The market sentiment continues to be sluggish and the chill is spreading, so what is our outlook for the market in 2024?
[Market outlook 1: The valuation of equity assets is at the bottom of history, and the valuation has more room for repair].
As of January 31, 2024Valuations of China's equity assets are at an all-time lowFor example, the PE-TTM of the CSI 300 is 1065, in the last decade 1115th percentile value. The value of the classic equity risk premium (ERP) model has been in the historical extreme range since June 2023, but the model may be distorted when considering the impact of U.S. bonds. Recently, the revised ERP model adjusted by U.S. bonds showsAt present, the market is also in the extreme area of the historical bottom, and the allocation value is high.
Combined with the emergence of an inflection point in external financial conditions, according to CME observation, the market expects that the Fed's interest rate hike cycle has ended, and the current data shows that the Fed will start cutting interest rates in March 2024 at the earliest, which may lead to the repair of risk asset valuations.
The U.S. debt-adjusted ERP is also close to historical extremes
Data**: Wind, as of November 30, 2023;
The model is calculated based on historical data, and there is a certain risk of failure.
[Market outlook 2: The inflection point of A-share earnings is emerging, and the profit-driven ** may be opened].
From the perspective of economic fundamentals, the GDP growth rate in the third quarter exceeded expectations, and the data inflection point of production, consumption and credit has appeared. Macroeconomic expectations have stabilized, and corporate earnings have gradually picked up.
Since November 2022, the CSI 300 has been more consistent with the expected trend of nominal GDP. The earnings expectations of the major broad-based indices in the next 1 year have been repaired to varying degrees, among themGrowth assets have a higher degree of earnings recovery.
The CSI 300 is expected to be in line with nominal GDP
Data**: Wind, as of November 30, 2023;
The model is calculated based on historical data, and there is a certain risk of failure.
[Market outlook 3: the economy is heading for recovery, and growth assets may prevail throughout the year].
A review of the major broad-based valuation trends before and after historical economic recoveriesGenerally, the broad-based (pro-cyclical value assets) will be repaired first, and then the growth assets will be repairedIt is divided into two investment stages: the expectation of trading recovery and the official start of recovery, as shown in the figure below. The first stage,Policies have led to an improvement in market expectations, and the valuation of pro-cyclical value assets has taken the lead in repairing; The second stage,The market's risk appetite has been boosted, growth assets have received more attention, and the style is biased towards growth.
Valuation Repair Time Rhythm - Historical before and after economic recovery and major broad-based valuation trends.
Data**: Wind, as of November 30, 2023;
The model is calculated based on historical data, and there is a certain risk of failure.
Although the chill of the current market has not dissipated, pessimism is still spreading, butAt present, the internal and external macro logic has entered a state of resonance, and the dawn of equity assets has begun to appear. Related Products:
Core assets: CSI 300 ETF E Fund (510310, OTC Connect Class A 110020 Class C 007339) SSE 50 ETF E Fund (510100, OTC Connect Class A 007379 Class C 007380).
Growth Assets: STAR Market Series: STAR Market 50 ETF (588080, OTC Connect Class A 011608 Class C 011609) STAR 100 ETF E Fund (588210) STAR Growth 50 ETF (588020); GEM Series: GEM ETF (159915, OTC Connect Class A 110026 Class C 004744) GEM 200 ETF E Fund (159572).
Growth Blue Chips: SZSE 50 ETF E Fund (159150) SZSE 100 ETF (159901, OTC Connect Class A 110019 Class C 004742).
The above content and data have nothing to do with the position of the interface and do not constitute investment advice. Do so at your own risk.