The market's 'double bottom indicator' appears, and leading stocks such as 'picking up money' in consumption and the Internet
Red Weekly Special | Chen Haoyang
As of the close on October 19, the Shanghai Composite Index closed at 3,044.38 points, returning to the starting point of the 2015 bull market. The Hang Seng Index closed at 16,511.28 points, returning to before 2007. At the same time, the trading volume of the two markets is constantly approaching the level before the start of the big bull market, which reflects that the power of short selling is constantly exhausting and coming to an end.
According to the author’s observation, the emergence of the bottom of the secondary market is often accompanied by the “bottom” of macroeconomic and liquidity indicators. Now, these two indicators have a high probability of entering the bottom area. This may mean that the market has reached a good period for counter-cyclical layout.
At the same time, combined with the overall valuation level of the current A-share market and Hong Kong stock market, as well as the adjustment of many white horse stocks for more than a year, and the valuation level has returned to the situation a few years ago, the author believes that the previously unattainable consumption, medicine Most of the leading stocks in the fields of , Internet and other fields have been adjusted to a reasonable position. Therefore, you don’t have to bother to find the dark horse stocks, you can just pick up the money and the white horse stocks.
Real estate worst may be over
Economic and liquidity bottom confirmation
There are usually two leading indicators for the market to come out of the bottom. One indicator is the bottom of the macro economy. In China’s economic structure, the total value of the real estate industry chain ranks first, accounting for more than 20% of GDP. Since the second half of last year, the in-depth adjustment of real estate has started. The top 100 real estate companies in the industry have defaulted on their debts. This is not only a major reshuffle in the history of China, but also in the history of the global economy. At the same time, due to the impact of the epidemic for three consecutive years, all walks of life have been negatively affected to varying degrees.
But now I think the worst may be over for real estate and the economy as a whole. This judgment comes from the policy support of the country to stabilize the broader economy. For example, in the real estate sector, relevant bailout policies, including phased adjustment of differentiated housing credit policies, have been continuously launched recently. Real estate companies and the market are expected to gradually stabilize and even surpass the current level. bottom. The same is true for the macro economy. While we see the real estate industry slowly recovering, we also need to see some bright spots in the industry, such as the automobile industry, which is second only to real estate in overall scale. In terms of exports, China’s auto exports are particularly strong. From January to August this year, it increased by 44.5% year-on-year to 1.91 million vehicles. This data has surpassed Germany and is second only to Japan, the world’s largest exporter. This reflects the continuous upgrading of China’s high-end manufacturing. We have reason to believe that China’s economy will gradually enter the recovery channel.
Another indicator is liquidity (valuation) bottoming out. Of course, liquidity is also related to real estate. In the past, deleveraging had a large negative impact on the liquidity of the entire market. First of all, everyone is afraid to take out loans. In addition, many industries are affected by the epidemic, and they are afraid to invest even after taking out loans. But the bottoming out of real estate now also suggests that liquidity may be entering a bottom.
In addition, at the national level, financial institutions such as banks are actively encouraged to increase their lending efforts. For example, in terms of medium and long-term loans in the manufacturing industry, the regulatory authorities recently required 21 national banks to add an additional 1 trillion to 1.5 trillion yuan from August to December on the basis of adding about 1.7 trillion yuan from January to July. Wait. This will inject more liquidity into the Chinese economy and the market.
The market is fully adjusted in two dimensions
It’s time to invest counter-cyclically
From the perspective of time and space, the current adjustment of China’s stock market is relatively sufficient. For example, from the peak on February 18 last year to October 12 this year, the Shanghai Index has fallen by more than 17.22% in more than a year and a half, while the CSI 300 has fallen by 34.84%. Hong Kong stocks fell even more. For example, the Hang Seng Index fell from a high of 31,183.36 to a low of 16,438.60 today, a drop of 46.27%.
According to the author’s observation, the Hong Kong stock market has experienced 7 rounds of large-scale bear markets (with a drop of more than 30%) in the past 30 years, with an average drop of about 48%, and is now in the 8th round of bear markets. Among them, in the past 30 years, there have been three rounds of declines larger than the present. The first was the Asian financial turmoil in 1997; the second was the bursting of the Internet bubble and SARS in 2000; the third was 2008 The subprime mortgage crisis. However, this round of bear market is different from the past in that the premise of the previous big falls was that the stock market rose sharply, and in the past 10 years, the overall rise of Hong Kong stocks was weak. Therefore, from the perspective of valuation, the current dynamic price-earnings ratio of the HSI is 8.07 times and the price-book ratio is 0.80 times, which are lower than its historical average and close to the level of the lowest point in 2008.
Of course, there are also many positive factors brewing in the Hong Kong stock market. For example, 60% to 70% of the Hang Seng Index is now made up of mainland companies. With the stabilization of the mainland economy, the overall profitability of the Hong Kong stock market will also increase. More importantly, the Hong Kong stock market is a fully open market, with a high proportion of foreign capital. The previous weak trend has a lot to do with the continuous withdrawal of capital by many institutions in Europe and the United States. But at the same time, southbound funds are constantly flowing into the Hong Kong stock market. Data show that since the opening of the Shanghai-Hong Kong Stock Connect in 2014, the net inflow of southbound funds into the Hong Kong stock market has reached 2.44 trillion Hong Kong dollars, equivalent to 2.10 trillion yuan, accounting for 2.10 trillion yuan in Hong Kong stocks. The total market value accounted for 5.72%. This does not include the situation in which domestic institutions directly purchase Hong Kong stocks in Hong Kong dollars. If this part is included, the proportion of mainland funds in the Hong Kong stock market is even higher.
