Text: Yanagawa. 2023 is coming to an end, and in this year, after experiencing the small consumption upsurge brought by the "Xiaoyangchun" of the property market and Zibo barbecue in March and April, there are still bright spots in the economy. However, there was a rare contraction in valuations for the third consecutive year in the A** market, with valuation levels falling to historical extremes.
In this context, a series of favorable policies have been introduced continuously, laying a solid policy foundation for A-shares in 2024. How do you look ahead to investment opportunities in 2024?Which sectors will become the most worthy of light in 2024?It has become a hot topic of discussion in the market every year. With this problem, the "China Times" reporter interviewed brokerages and many industry leaders.
The bottom is tamped
With the end of the three-year pandemic, the market looked ahead to 2023 with more optimistic expectations at the beginning of this year. The balance sheet of residents, residents' willingness to spend, the elasticity of the recovery of spending power, and the difficulties caused by the downturn in real estate are underestimated.
After experiencing the "Xiaoyangchun" of the property market and the small upsurge of consumption brought by Zibo barbecue in the month, there are still bright spots in the economy. However, from the perspective of the ** market trend, 2023 is a rare third consecutive year of valuation contraction in the history of China's ** market, and the market as a whole is volatile, with limited incremental funds.
Although the Politburo meeting at the end of July proposed to "activate the capital market", at the end of August, the regulator lowered stamp duty, tightened IPO and refinancing, regulated **, and reduced the proportion of financing margins.
At the end of October, as Huijin increased its holdings of ETFs and the issuance of trillions of treasury bonds, the non-farm payrolls and inflation in the United States in October were less than expected, and the market expected the end of the Fed's interest rate hikes, and the market ushered in a wave of repairHowever, since the end of November, the repair momentum has weakened, and the market has once again **.
As of the end of December, the Shanghai Composite Index continued to hover below 3,000 points. The CSI 300 Index has been adjusted, with the price-to-book ratio back to near the all-time low, the dividend yield back to near the all-time high, and the interest rate spread against the 10-year Treasury bond hitting a record high.
As of December 21, 2023, the price-to-book ratio of the CSI 300 Index reached 117 times, the lowest value in 2014 and also around the lowest level in history. The price-to-book ratio of the CSI 300 index fell below 12, there have only been three occurrences in history, namely in mid-May 2014, at the end of December 2018 and at the end of October 2022, and since then the index has seen more than 20%**.
Zhang Xia, chief strategic analyst of China Merchants, said that because China's economy is still growing, the CSI 300 index earnings are still growing, and the dividend ratio of listed companies has begun to increase in recent years, and the final results of the index since the beginning of this year have prompted the dividend yield of the CSI 300 index to climb to 333%, close to the highest level in 2014. The yield on the 10-year Treasury note has now fallen to 2Around 6%, the difference between the CSI 300 index dividend yield and the yield of 10-year government bonds hit a record high.
The CSI 300 Index is relatively extremely undervalued both horizontally and vertically. And just as an extremely compressed spring will be ** after the pressure is released, ** will also usher in ** after the valuation compression caused by pessimistic expectations.
In fact, the real economy as a whole is stabilizing, the internal economic momentum driving model is changing, the old model of real estate-driven economic growth is being broken, and the new economic momentum is growing.
The global competitiveness of China's manufacturing enterprises has maintained strong resilience as a whole, the momentum of new models of innovation and development is still emerging, and the proportion of the "three new" economy in GDP of new industries, new formats and new business models is showing a rising trend. In the context of real estate transformation, the proportion of deposits in the use of residents' funds has expanded significantly, and medium and long-term industry and infrastructure are replacing real estate, becoming an important support for social credit derivation.
Fang Han, chief strategic analyst of Harvest, told the China Times: "Although there is a high probability that real estate will not see particularly strong elasticity on the macro level, it represents the direction of China's economic transformation, such as new energy vehicles, photovoltaics, semiconductors, etc., after two years of adjustment, it is currently at the low level of the cycle." With the clearing of the industry pattern in these industries, the supply is also improving in stages. Next year, it is expected that these bottom-up endogenous growth industries will also enter the end of the downward cycle and enter a new upward cycle. ”
Investment outlook for 2024
How do you look ahead to investment opportunities in 2024?Which sectors will become the most worthy of light in 2024?It has become a hot topic of discussion in the market every year.
Looking forward to 2024, Fang Han told this reporter: "Next year, the index is expected to be a positive return, the opportunity will increase, the resilience of the micro fundamentals is expected to overshadow the more significant track type of opportunity, and the overall alpha will be the main grasp next year." ”
Cathay ** told this reporter: "In the high-dividend strategy, it is recommended that the state-owned banks with low valuations and high dividends are recommended for power highways. As the trend of great power game and de-globalization continues, the formation of a new economic paradigm still takes time, and the market is still in a highly volatile environment, investment will pay more attention to the high certainty of assets, pay attention to the margin of safety, and should prefer defensive varieties with low valuation, low debt, stable cash flow and business sustainability. ”
Wells Fargo** told reporters: "Under the combined effect of the two expectations of economic recovery and the inflection point of global liquidity, the A** field is expected to gradually come out of the bottom area." Until the inflection point is further verified, a "triangular form" layout can be adopted. On the defensive side, it is equipped with a dividend strategy with high dividends and low valuations, benefiting from the gradual recovery of fundamentals and changes in expectationsOn the offensive side, we can focus on the improvement of the supply side of economic growth and the rise of a new round of industrial cycle, and lay out relatively highly volatile TMT technology growth sectors, especially Huawei-related sectorsThe middle layer is mainly stable, with the layout of pharmaceuticals and consumption that benefit from the recovery of market pessimism, as well as pro-cyclical industries that benefit from economic recovery. ”
Huaxia ** told reporters: "The pharmaceutical sector has resonated with multiple inflection points in the near future, and the high prosperity range of the industry led by innovative drugs is expected to return, looking forward to 2024, focusing on the multiple catalytic inflection points of the industry." On the one hand, the wait-and-see sentiment in the market brought about by the medical anti-corruption has gradually bottomed out, and we are optimistic about the triple resonance investment opportunities of valuation, holdings and sentiment at the bottom of the pharmaceutical sector. On the other hand, with the growth of China's innovative pharmaceutical companies, the drug R&D capabilities of domestic pharmaceutical companies have gradually attracted the attention of international pharmaceutical giants, and Chinese pharmaceutical companies have gradually grown into a gold rush for global pharmaceutical companies. The overseas expansion of domestic innovative drugs has brought a broader market space to domestic pharmaceutical companies, and the long-term growth investment logic of the pharmaceutical industry has been strengthened. ”
Editor-in-charge: Shuai Kecong Editor-in-chief: Xia Shencha.