Since the end of September, stimulated by many favorable policies, the market has continued to rise sharply, and the market is still hot after the National Day holiday. What are the characteristics of this round of market interpretation, and what sectors are worth paying attention to? What are the strategies for indexed investment? We invited the index fund managers of Penghua Quantitative and Derivatives Investment Department to answer questions for the majority of investors, let's take a look.
Su Junjie
Penghua Quantitative and Derivatives Investment Department
General Manager/Fund Manager
There may still be room for improvement in domestic and foreign positions, and we should pay attention to high-beta and broad-based varieties such as Kechuang 100
A large amount of money may be waiting to open a position or enter the market
● Foreign capital has continued to flow out in the past year, and the short-term replenishment is still insufficient.
●New funds may be forced to build positions quickly to bring incremental funds.
●Under the amplification effect of self-media, retail investors have accelerated the pace of entering the market. According to the survey, the number of brokerage account openings has surged by 4-6 times recently, and the overall number of new account opening investors is mainly young people, with the post-85s and post-90s as the main force, and the number of post-00s accounts has increased significantly.
In the short term, there may be further upward impulses
● During the National Day period, Hong Kong stocks and overseas Chinese stocks performed well. During the National Day holiday, both Hong Kong stocks and U.S. stocks recorded large gains. Wind data shows that Hang Seng Technology rose 10%, the Hang Seng Index rose 7.6%, and A50 futures rose 12%, and A-shares are expected to make up for the rise quickly after the holiday.
●Overseas funds and products may flood into the A-share market, which has a stronger carrying capacity, on the post-holiday trading day. Overseas A-share products have recently received a large number of subscriptions or capital inflows, with more than $2.6 billion subscribed for just two products, and A-shares will be passively bought at the opening after the holiday.
●Pre-holiday vacation funds are expected to quickly fill positions after the holiday. Before the holiday, some institutions were relatively cautious and failed to quickly increase their positions. The market rose too fast before the holiday, the increase was too large, and the vacation of some institutions and managers near the holiday led to the failure to increase the position in time, and it is expected to quickly replenish the position after the holiday.
● The market is making a rational choice based on bull market expectations - choosing a high beta direction or leveraged products. Under the limited position, priority is given to the allocation of highly elastic directions and varieties.
Catalyzed by sentiment, the high-beta sector may become the preferred direction for capital allocation. This round of incremental funds came from low-position private equity and floating capital, overseas funds and individual investors. Its own aesthetics and preferences will shape the short-term market style, and the direction of more adequate adjustment and greater flexibility will become the preferred direction of related funds. The broad-based indices with the highest returns and the best performers in the history of the bull market are all high beta varieties. The Science and Technology Innovation Growth Small Cap Broad-based Science and Technology Innovation 100 is expected to lead in this round, and the Innovation 50, as the most favored index for foreign investors, is expected to achieve good returns. The Kechuang 100 is highly elastic and aggressive, and is the preferred target for the bottom of the market to repair the market. In the stage of repair and rise after the market bottoming out since 2020, the rise of the Kechuang 100 is in a leading position, whether it is the market repair in mid-2020, or the market decline and repair in mid-2022, as well as the phased repair of the market in the fourth quarter of 2023.
Long Chen
Penghua Quantitative and Derivatives Investment Department
Deputy General Manager/Fund Manager
Short, medium and long-term resonance, optimistic about the long-term growth of the defense sector
The second half of 2024: optimistic about the inflection point of orders in the fourth quarter
●Order dimension: the worst stage of the industry's prosperity has passed, and orders are expected to recover in the second half of the year, and the fourth quarter ushered in the climax of this round of orders;
●Financial report dimension: the low point of performance growth in the first quarter, the quarter-on-quarter improvement in the second quarter, and the accelerated improvement in the third quarter, confirming the turning point of the business cycle;
Market dimension: the inflection point in mid-April, the second bottom in July; The spiral rose in the third quarter, and the slope was slow; In the fourth quarter, orders and performance resonate, and if the market cooperates, it is expected to come out of the main rising wave.
2025: Financial reports continue to improve, "15th Five-Year Plan" expectations
Under the low base effect, the financial performance is expected to continue to maintain medium and high-speed growth; Under the combined effect of the end of the "14th Five-Year Plan" task and the pre-landing of the "15th Five-Year Plan" demand of middle and upstream enterprises, the industry's prosperity will rise significantly in 2025.
