Assistant General Manager of R&D and Investment Department of Huabao ** Index.
A50ETF Huabao (159596)" proposed ** manager Jiang Junyang.
In 2024, the A** market started with more twists and turns, but from the perspective of the economic operation cycle and the perspective of asset allocation throughout the year, we believe that it is worth facing the market with a more positive attitude and rationally doing a good job in investment layout.
Economic recovery policy care
First of all, economic fundamentals are an important factor affecting the performance of the domestic economy, so it is necessary to keep a close eye on the moderate recovery of the domestic economy. It can be seen that since 2023, due to the continuous efforts of policies, the economic recovery trend has been gradually established, of course, the situation of weak aggregate demand needs further observation and care. Judging from the recent manufacturing PMI data, although domestic demand is still under certain pressure, it has improved year-on-year, and some areas have shown marginal improvement; At the same time, considering the rebound of overseas inventory cycles, domestic exports are also expected to usher in more favorable factors in 2024. In terms of real estate, we see that under the combined action of various forces such as city-specific policies and affordable housing, the drag on real estate has been reduced, and the optimization of real estate policies is expected to help economic performance in 2024. Overall, we believe that the domestic economy can be expected to recover in 2024, and in this context, corporate inventories, PPI, and industrial enterprise profits are expected to bottom out, which may also lead to a rebound in A-share earnings. It is particularly worth noting that, in combination with the historical situation, in the period of economic stabilization and recovery, the equity market is prone to a more obvious repair, and the superimposed profit cycle is upward, often at this stage, the core leading assets are prone to show stronger market performance.
In 2024, it is also necessary to pay attention to the direction of US Treasury yields and whether the US will cut interest rates, which will be an important variable in the external environment of the A** market. The high overseas risk-free rate of return in 2023 will also suppress the performance of domestic equity assets, but the high interest rate environment cannot be sustained for a long time, and the U.S. monetary policy will need to return to normal in the future. Therefore, once the high overseas interest rates are eased in 2024, it is expected to have a positive impact on China's investment environment, exports and capital market performance.
At the policy level, in fact, since 2023, the "policy bottom" has gradually become prominent, important economic meetings have set the tone of "promoting stability with progress", the main line and ideas of fiscal policy and monetary policy are relatively clear, and the tone of stable growth may run through the whole year of 2024. It is worth noting that before the Spring Festival, ** Huijin Company issued an announcement stating that it fully recognized the allocation value of the current A** market, and has recently expanded the scope of ETF holdings, and will continue to increase its holdings and scale. Such a clear statement and increase in holdings will bring a substantial boost to market confidence.
The core faucet is more advantageous
In 2024, from the perspective of asset allocation, we believe that from the medium and long-term perspective, the valuation of A-shares has been at a historical low, which can be said to have a high allocation value. According to Wind data, as of the end of 2023, the risk premium of Wind 300 divided by financial (measured by the yield of 10-year Treasury bonds minus the index dividend yield) is around the average of -2 standard deviations in the past three years, which fully explains the high valuation cost performance of the current A-share equity market.
In the equity market, we are more bullish on the performance of core leaders. There are many reasons for this: first, as mentioned earlier, in the stage of economic stabilization and corporate earnings cycle, the core leading assets are more likely to show stronger market performance; Second, based on the in-depth tracking of research institutions, most of the core leading enterprises in various industries in the A** field have technical advantages, scale advantages, resource advantages, etc., which are ahead of their peers, so they also have long-term core competitiveness and can contribute to long-term and stable profits. At the same time, the state is also promoting state-owned enterprises to accelerate the forward-looking layout of strategic emerging industries through professional integration from top to bottom, which to a certain extent, also means that the advantages of some core leading assets may continue to consolidate and strengthen.
CSI A50 selects and subdivides high-quality faucets
What are the core leading assets of the A** field? It is worth noting that the so-called "core assets" are not always static, they must not only adapt to the changes in the economic structure, reflect the direction of future economic transformation and upgrading, but also often reflect the understanding of domestic and foreign mainstream funds on China's current advantages and future core competitiveness.
As the world's largest steel group and a subsidiary of China Baowu Group, a state-owned enterprise, Huabao has always adhered to the original intention and mission of "efficiently serving the real economy and supporting the industry to serve the country", and has made unique advantages in the field of ETF business in recent years. Huabao**'s blockbuster ETF innovative product "Huabao CSI A50 ETF" will be the first to go on sale on February 19 (Monday), referred to as "A50ETF Huabao", subscribed to **159596. Taking the CSI A50 Index tracked by this ETF as an example, let's take a look at some of the characteristics of A-share core assets.
