The author of this article |Dynamic analysis **Photo.com.
A-shares will usher in a turnaround in 2024
Looking back on the past 2023, against the backdrop of major changes unseen in a century, China's economy has experienced the pains of balance sheet repair and economic structural transformation in the post-epidemic era, especially the continued downturn in real estate and the prominent pressure on local financesThe renminbi has also experienced a sharp depreciation cycle during the year, and there has been a significant outflow of foreign capital under the situation of high US interest rates and widening interest rate differentials between China and the United StatesAfter a bleak 2022, the A** market will still perform poorly in 2023, especially the ChiNext index has come out of the five-year consecutive yin, as of December 20, 2023, the Shanghai Composite Index has **6 this year06%, Shenzhen Component Index **1686%, GEM refers to **23 during the year18%, all three indices are now the lowest points of the year**.
From the perspective of the rise and fall of industry sectors, media, communications, telecommunications operations, coal, oil and other sectors rose greatly, while tourism, aviation, real estate, wine, insurance and other sectors fell larger. On the whole, listed companies with high dividends, low valuations and high cash flows are favored, and bond-like assets are the direction sought after by the market when the economic situation is bad.
Of course, when there was no trend in the entire A** field, the concept stocks were wonderful, and ChatGPT, media and other themes performed prominently during the year. Another significant feature is that the public offering of heavy stocks is generally poor, and the public offering is once again significantly underperforming.
As of December 20, 2023, Kweichow Moutai, the largest in terms of market capitalization, fell slightly by 191%；China Mobile, PetroChina and CNOOC respectively during the year12% and 4192%, which is the most outstanding performance in the large market capitalization**, which exceeds the expectations of most investors, and there are very few that can outperform the three barrels of oil this yearThe four major banks of industry and agriculture are respectively18% and 2233%, which is very different from the performance of other joint-stock banks, such as China Merchants Bank, which was 23 during the year82%。Insurance stocks underperformed, with Chinese Life and Ping An each **25 during the year47% and 1373%。
Although the overall performance of A-shares in 2023 is poor, looking forward to 2024, a turnaround is coming. Internationally, the US dollar has begun to enter a cycle of interest rate cuts, which is diametrically opposed to the two consecutive years of bear bear in A-shares under the background of the US dollar interest rate hike cycle in the past two years, and the outflow of foreign capital will be greatly reduced, and it is not even ruled out that it will begin to flow into the A** market in 2024.
The friendship of the policy side is beyond doubt, from the Politburo meeting on July 24 to activate the capital market, to the year-end economic meeting, proposed to promote stability, first establish and then break, from the launch of trillions of special treasury bonds in October, to the final bastion of real estate in Beijing, Shanghai, Guangzhou and Shenzhen, all macro policies are becoming friendly to the first country, and the leverage of the first fiscal in 2024 may become the key to the economic breakthrough, thereby driving China's economy to bottom out.
The fundamentals of listed companies have also begun to bottom out, and the year-on-year growth rate of listed companies' profits in the third quarter of 2023 has turned from negative to positive, and the economy has begun to recover from the perspective of electricity consumptionOf course, investor confidence is still insufficient, and the public offering is also facing redemption pressure brought about by negative returns for two consecutive yearsBut everything is a cycle, and the end of a bear market is the beginning of a bull market, and we are looking forward to 2024.
Let's take a look at the investment strategies of mainstream institutions in 2024.
Li Qiusuo, chief analyst and managing director of the domestic strategy department of CICC's research department, believes that from the end of the year to next year, the direction and intensity of domestic policies and reforms, the process of economic recovery, and the inflection point of overseas U.S. bond interest rate trends may have an impact on the rhythm of A-shares, and it is expected that the index performance may stabilize before and then rise in 2024.
Qin Peijing, chief strategist of CITIC**, said: "In 2024, market confidence will reunite, and changes in investor behavior will drive valuation repair to be the main theme of the A** field, and it is expected that the first half of the year will be more elastic and the second half of the year will be differentiated." ”
In 2024, with the moderate recovery of the domestic economy, corporate earnings will rise, and the improvement of the internal and external environment will drive the capital side to a moderate net inflow, so that A-shares will rise, and the main broad-based index is expected to be small.
Chen Guo, chief analyst of China Securities Construction Investment** strategy, has a more positive view, he believes that A-shares are expected to enter a small bull market in 2024, mainly due to two major factors, one is the obvious improvement of global macro liquidity, and the other is that the domestic stable growth may exceed expectations, which will promote the positive growth of A-share earnings in 2024.
