably converge” and “the style will be more balanced”. For example, Han Chuang, manager of Dacheng state-owned enterprise reform fund, said: “the importance of stock selection has further increased in 2022. Relying on betting on a certain track to obtain huge excess returns may not work in the new year. Only through meso and micro research and selecting high-quality stocks can we obtain good returns sustainably.”
(source: securities market weekly)