CSI A50 is the first A50 index compiled by a domestic index company, which adopts scientific and reasonable compilation rules to screen out 50 of the largest market capitalization in various industries as index samples, so it is expected to become an important broad-based index to characterize the core assets of A-shares. At the same time, the index also takes into account the characteristics of the industry representativeness and market capitalization of constituent stocks, and innovatively introduces the concept of ESG sustainable investment, which is conducive to the use of ESG negative elimination methods to achieve "demining" of some inferior ** directions.
Overall, the constituent stocks of the CSI A50 Index are biased**. As of the end of December 2023, the average market capitalization of its index constituents was 273.5 billion yuan, higher than that of indices such as the CSI 300. At the same time, compared with the SSE 50 Index, the CSI A50 Index has a more balanced market capitalization distribution, taking into account some industry leaders with slightly smaller market capitalization. During the same period, the top 10 weighted stocks of the CSI A50 Index included Kweichow Moutai, Ping An of China, CATL, China Merchants Bank and other leading companies in multiple industries; At the same time, the constituent stocks of the index also include various new economy industry leaders, such as Mindray Medical, BOE, etc. In addition, the CSI A50 Index has a relatively balanced industry distribution, avoiding the high allocation weight of traditional industries. As of the end of 2023, the top three heavy sectors in the index are food and beverage, power equipment and new energy, and pharmaceuticals. Since the CSI A50 Index has both large market capitalization attributes and industry representation, its constituent stocks are also the "core assets" of domestic institutional investors represented by public offerings** and foreign institutional investors represented by northbound funds.
The profitability and growth ability of listed companies are what we need to pay special attention to in the investment process. So how are core assets doing in this regard? Also take the CSI A50 Index as an example, as of 20239.30. 68% of the constituent stocks of the index have an ROE greater than 10%, and 30% of the constituent stocks have an ROE greater than 20%, and the overall profitability is strong. At the same time, the median return on equity of the index constituents was 1483%, the median net profit growth rate is 653%, both higher than the main broad-based indices.
In summary, we believe that the constituent stocks of the CSI A50 Index can be used as a new model for the "beautiful 50" of A-shares to a certain extent. At the same time, after the A-share in the early adjustment, the valuation of leading companies in various industries has been at a historically low level, combined with the possible subsequent profitability improvement of listed companies, the CSI A50 Index and its constituent stocks are also reflecting a more obvious medium and long-term allocation value, this broad-based index and index-linked "A50 ETF Huabao (159596)" will also provide investors with investment tools to share the future growth of China's economy.
Data**: Wind, Huabao**Index R&D Investment Department, China Securities Index Company; Statistics deadline: 202312.29。The deadline for ROE-related data statistics of CSI A50 Index constituent stocks is 20239.30。
Risk Warning: The index tracked by Huabao CSI A50 ETF [A50ETF Huabao (159596)] is CSI A50 Index, and the base date of the index is 201412.31, release date 20241.2。The above mentioned ** are all constituent stocks of CSI A50 Index, and the constituent stocks of the index are for display only, **description is not intended as investment advice of any kind, nor does it represent any ** position information and trading trends of the manager. The change of CSI A50 Index in the past 5 complete years is: 2019, 4371%；In 2020, 3341%；In 2021, -538%；In 2022, -2119%；In 2023, -1242%。The historical performance of the index is based on the simulated backtesting of the current composition of the index. Its index constituents are subject to change, and their backtesting historical performance is not indicative of future performance of the index. Huabao CSI A50 ETF [A50ETF Huabao (159596)] is issued and managed by Huabao**, and the agency does not assume the investment, redemption and risk management responsibilities of the products. Investors should carefully read the "Contract", "Prospectus", "Product Key Facts Statement" and other legal documents, understand the risk-return characteristics of the company, and choose products that are suitable for their own risk tolerance. Past performance is not indicative of future performance, and investment should be cautious! **The risk rating of this product is R3-Medium Risk. The sales agency (including the ** manager, the direct sales agency and other sales agencies) shall conduct a risk assessment of the ** in accordance with relevant laws and regulations, and the investors should pay attention to the suitability opinions issued by the ** manager in a timely manner, and the opinions of the sales agencies on the suitability are not necessarily the same, and the ** product risk level evaluation results issued by the ** sales agency shall not be lower than the risk level evaluation results made by the ** manager. The risk-return profile and risk level in the contract vary depending on the factors considered. Investors should understand the risk-return situation, carefully choose the best products and bear their own risks based on their own investment objectives, period, investment experience and risk tolerance. **Invest with caution.
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