The next 3-5 years: the centennial goal of the founding of the army, military and civilian two-wheel drive
Under the traction of the centennial goal of the founding of the army and strategic emerging industries such as commercial large aircraft and commercial aerospace, the industry has high certainty of demand and broad growth space. Driven by the concept of high-quality development, enterprises with large demand space, good industrial pattern and outstanding operating capabilities are expected to continue to gather capital consensus as core assets.
Luo Yingyu
Fund Manager of Penghua Quantitative and Derivatives Investment Department
Thematic investment in the TMT sector is likely to be active again and again in the fourth quarter
Core Assets:
In the past few years, the overall performance of the TMT sector has been relatively sluggish, with a relatively large downward range, and the overall valuation is mostly at the bottom of history. As the rally unfolds, well-corrected assets, especially core assets, are expected to recover.
M&A:
On September 24, 2024, the China Securities Regulatory Commission (CSRC) issued the "Opinions on Deepening the Reform of the M&A and Restructuring Market of Listed Companies", which is known as the "Six M&A Measures", which aims to further stimulate the vitality of the M&A and restructuring market, optimize the restructuring review process, improve the efficiency of restructuring, and help economic transformation and upgrading.
Thematic Investments:
In the remaining 3 months of the second half of the year, there are many TMT-related events, and in the environment of increased risk appetite, thematic investment may be repeatedly active, including artificial intelligence, domestic computing power, HarmonyOS operating system, Tesla conference, etc.
Zhang Yuxiang
Fund Manager of Penghua Quantitative and Derivatives Investment Department
The policy catalyzed the value revaluation of the consumer sector
Around August, the state has also introduced relevant policies to stimulate consumption, such as "Several Measures to Support Large-scale Equipment Renewal and Consumer Goods Trade-in", and the overall arrangement of about 300 billion yuan of ultra-long-term treasury bonds to support the relevant replacement.
1) Hit the pain point: We have repeatedly pointed out in the early stage that the medium and long-term growth of consumption is mainly related to future income expectations and consumer confidence. Compared with the previous policies, this round of policies not only repeatedly mentioned the words "promote employment and consumption", but also put forward specific measures such as "promoting the private economy" and "promoting the income of low- and middle-income groups".
2) Be more pragmatic: We believe that the best way to stimulate consumption in the short term is not to "shout slogans" or distribute cash, but to issue consumption vouchers. Because if consumers are pessimistic about future expectations, they may not respond much to the call to boost consumption, and consumers are more willing to save cash after handing out cash. The issuance of consumption vouchers makes consumers feel that they have received real benefits, which can achieve the purpose of stimulating consumption in the short term.
3) Combination of short and long: The issuance of consumption vouchers is essentially to advance future consumption, and the issuance of consumption vouchers alone may have a certain siphon effect, which may bring short-term prosperity; Only by promoting employment, stabilizing income, and promoting the development of private enterprises can we bring about the recovery of long-term consumption. We believe that this round of policies is a combination of short and long, and there is a degree of restriction.
Investment dimension: It is still in the stage of rapid growth, and it is recommended to actively embrace it.
The investment dimension generally has three stages, one is to buy expectations, the second is to buy the expected landing, the third is to buy the performance realization, the three points in time the winning rate is different, the yield is also different, the first stage, buy the expectation is pure left, the winning rate is high, but the increase is uncertain, the time dimension, the second stage, buy the expected landing, the winning rate is also very high, the increase is the largest, the time is short, the third stage, buy performance, the winning rate is uncertain, this time is the longest, the increase is the most uncertain, if the performance comes out there will be enough right time to increase the position.
In this policy shift, we believe that market expectations are insufficient, and the timing and magnitude of the policy pivot far exceed investors' expectations. We expect to be in a spurt for now, with sentiment high and valuation repair underway. As the recovery gradually progresses, the consumption data gradually improves, and the performance of listed companies will usher in an upturn, and the consumer sector is expected to usher in a long-term trend rise. At present, the valuation of the sector is still low, and it is recommended to actively layout.
Yan Dong
Fund Manager of Penghua Quantitative and Derivatives Investment Department
Macro reversal, low-level cycles, and investment opportunities in the new energy sector are worth paying attention to
Commodities: The overall rebound is an opportunity
Since June, commodities have ended the year's rally and fallen rapidly, due to the shattering of optimistic expectations for the global economic recovery, and the macro logic has quickly switched from the "reflation trade" to the "Trump trade" and then to the "recession trade".
