Since the beginning of this year, the market style has switched again, and small and micro cap stocks** have continued to decline. Many public offerings that rebalanced their positions and pursued small and micro cap stocks last year performed poorly. In the fourth quarter of 2023, you have just replaced all the heavy stocks with small and micro cap stocks, and you will usher in a wave of performance "killing" in early 2024. Part of the ** chasing the wind "caught up with the late set". Industry insiders said that at present,Be wary of switching between over/under styles
The performance of small and micro cap stocks chasing the wind is "embarrassing".
On January 30, the Wind Micro Cap Index and the CSI 2000 Index, which represent the style of small and micro cap stocks, were 19% in a single day. Wind data shows that as of January 30, the Wind Micro Cap Index and the CSI 2000 Index have each ** 58% this year.
In the past three years, against the backdrop of pressure on the valuation of ** stocks, small and micro cap stocks have been in the limelight for a while. From the beginning of 2021 to the end of 2023, the Wind Micro Cap Index has risen by more than 140%, and the CSI 2000 Index has risen by more than 13%.
In this process, the level of public offerings in small and micro cap stocks has been continuously improved, and some public offerings have even switched heavy stocks from the previous "white horse blue chips" to small market capitalization.
Position adjustment and stock swap "caught up with the late set".
If the market value of less than 20 billion yuan and more than 5 billion yuan is defined as small-cap stocks, and the market value of less than 5 billion yuan is defined as micro-cap stocks, Tianxiang Investment Consulting data shows that at the end of 2023, the top ten heavy-weight stocks in the public offering hold a total of 4,619 small and micro cap stocks, and the market value of these ** will reach 2804 trillion yuan. This is an increase of 285 compared to the end of 2022**.
For some people who will fully swap positions in the fourth quarter of 2023 to chase small market capitalization, it seems that they have "caught up with a late set".
Taking a certain ** as an example, at the end of the third quarter of 2023, there are many blue-chip ** representing core assets such as Luzhou Laojiao, Zijin Mining, Kweichow Moutai, Shanxi Fenjiu, China Mobile, and Luxshare Precision. At the end of the fourth quarter of 2023, the top ten heavy-duty stocks will be "replaced", and micro-cap stocks such as Yongyi Shares, Guoen Shares, Tongde Chemical, Boshen Shares, and Lubei Chemical will enter the top ten heavy-cap stocks. The net value of the ** in the fourth quarter of 2023 fell by 5%, and the net value ** since 2024 was nearly 4%. Be wary of market style switching
Regarding the recent market style switch, the China Merchants Quantitative Research Team believes that from the perspective of valuation indicators, the valuation of small-cap stocks has risen significantly in recent years, and the cost performance has declined. At this point in time, you should be wary of switching between large and small market styles.
No matter how good an asset is, pay attention to its valuation. Mean reversion is regarded as the most powerful law in the world。Gui Zhenghui, manager of Bosera Index and Quantitative Investment Department, said that in 2015, for example, the valuation of small-cap stocks remained high, and in extreme cases, the price-to-book ratio of first-class stocks was only half of that of small-cap stocks. This was followed by a six-year-long **stock**. In contrast, in 2021, the net ratio was 40% higher than that of small-cap stocks, and since then there has been a new round of activity in small-cap stocks. Tianxiang Investment Consulting believes that in terms of investment and research capabilities, small and micro cap stocks usually belong to emerging or specific sub-sectors, and an in-depth understanding of these industries is crucial, and managers need to have deep industry research capabilities to understand the development trends, competitive landscape, and potential opportunities and risks of the industry. In addition, small and micro cap stocks have relatively little data disclosed to the outside world, and managers need to spend more energy to collect and verify information and deeply analyze the company's fundamentals, including financial status, management quality, business model, etc.
Bao Xiaohui, chairman of Changli Assets, believes that in 2024, there are still certain investment opportunities in small and micro cap stocks. While short-term risks may exist, the growth potential and innovation capabilities of small and micro cap stocks remain a key focus for institutions in the medium to long term. For investors, they should allocate assets reasonably according to their own risk tolerance and investment goals, and look for high-quality varieties with long-term growth potential. (Article**: China ** Daily).