2023 is coming to an end, the current market has intensified, and investors' risk appetite has increased significantly weaker than expected. The end of the year and the beginning of the year will be the key time point for the release of a new round of policy signals, which is crucial for investment. How do you view short-term, medium- and long-term investment opportunities?What are the factors that affect the trend?Recently, Penghua's first-class fixed income investment experts have expressed their investment thoughts, and it is expected that the follow-up bond market may be maintained first, and if the capital side turns loose, it may bring investment opportunities**The current valuation level is generally low, and the risk of continuing is small;The cost performance of the convertible bond market has been significantly improved, and it has begun to have allocation value.
The yield curve remains flat, taking advantage of the downside opportunities at the short end
Observing the core management team of Penghua Fixed Income, many members have been in the industry for more than 10 years, Zhu Song is an investment research veteran who has been in the industry for more than 15 years, and is currently the general manager and manager of Penghua's ** bond investment department, focusing on the first-class bond base for a long time, and the "old" bond base Penghua industrial bond is its representative work;Liu Tao is a representative of the strength of the Mesozoic generation who has been in the industry for more than 10 years, and is currently the general manager and manager of Penghua's ** Bond Investment Department II, and has shaped many high-quality products such as Penghua Fenglu and Penghua Double Quarter Enjoy 180 Days in the field of pure bonds. In the outlook for the bond market in December, Zhu Song and Liu Tao believe that the current bond yield curve is likely to remain flat, and it is recommended to focus on the policy tone at the end of the year.
Zhu Song said that in terms of macroeconomy, the annual GDP growth rate is more likely to complete the set target of 5%, but the recent PMI, real estate and other data trends are weak, and the economy is still under downward pressureAt the policy level, the tone of the economic policy set by the first economic work conference before the end of the year is worthy of market attention, and the fiscal and monetary policies may be further strengthened in the future.
In the bond market, the relationship between supply and demand of certificates of deposit is still tight, the interest rate of certificates of deposit is still under upward pressure, the fundamentals are supportive, the upside of long-term interest rates is limited, and the yield curve may remain flat in the short term.
Talking about the current and subsequent opportunities and risks in the bond market, Liu Tao pointed out that the economic data in November was weaker than the previous month and lower than seasonal. Towards the end of the year, economic data and inflation are not expected to disrupt the bond market by the end of the year. Since November, the core factor affecting the bond market is the fluctuation of funds, in the context of the issuance of ** bonds, the banking system's excess reserve rate remains low, and the central bank has always maintained a steady and precise monetary policy orientation, in the middle of the net investment of 600 billion MLF to meet the capital needs of the banking system, while daily operations also pay attention to prevent capital idling. The overall interbank capital situation shows increased volatility and stratification, which is expected to last until the end of the year. Approaching the annual economic work conference, the market is paying close attention to key data such as next year's growth target and deficit ratio and the path to achieve it, and it is expected that the expectation of policy will become the core influencing factor of the bond market in December together with the funding rate. Due to the high funding rate, the yield curve is currently extremely flat, and the short-term downside opportunity can be taken advantage of.
**The valuation is generally low, and the cost performance of convertible bonds has improved
Wang Shiqian and Fang Chang are also two representatives of the Mesozoic strength in Penghua's fixed income team, Wang Shiqian is known as a "fixed income +" investment expert, and is currently the general manager and manager of Penghua's ** multi-asset investment department, and Penghua's convertible bonds are its representative worksFang Chang is currently the deputy general manager and manager of Penghua's ** multi-asset investment department, and his management of pure debt ** Penghua Fengheng and Penghua Fengxiang is quite recognized by institutional investors.
Looking ahead, Wang Shiqian believes that in the bond market, the current macro economy has shown signs of stabilization, but in the short term, the upward elasticity is insufficient, and the medium and long-term yields are difficult to rise sharply. In terms of the market, the current valuation level is generally low, and the risk of continuing is small, and the domestic macro economy is constrained by the weak real estate industry, and there may still be a lack of upward elasticity in the short term, and the economic recovery may need to wait for 2024;The market's expectation that the Federal Reserve will cut interest rates for the first time in 2024 has been advanced from June to March 2024, which may form a catalyst for the domestic market. In terms of structure, we are relatively more optimistic about the technology and pharmaceutical tracks, mainly because the industry fundamentals are low in correlation with traditional macro demand, and the decline in U.S. bond yields may boost valuations. In terms of the convertible bond market, the current valuation quantile has dropped from more than 90% this year to about 70%, and the cost performance has been significantly improved, and it has begun to have allocation value.
In Fang Chang's view, the domestic economy is currently in a critical period of switching between old and new kinetic energy, high-end manufacturing and technological innovation are showing a sustained growth trend, and consumption and exports remain relatively resilientThe traditional economic direction, benefiting from the relaxation of chemical debt and real estate, is expected to stabilize step by step. In terms of the bond market, after the adjustment since September, the short- and medium-term high-quality credit bonds have a good allocation value, and have gradually entered the layout window period, the probability of maintaining abundant liquidity in the money market is still high, and the overall risk of the bond market is controllable. In terms of the equity market, it is currently at the bottom of sentiment and low valuation, gradually gathering momentum and breeding momentum. Considering that the external Fed's interest rate hike is nearing the end, the Sino-US relationship is improving in stages, the effect of internal stable growth is gradually emerging, and the medium and long-term funds such as social security and insurance are gradually entering the market, the equity market sentiment and valuation are expected to gradually recover.
The bond market may be ** in December, focusing on opportunities after volatility
The Penghua fixed income team attaches great importance to talent training, and has established a perfect talent echelon training system, and a group of new generation managers have gradually emerged in recent years. Deng Mingming has 9 years of experience, and is currently the assistant general manager and manager of Penghua ** bond investment, with rich experience in the management of fixed bond products, and Penghua Yongan 18 months is his representative workWang Kangjia has 6 years of experience, and is currently the manager of Penghua's cash investment department, with products under management covering short-term bonds and short-term bonds, Penghua Wenli short-term bonds and Penghua 3-month short-term bonds are his representative works.
Deng Mingming said that the bond market could remain neutral in December. The problem of high repo rates seems to be a medium-term problem, which has a lot to do with the bank's own negative behavior and the central bank's liquidity supply method. However, open market operations are also trying to keep the repo rate at a reasonable level, which may lead to high short-end interest rates, and the long-end will have little room to fall sharply until there is a signal of further economic expectations. Although the average duration of institutions is at a low level, the leverage has rebounded, the overall risk of the bond market is not large, and the interest rate may be out of the range.
Wang Kangjia pointed out that the bond market is expected to be weak in December, focusing on the capital side, central bank operations and the economic work conference. Considering the high issuance pressure in the primary market, the capital side may still be disturbed, and the bond yield curve may remain flat.
*The Economic Work Conference will be held soon, focusing on economic objectives, monetary and fiscal policy tone, and trading opportunities after market volatility. Credit bonds are expected to outperform interest rate bonds, and credit spreads remain low. Considering the issuance of special financing bonds, the risk of urban investment bonds has been alleviated, the supply and demand pattern is better, and the rating spread is expected to continue to compressThe adjusted allocation value of bank Tier 2 capital bonds and perpetual bonds will gradually become prominent, and the portfolio will consider intervening at appropriate points.
This article is for reference only and is not intended as an investment basis, as there are risks in entering the market, and investment should be cautious.