Viewpoint**: Liu Xinzheng, manager of the intelligent equity investment department.
Since the beginning of the year, pessimism has spread and market confidence has been lacking. Last week (122~1.26), the central bank cut the reserve requirement ratio by 05%, the larger-than-expected RRR cut reflects the regulator's support for liquidity and the market.
Since the beginning of 2024, only the dividend index has recorded positive returns, the CSI 300 and the Hang Seng Index have continued to decline, and the ChiNext and small and medium-sized caps have been rapid**. In our view, the market divergence reflects the compression of asset duration due to the rapid decline in risk appetite. Compared with "future growth returns", everyone prefers "current dividend returns" and treats ** as fixed income.
The duration preference of the market, like a pendulum, reincarnates between the shortest "dividend", the medium "value", and the longest "growth". When the pendulum swings back and the duration is extended, the ** of "value" stocks will strongly drive the index**.
It is worth noting that outside the ** market, interest rates are falling, and the duration of the bond market is lengthening; Early repayment of property *** residents; There is actually a certain degree of "asset shortage" in the market. In our view, the attractiveness of the implied yield of ** assets has actually reached a very high level among the major asset classes, and the market has the conditions for bullish valuation.
At the same time, there have been some eye-catching events in the market recently, such as the daily limit and high premium of the ** ETF in the United States and ** ETF in Japan, the deep discount of the stock index**, and the closure of investment products in the Chinese market by some Asian hedges. We believe that these landmark events reflect behaviour that signals the sentiment side of the market bottoming out.
*The decline in market risk appetite partly reflects investors' pessimism about China's economic outlook, but we believe this underlying assumption is not valid. Referring to Professor Lin Yifu's view, China has three major advantages, namely human capital advantage, huge domestic market advantage and the world's most complete industrial support, these three points have not changed. So we still believe in the potential of China's economic growth, and the short-term cyclical twists and turns provide an opportunity rather than a reason to panic.
Market outlook
A shares:If we analyze the long-term returns from low to low, the CSI 300 index has returned 40% cumulatively since the end of 2013, while the cumulative increase in index earnings is 80%. We tend to think that the index is in an overshoot and there is room for valuation repair. Looking ahead to 2024, the probability of the A-share index achieving a positive annual return is relatively high.
Hong Kong stocks:At the current point in time, I am optimistic about Hong Kong stocks, because the market valuation has been compressed to the extreme, and there are more targets to buy, and the implied income space may be higher.
Data**: Compiled by wind and public information, statistics as of January 26, 2024.
Risk Warning] The above views and ** only represent the views at that time, and may change in the future as the market changes. **There are risks and caution should be exercised. Historical index data is not indicative of future market performance, and related conclusions are not intended as investment advice. The manager undertakes to manage and use the assets in good faith, diligence and due diligence, but does not guarantee a certain profit, nor does it guarantee a minimum return. This material is promotional material only and does not constitute any investment advice and is not intended as any legal document. Investors should carefully read the "Contract", "Prospectus" and "Product Key Facts Statement" and other legal documents, fully understand the risk-return characteristics and product characteristics of the product, and fully consider their own risk tolerance according to their own investment objectives, investment period, investment experience, asset status and other factors, rational judgment and prudent investment decisions. The investment shall be purchased and redeemed through the manager or other institutions with the qualification of sales business, and the list of sales agencies shall be detailed in the public information of the manager and relevant announcements.