On February 18, the strategy team of Zheshang ** Wang Yang released a report that the market has basically entered the historical bottom area after continuous adjustment since August 2023. On February 6, 2024, ** Huijin announced that it would increase its holdings, which boosted liquidity confidence and became an inflection point for micro liquidity repair. As the market returns to a steady state, the essence of where A-shares are bottom will depend on valuations and earnings. In terms of valuations, a number of indicators show that the market has basically entered the historical bottom zone; In view of profitability, the policy of stabilizing growth has been strengthened, and high-quality development has helped, and the overall profitability is expected to be gradually restored, and structural highlights are expected to gradually appear.
The team judged that the market has basically entered the historical bottom range, and at this time, it should grasp the opportunity with an optimistic attitude, pay close attention to the positive changes in the policy and industry, and pay attention to the two major clues of low valuation and TMT.
Trend: The market enters the historical bottom area.
Valuation: Entered the historical bottom zone. First, the price-earnings ratio is close to the level of several classic historical bottoms. Second, the price-to-book ratio, the current A-share breakage rate basically exceeds the level of the fourth quarter of 2018. Third, the dividend yield, historically, when the dividend yield of A shares in the past year is close to or exceeds the yield of one-year treasury bonds, it is often the long-term bottom of the market, and the current dividend yield of Wind All A in the past year is about 24%, which is already significantly higher than the current one-year Treasury yield of 19%。
Profitability: Steady growth and efforts to help repair. With the increase of stable growth policies and the help of high-quality development, A-shares as a whole are expected to gradually recover, and structural highlights are also expected to gradually appear.
Risk appetite: micro liquidity helps. One of the most meaningful and fairly simple things about risk appetite is to be able to know that "risk appetite has cycles", because panic and frenzy are unsustainable. Since the beginning of December 2023, the risk premium has crossed above the mean +1x standard deviation, approaching the extreme level at the end of 2018. On February 6, 2024, ** Huijin announced that it would increase its holdings, which boosted liquidity confidence and became an inflection point for micro liquidity repair, which is expected to help restore risk appetite.
Structure: Embrace a new round of industrial cycle.
Trend: Focus on low valuations and AI cues. The industrial cycle is the key clue for us to choose a structure based on 5-7 years. The rise of heavy industry drove the main line of heavy industry from 2002 to 2008, until January 2008 saw an inflection point; The explosion of smartphone penetration and applications drove the main line of TMT from 2009 to 2015, until June 2015, when it reached an inflection point. From 2016 to 2021, on the one hand, consumption upgrading drove the main line of large consumption, and on the other hand, the rise of photovoltaic and electric vehicles drove the main line of new energy, until 2021, it has seen an inflection point. The change of industrial cycle is usually accompanied by a major structural change. Since April 2022, a new round of industrial cycle has begun, and the structure has also ushered in a major switch. On the one hand, as far as traditional industries are concerned, dividends are one of the clues for revaluation, and the clues for the optimization of the supply-side pattern and the export clues of the Belt and Road Initiative are also worth excavating. On the other hand, as far as emerging industries are concerned, combined with the global industrial trend of artificial intelligence, technological innovation is the core clue.
This year: science and technology, taking into account tradition. Focusing on the structure in 2024, the team believes that the scientific and technological innovation industry will be the mainstay, taking into account the restoration of traditional industries. For TMT, it is currently in the AI theme stage, combined with the clues of profit release, infrastructure construction or the first birth field represented by operators and computing power, and at the same time, pay attention to the fermentation of hot topics of AI applications such as MR, humanoid robots, and autonomous driving. For traditional industries, economic clues are more critical, we use the inventory cycle position to study and judge, combined with the latest industrial enterprise data, beverage and dairy, nonferrous metals, refining and chemical and **, gas, chemical, automobile and other related industries fundamentals repair smoothly.
Editor-in-charge: Ren Haopeng |Review: Li Zhen |Supervisor: Wan Junwei.