Since the Fed started the current round of interest rate hike cycle in March 2022, as of July this year, it has raised interest rates 11 times, with a cumulative increase of 525 basis points. However, on December 13, 2023, at the Fed's last interest rate meeting of the year, the target range for the US dollar interest rate remained at 525% to 55% is unchanged. This is the third consecutive pause in interest rate hikes by the Fed since its September meeting. Powell made it clear at the press conference after the interest rate meeting: "The issue of interest rate cuts has entered our field of vision."
Hong Hao, chief economist of Sirui Group, believes that the Fed's "** turn" is a historic turn. Hong Hao found that over the past 36 months, as the Federal Reserve has continued to raise interest rates, the yield of US Treasury bonds, the benchmark for the global risk-free yield, has soared, suppressing the pricing of global risk assets, including China**, which is clearly reflected in the trend of A-shares and the trend of US Treasuries in the past period. Now that the Fed is poised to cut interest rates, the situation will reverse next year, and risk assets, including China, will naturally recover as Treasury yields fall.
The global political and economic environment in 2024 is still challenging, with as many as 76 countries and regions in 2024 ushering, including important countries such as the United States and Russia. There are still great uncertainties about how the current Russia-Ukraine war and the Palestinian-Israeli conflict will evolve in the future. These factors have a significant impact on oil prices, food and inflation.
The author believes that with the opening of the US dollar interest rate cut cycle, funds will leave the United States and look for cost-effective assets in the world, and China, which has been sluggish, is undoubtedly a better choice.
At the same time, the trend of northbound capital outflow from the A** field is also expected to reverse, when the US dollar cuts interest rates and the US dollar is weak, the RMB will also enter an appreciation cycle, at this time global funds will chase RMB assets, especially the undervalued A** field. Smart Middle Eastern funds have already begun to deploy Chinese assets in advance, from chemicals to new energy vehicles.
On July 24, the Politburo proposed to activate the capital market, but the A** market did not buy it, and the major indices have hit new lows this year.
In the month, the China Securities Regulatory Commission, the Ministry of Finance, and the State Administration of Taxation launched a policy "combination punch" to activate the capital market, involving the implementation of halving the stamp duty on transactions, optimizing IPO and refinancing supervision, and further regulating the behavior of shares.
In October, ** Huijin Company increased its holdings in the four major banks, and at the same time ** ETF, while the Ministry of Finance issued an additional 1 trillion yuan of special treasury bonds in 2023 in the fourth quarter of this year, and fiscal force has become the highlight of next year.
At present, China's top financial department still has a large potential leverage space. Real estate has been greatly relaxed, including the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, all of which have made loose adjustments to the housing purchase policy. These statements mean that the policy level will be more friendly in 2024, especially at present, the overall market valuation is at a historically low level, the turnover rate has also fallen to a three-year low, and the market sentiment is at a low level, and the valuation quantile of major market indices such as CSI 300 and CSI 500 are all below 25%, which is in the cost-effective range, and the cumulative policy will change from quantitative to qualitative, and finally change the negative feedback phenomenon of the A** field.
More and more listed companies have begun to repurchase, which is also the embodiment of the characteristics of the bottom of the A** market. Of course, the author also wants to remind that the current bubble of new stocks is still relatively large, and it is recommended not to participate in the game of new stocks in two or three years.
With the basic disclosure of the third quarterly report, the latest top ten heavy stocks of public offering have also surfaced, followed by Kweichow Moutai, CATL, Luzhou Laojiao, Wuliangye, WuXi AppTec, Tencent Holdings, Mindray Medical, Hengrui Pharmaceutical, China Merchants Bank, and Shanxi Fenjiu. This shows that the bottom position of the first is still allocated in the liquor, medicine, and new energy sectors, and these sectors are precisely the sectors that will be adjusted relatively large in 2023. The direct result is that the public offering** has significantly underperformed the market for two consecutive years.
The scale of equity ** has exceeded 2 trillion since 2007, and it is still hovering in the range of 2-3 trillion until 2015, and the era of the great development of equity ** is 2019 and 2020. From 2021 to 2023, the public offering of heavy stocks ushered in Waterloo, and the public offering of ** will lose as much as 1 in 202245 trillion. Since 2021, the main line of the market has been switched, but the public offering** still refuses to switch the bottom position.
To add insult to injury, the heavy stocks of the public offering are highly overlapping with the heavy stocks of the northbound funds, and with the continuous outflow of foreign capital, these ** began to fall continuously. After enduring nearly three years of losses, the best managers of the heavy pharmaceutical liquor new energy have completely despaired, and the redemption behavior has begun to accelerate. As more and more people redeem their shares, the public offering manager has to sell his heavy shares, which in turn accelerates the growth of these people. The chip structure, rather than the fundamentals, has become the most important factor affecting the stock price trend of the current ** heavy stocks.
(End of this article).