In terms of trading volume, mainland funds are more active in the Hong Kong stock market. Taking the performance of the Hang Seng Index in recent months as an example, according to the author’s observation, the average daily turnover of the Hang Seng Index in August and September was 91.972 billion yuan. The average daily turnover was 72.074 billion yuan. In contrast, the turnover of mainland funds accounted for more than 20% of the Hong Kong stock market.
What needs to be known is that when the market had a big bottom in 2011 (there was no southward capital), the average daily turnover of the Hong Kong stock market was also around 70 billion yuan. This means that the current market sentiment has also reached its lowest point. And the assets at that time cannot be compared with the current assets, because the past 10 years have been continuously releasing water to fight inflation, and the assets in the past will increase in value.
So, now is probably a good time to lay out. In the author’s opinion, if you want to make big money, you must buy at the bottom. This is the core of counter-cyclical investment. As for when the bull market will come, according to the experience of the past 10 years, from the big bull market in 2014 to 2015, it is likely to usher in a wave of large market doubling levels in the next 2 to 3 years. A bull market, that is, from the current 3,000 points to 6,000 points.
New Energy Opportunities in ToC Vehicles
The strategy is to go long on A-shares and short on U.S. stocks
From the perspective of investment opportunities, the author believes that the overall popularity of the new energy sector is still there, but its overall valuation level is also clearly on the upper track of the historical center, making investment difficult. The author’s current main line of investment is concentrated in the field of complete vehicles, because most of them, including batteries, photovoltaics, materials, etc., are ToB companies, and it is the complete vehicle that is most likely to make a ToC brand. As a brand, there is a consumer premium, which can occupy the minds of consumers. It is difficult for batteries, etc. to do this, and from a long-term perspective, their cycle attributes are also relatively strong. In addition, China’s new energy vehicles are now in a breakthrough stage, and the possibility of finding good targets is also higher.
However, because of the high prosperity of the whole vehicle, there are many participants, and many companies have also given higher valuations. Therefore, at the operational level, the strategy chosen by the author is long-short pairing, that is, to be long on A-share new energy vehicles and short on US stocks. Because if you do more unilaterally, when the industry peaks, investment will also fluctuate. For example, BYD, which the author is long, has experienced a certain correction with the recent reduction of Buffett’s holdings. However, since the short-selling part contributed more profits, the author’s overall portfolio is still profitable.
In mid-April last year, the author published in “Red Weekly” that the winner of the high-end model is Tesla, and the winner of the next model is BYD’s point of view. Standing at the current point of time, this point of view remains unchanged, and Tesla is also We are one of the few U.S. stock targets that we have not shorted. Although Tesla has a certain bubble at present, its potential is still worth looking forward to from a fundamental point of view, and the author is mainly shorting some new car-making forces, including “Wei Xiaoli” and so on. Because in the author’s opinion, their development potential is not as great as the market imagines, but they are given a higher valuation.
In addition, the author thinks it is worth paying attention to some traditional OEMs in China. They are all actively transforming into new energy vehicles, and their related export data are also showing explosive growth, but on the contrary, their valuations have not risen much in this wave of new energy, indicating that the market is still Traditional car companies give valuations.
In the fields of consumption, medicine, Internet, etc.
It’s easier to pick up cheap chips
Relatively speaking, the author believes that it will be easier to make money in the fields of consumption, medicine, and the Internet of Hong Kong stocks. Because with the continuous adjustment of the market, the leaders in these fields have become the main force leading the decline, but on the other hand, these fields are still highly likely to be indispensable in the future. Since it is indispensable, the “pit” that is now smashed by the market is likely to be filled in later, that is, valuation repair. And from the perspective of the capital market in the past few decades, these are also industries that can continue to export big bull stocks.
Especially some time ago, the drama of “killing” a white horse stock in one day is constantly being staged. Most of the leading stocks have even been adjusted for more than a year, and there are opportunities to pick up money everywhere. A particularly small dark horse. In particular, some of these asset-light industries (including insurance, property management and other industries) may have higher returns.
On the whole, when the adjustment range and time length are in place, it is a good time to gradually deploy. For example, Alibaba, the Internet leader in Hong Kong stocks, which adjusted relatively early, started its adjustment when Ant Financial failed to go public. It has fallen by nearly 80%, and it has taken more than a year and a half. The adjustments in these two aspects are relatively sufficient. .
Of course, the bottom that these leading companies are now at is probably not an absolute bottom, and there is still the possibility of continuous adjustment in the future. For example, at the end of the first quarter of this year, Tencent fell below 300 Hong Kong dollars per share for the first time. Most of the market believes that this is the bottom. However, Tencent’s recent share price has broken through this bottom again. As of October 12, the intraday price hit 248 Hong Kong dollars per share new low. Therefore, the author suggests that companies that invest in such oversolds can gradually increase their positions, slowly adding from left to right.
More importantly, the author believes that the unfavorable factors of Internet leaders like Tencent and Ali have been fully reflected in the stock price. Whether it is platform anti-monopoly policy or the macro economy, the unfavorable news for Internet leaders is changing for the better, and their expectations are bound to become optimistic.