Recently, the dividend style has bucked the trend, and high-dividend stocks such as coal and banks have been sought after by the market.
Guosheng ** pointed out in its report on Tuesday that from the perspective of valuation alone, the valuation of the dividend style is on the expensive side, but it is still not in the extremely low odds range, and the overall may not be crowded in terms of position and transaction congestion.
However, in terms of industries, some industries such as banking, media, and utilities have begun to show congestion in high-dividend trading, and coal, transportation, non-bank finance, light manufacturing, building materials, and machinery are currently in the strong-low congestion quadrant.
Guosheng believes that the current market in the sixth stage of the economic cycle is expected that the situation of strong dividends and weak growth may continue. Subsequent "odds overdrawn to -1."Below 5 times the standard deviation, the congestion increased by more than 1 standard deviation, the upward trend of the growth style was confirmed, and the macro economy entered the first stage of the economic cycle", which is a sign that the dividend strategy has peaked.
Guosheng** pointed out that from a valuation perspective alone, the current dividend style odds are -125 standard deviations, valuations are on the expensive side. But only from a valuation point of view, it may be too left in terms of timing.
Guosheng gave an example of the small-cap style in September 2020:
The small-cap style had extremely high odds at 2x SD in September 2020, but it still suffered significant tail risk in the short term, pushing its odds above 3x SD before finally seeing a true bottom in February 2021.Therefore, Guosheng pointed out that only the ultimate odds can distinguish short-term excess returns, and the current dividend style odds are still not extreme.
As can be seen from Figure 3, there is not much difference in the odds of medium-low-medium-low-medium-high in the next three months**, and only the style of extremely high odds and very low odds shows a significant difference in returns. The current bonus style odds are -125 times the standard deviation level, still not at very low odds [-3, -1.]5].Looking further, Guosheng pointed out that although the dividend has risen so much, it believes that the dividend style as a whole may not be crowded
High market attention is not necessarily the same as high crowding, the difference lies in whether there is "real investment", real investment includes two dimensions: the proportion of stock holdings and the incremental transaction heat.However, Guosheng pointed out that some industries have begun to show high dividends** trading congestion: such as banks, media, utilities, etc. According to the effectiveness of the industry's high-dividend strategy and the congestion of the industry's high-dividend**, coal, transportation, non-bank finance, light manufacturing, building materials and machinery are currently in the strong-low congestion quadrant.At present, whether it is from the perspective of the proportion of low-frequency positions or the proportion of high-frequency measured positions, the stock positions of dividend style are not crowded.
The current bonus style trading congestion is -055 times the standard deviation, although it has been rapid recently**, but it has not skyrocketed like in April 2023, so it does not constitute an early warning of transaction congestion.
Regarding style rotation, Guosheng pointed out that it often takes a few months or even a year for the style to really accelerate**, and suggested that investors pay attention to the right signal:
Looking back at the historical large- and small-cap and value growth style rotations of A-shares and U.S. stocks, we find that style rotations tend to be long-term trends on an annual basis, rather than short-term back-and-forths.Judging from the current macro environment, Guosheng believes that the market is currently in the sixth stage of the economic cycle, and the situation of strong dividends and weak growth may continue.Although the right side of the timing may take a certain amount of risk in the early stage of style switching, if you look at the entire 2 3 years of strong cycle, the initial fluctuation contributes less to the total return, and it often takes several months or even a year for the style to really accelerate**.
At present, we are in a macro environment of monetary easing, credit ebb and slowing growth, that is, the sixth stage of the economic cycle (monetary expansion stage), the monetary expansion stage is generally weak stocks and strong debts, strong dividends and weak growth, which is basically consistent with the market performance in the past period.On the whole, Guosheng pointed out that the current valuation of high-dividend strategies has not reached the extreme state, the macro environment is favorable, the trend is strong, and the congestion is low, and there are still certain trading advantages. So how to judge the top of the bonus strategy, Guosheng gave the following four criteria:1) If it enters the first stage (credit expansion stage), the situation may be reversed into strong stocks and weak debts, strong growth and weak dividends; 2) If it is maintained in stage 6, the situation of weak stocks and strong debts, strong dividends and weak growth may continue.
1) Valuation perspective: Bonus style odds are overdrawn to -15 times the standard deviation or less; 2) Congestion angle: the congestion of bonus style increases by more than 1 standard deviation; 3) Technical perspective: confirmation of the upward trend of the growth style, or confirmation of the downward trend of the dividend style; 4) Macro perspective: smooth monetary transmission, credit expansion, and re-entry into the first stage of the economic cycle.This article is mainly excerpted from Guosheng** "What signal will make us downgrade the rating of the dividend strategy?" Analysts Lin Zhipeng (Practicing Certificate No.: S0680518100004) and Liu Fubing (Practicing Certificate No.: S0680518030007).