Wind data shows that after more than two months of decline, the commodity index fell by more than 10%, the price in a lot of panic, the inflation expectation indicator implied by the US Treasury has fallen to the level of about 2%, many commodities fell below the lows in the middle of last year, and the overall commodity has returned to a very supportive position. As the Fed's policy target shifts from "anti-inflation" over the past two years to "normalization" (balancing inflation and employment), fears of a recession in the United States have subsided for the time being, domestic policy expectations are showing signs of restarting, and commodities are expected to stabilize and rebound.
Photovoltaics: Photovoltaic installations at home and abroad are resonant, and prices are expected to stabilize or even rebound
Terminal demand: Domestic PV installed capacity + overseas module and inverter export data show that the world is gradually entering the peak demand season. Emerging markets in Asia, Africa and Latin America have entered the era of electrification, and the increase has exceeded expectations, offsetting the negative impact of United States policy disruptions, and United States waiting for interest rate cuts. The European market is also obviously recovering, and balcony PV and rooftop distributed in major countries such as Netherlands, Germany, and France are improving month-on-month. The global PV installed capacity forecast was raised to 517GW (originally forecast 480GW).
Price judgment: the current industry-wide loss, under the condition that the price remains unchanged, it is expected that the loss in the third quarter will be the same as in the second quarter, and the inventory loss will decrease. The industry took the initiative to reduce the start, and the shutdown began to occur. It is expected that the price drop in the Q4 industry will gradually stabilize and even rebound, and we are optimistic about the improvement of supply next year.
Lithium battery: profit differentiation accelerates the industry reshuffle
The bottoming rebound market may be being interpreted, and the valuation cost performance is gradually highlighted. Looking to the future, on the one hand, the demand for downstream power batteries and energy storage batteries is expected to maintain a high boom, and the midstream manufacturers with bottomed out profits under the elasticity of demand have greater profit expectation elasticity; On the other hand, the industry pattern has stabilized, and companies with stable profitability have upward valuation elasticity, and they are optimistic that the valuation of the industry leader will lead the sector to recover in the second half of the year.
Yu Zhanchang
Fund Manager of Penghua Quantitative and Derivatives Investment Department
We are optimistic about the long-term and sustainability of capital entry into the market, and help the valuation of the bank and securities sector continue to repair
The central bank has created new monetary policy tools to support the stable development of the stock market. The establishment of swap facilities for securities, funds and insurance companies will support eligible securities, funds and insurance companies to use their own bonds, stock ETFs, and CSI 300 constituent stocks as collateral to exchange high-liquidity assets such as treasury bonds and central bank bills from the central bank, which will greatly improve the access to funds and increase the holdings of stocks by relevant institutions. The funds obtained by institutions through this tool can only be used to invest in the stock market, and the scale of the first phase of swap convenience operation is 500 billion yuan, and the scale can be expanded according to the situation in the future.
The central bank will also create a special re-loan for stock buybacks and increase holdings, guide banks to provide loans, support listed companies and shareholders to repurchase and increase their holdings of shares, and promote listed companies to pay attention to market value and investor returns, which will help boost market sentiment.
The China Securities Regulatory Commission (CSRC) expressed its support for Huijin to increase its holdings in the capital market, and will issue policy opinions on medium and long-term capital entry into the market, further improve the relevant policy toolbox, and enhance strategic reserves.
The implementation of a package of monetary policy that exceeded expectations reflects the central government's determination to stimulate economic growth under the weak economic reality. From the perspective of bank fundamentals, the loss of interest margins is inevitable, but the magnitude is controllable (it is estimated that the two LPR cuts in 24 years and this package of policies have dragged down the 25-year interest margin by 11.5BP), and the policy itself takes into account the care of banks' net interest margins and capital. From the perspective of aggregates, the monetary policy package is conducive to improving the macro balance sheet and stimulating the improvement of aggregate demand, which is expected to be a certain degree of "volume compensation" for banks, and pro-cyclical sectors, including banks, are expected to make overall gains.
At present, the core of the fundamental blockage of the securities sector lies in market liquidity and market sentiment, and the implementation of policies will help the valuation performance of the brokerage sector to rebound at the bottom, and mergers and acquisitions related to market sentiment will be more favored by funds, further amplifying the transaction elasticity of the sector. The policy release sounded the horn, the incremental policy landing and continuous entry into the market is expected to continue to promote the valuation performance of the securities sector to repair, the market turnover rebounds more space, securities companies in the second half of the year for the performance base of the low point, optimistic about the performance valuation of the securities sector to boost the space.
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