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Original caption: Kong Lingfeng, Chairman of Xinran Investment: A-shares slow uptrend establishes that high-quality white horse pool is benign rise
Where will the market go in 2021? How long can the current active pool last? What are the subdivisions worthy of attention? This is an issue that worries investors.
Market volatility may increase in 2021
The continued slow uptrend of A shares is basically set
Compared to 2019-2020, the market may be more volatile in 2021 and the expected return will decline.
First, the structural sector opportunities in the last two years have been relatively clear and the index has also been relatively optimistic. The overall ratings of leading companies for high-quality track records and epidemic targets are relatively high, especially the increased risk. Appetite sparked by the relaxation of global liquidity in 2020, but the relative short-term space offered by the pool of high-quality assets is limited and investors are in higher demand for returns.
Second, with the popularization of the new crown vaccine, the rapid recovery in the real economy will inevitably lead to a tightening of global liquidity. The restorative growth of economic fundamentals determines the trend of long-term market stability, but the tightening of liquidity valuation of term assets High volatility, which may have a certain impact on short-term market trends.
Therefore, based on the current liquidity and fundamental analysis, we believe that the market will be more volatile this year, especially in the second and third quarters, which can be relatively cautious. At the same time, the expected return for the whole year will be decrease.
But in the medium and long term, I still have full confidence in equity assets, especially A shares. As China’s economy is the first to recover in the world, the epidemic has strengthened the international competitiveness of many domestic industries. , which amounts to a reform on the supply side of the world. With the gradual recovery of the world economy, several -Quality domestic companies will continue to benefit. In the next 2-3 year cycle, high-quality A-share listed companies will be relatively dominant high-quality assets among global assets.
At the same time, the A-share market is undergoing a series of institutional reforms, which have played an important role in ensuring the stable long-term operation of the market.
In terms of capital, although the liquidity margin is gradually shrinking, incremental funds such as storage and relocation of residents, new scale of public funds, housing and non-speculation housing, social maintenance of old funds on the market, management subsidiaries of Bank assets, and the continuous flow of foreign capital, continue to increase. The result is that the share of institutional investors continues to rise and the price of high-quality domestic assets will be more mature and rational.
Based on the above analysis, we believe that the market will enter a phase of liquidity and fundamental play in 2021. This phase will be more volatile and the expected rate of return will decrease compared to the previous two years. But in the medium and long term, we believe that the continued slow uptrend of A shares is basically established.
We are more optimistic about two directions in 2021. First, pro-cyclical sectors with improved supply patterns, such as high-end manufacturing sectors such as chemicals, household appliances, new infrastructure and automobiles; second, long-term high-quality leads such as new energy, artificial intelligence, semiconductors. The risk to be aware of is that the sectors that fully benefit from the epidemic may have some risk of a valuation drop after the promotion of the vaccine this year, such as some medicines and consumer products. Also, from a style perspective, small market cap targets can remain marginal or even penny stocks.
Not all groups are correct
But high-quality white horse is relatively benign
Baotuan is also a hot topic in the market. Baotuan originates from fundamentals and is not unique to A-shares. Mature capital markets, such as the United States, have been in this state for the past ten years. Our pursuit of fundamental gains is Reasonable and long-term. This is also our steadfastness. Optimistic about the core of the long-term market going forward.
We may recall that the 2014-2015 bull market was a bull market for small stocks and concept stocks, but today we look back at those bull stocks at first, but the actual logic and performance is very rare. Now look at most of There are no real fundamentals, so the bull market at that time could not be determined for a long time.
In the 2019-2020 bull market, the index’s sharp rise is driven by the leading white horse in the high-quality sector, and the performance and fundamentals of these companies continue to materialize. This increase is relatively benign, and there may be adjustment fluctuations during the period, and it is difficult There is a risk of losing control, after all, the fundamentals are excellent.
Therefore, we believe that this structural increase has a certain degree of sustainability. But we do not believe that all Baotuan is correct. For example, as mentioned above, Baotuan companies that have fully benefited from the epidemic or liquidity last year may be at great risk of losing their tokens in the later stage, and their stock prices are trending downward. long-term industry, valuations and performance growth. We remain strongly optimistic about the rapidly adapting company.
The fundamentals of leading companies continue to strengthen
Embrace high-quality companies and enjoy growth dividends
The A share market has changed a lot in recent years. The system is constantly improving and the market performance style is also constantly changing. For example, five years ago, the market was small and beautiful, but with the opening of the registry system, the fundamentals of leading companies continued to strengthen. Current valuations of large and small caps are completely opposite to those of five years ago. The market may prefer the deterministic premium over the right to truly enjoy the growth dividends of high-quality companies.
As the A-share market integrates with international standards, we may need to further understand the mature investment system. In this process, what we need to strengthen the most is the mindset, abandon short-term speculation or “catch bullish stocks” mentality, and based on a high degree of industry knowledge, find medium and long term. value investments.
Finally, I wish that all investors in the new year are not arrogant or impatient, grow their minds, become more stable in the investment and research system, and earn investment income that they can understand.
(Source: Stock Market Red Weekly)
