Source: China Fund News Author: Fang Li
Good start! On the first trading day of 2023, the A-share market is off to a good start.
Although the overall increase of A shares on the first day was not high, 2023 has always started with a bright red. I hope that this year’s market will surprise everyone.
Specifically, the Shanghai stock index rose 0.88% to welcome a good start, and the two markets reproduced the daily limit of 100 shares. The net outflow of northbound funds was 645 million yuan throughout the day. As of the close, the Shanghai Stock Exchange Index closed at 3116.51 points, up 0.88%; the Shenzhen Component Index closed at 11117.13 points, up 0.92%; the ChiNext Index closed at 2356.42 points, up 0.41%.
The market styles are highly differentiated, with computer, communications, and national defense and military industry and other scientific and technological growth fields experiencing relatively large increases, while food and beverage, consumer services, and agriculture, forestry, animal husbandry and fishery are among the top decliners.
Can this wave of good starts last? Which sectors have more opportunities in the future, Fund Jun immediately interviewed people from Fuguo, China Universal, Yinhua, Bosera, GF, Huaan, Central Europe, South, China Merchants, Chuangjin Hexin, Morgan Stanley Huaxin, Golden Eagle, Nuoan , Hang Seng Qianhai, Yongying Fund and other 15 fund companies. Many people believe that the gradual recovery of economic activities, the National Development and Reform Commission’s heavy statement, the further link of RMB depreciation pressure, and the active trading of northbound funds have become the main reasons for the good start.
It is worth mentioning that these fund companies stated that as the peak of the epidemic in more cities has passed, the impact of the epidemic on the economy has changed from shock to recovery, and the improvement in travel and consumption data has made further economic recovery on the way. Short-term The “epidemic recovery” industry may gradually emerge, and the pro-cyclical and epidemic recovery sectors are optimistic. In addition, the digital economy, information security, national defense and security sectors are also optimistic.
Many factors have prompted A-shares to fluctuate higher
In 2023, the market will fluctuate and rise, why can there be a “good start”? The National Development and Reform Commission made a big statement, the further link of RMB depreciation pressure, and the active trading of northbound funds have become the reasons why many fund companies are optimistic.
China Universal Fund said that on January 3, the market fluctuated higher and went up in an all-round way. The main reasons are as follows:
First, the National Development and Reform Commission made a major statement to promote private enterprises to participate in major national strategies, boosting market sentiment.
Zhao Chenxin, deputy director of the National Development and Reform Commission, said in an interview with CCTV News that in 2023, my country will continue to break various forms of unreasonable restrictions and hidden barriers to market access, promote private enterprises to participate in major national strategies, and increase relief for private enterprises. The intensity of poverty alleviation and the protection of property rights of private enterprises will promote the development and growth of the private economy. This statement released a positive attitude towards reform, which has extremely important positive significance for boosting the confidence of private enterprises and promoting the development of the private economy, and has boosted the overall investment sentiment in the A-share market.
Second, the pressure of RMB depreciation has been further eased, increasing risk appetite. The offshore renminbi regained the 6.9 mark against the U.S. dollar, and once rose by more than 300 basis points during the day today, a new high since September 2, 2022. Since November, as the domestic economic fundamentals are expected to continue to be boosted, the RMB exchange rate has fluctuated and strengthened, which has boosted the overall RMB assets and also promoted the risk appetite of the A-share market.
Third, northbound funds were actively traded, with a small net sale of 645 million yuan throughout the day. Northbound funds had a net sale of nearly 2.8 billion yuan in early trading, and returned in late trading, with a net sale of 645 million yuan throughout the day; of which, the net sale of Shanghai Stock Connect was 2.135 billion yuan, and the net purchase of Shenzhen Stock Connect was 1.49 billion yuan. A total of 88.282 billion yuan was traded in northbound funds today, a record high since December 12.
It should be noted that in December, the domestic manufacturing and non-manufacturing PMIs continued to fall to 47% and 41.6% respectively, both hitting new lows since March 2020, indicating that under the influence of the epidemic, the weak supply and demand pattern of enterprises continued, and the pressure on economic recovery remained. , more caution is required. The short-term weak reality phenomenon continues, which constitutes a certain suppression on the performance of consumption and financial sectors.
Huaan Fund stated that positive factors are gradually emerging, and the market will usher in a good start in 2023.
At the beginning of the new year, with the peak of new crown infections in major cities in China and the gradual recovery of economic activities, various positive factors are gradually emerging. Among them, the intra-city traffic flow index in Beijing, Shanghai, Guangzhou and other cities has bottomed out, the inter-provincial population flow has resumed, and express delivery and vehicle freight have picked up, indicating that the peak of new crown infections in major large and medium-sized cities has gradually passed , various economic activities picked up.
At the same time, the country actively promotes the steady recovery of the industrial economy and vigorously develops the digital economy. The Xinhua News Agency pointed out that the Ministry of Industry and Information Technology will promote the stabilization of the industrial economy by increasing effective investment and expanding consumption. In terms of vigorously developing the digital economy, it will speed up the construction of digital infrastructure, deepen the integrated application of “5G + industrial Internet”, and promote the research and development of 6G technology. Prior to this, my country also released the “Twenty Articles on Data” to promote the circulation of data elements and the establishment of a trading system.
Huaan Fund stated that the medium and long-term allocation value of the market is gradually emerging, and the direction of great security, post-epidemic, and stable growth deserves attention. On the whole, the negative impact of the new crown will gradually weaken, domestic economic growth is expected to stabilize and rebound, and the global liquidity environment is expected to be further improved. The current level of equity risk premium is higher than the historical average, and the market’s medium and long-term allocation value is gradually emerging.
The research department of Yinhua Fund stated that the computer sector rose by 5.11% today, of which cloud services rose by 5.70%, and computer software rose by 5.52%, mainly due to changes in market styles. Influencing factors include:
First, the recovery of recent market transactions after the epidemic has taken a certain amount of time and has increased. As the impact of the epidemic has gradually receded from the peak, some funds in the market have begun to consider the height of the post-epidemic economic and consumption recovery, and whether it can restore the past long-term growth trend. There are uncertainties. Therefore, the market style may be repeated at this stage, and the growth style with a large decline in the early stage may gain capital attention in stages.
Second, the pan-localization sector has a certain mid-term certainty, and it will benefit from the new year’s track switch first. Although the progress of localization work has been affected by the epidemic in the short term, the trend is still certain. After the correction in the early stage, it is expected that from the end of the year to the two sessions, it will still be a stage of concentrated interpretation of the pan-localization market.
Third, favorable policies for the government informationization sector have been introduced one after another, and the prosperity of the industry has risen. The timeline for the construction of the government big data system and the responsibilities of governments at all levels are clear, and the construction and improvement of the government big data platform is expected to speed up; the opinions on data elements emphasize the sharing and opening of public data, and government IT manufacturers are expected to benefit from the improvement of the industrial chain and value enhancement. The business of government informatization vendors was disrupted by the epidemic in the fourth quarter, and the performance of financial IT vendors showed more resilience.
Fourth, the security sector will benefit from policy stimulus and the long-term certainty of the industry trend. In 2023, it will enter the performance release period brought about by the marginal improvement of G-side demand and cost reduction and fee control. With the catalysis of the localization market, it will have a basis for continuous recovery of valuation.
Today’s communications sector rose 4.03%, of which telecom operations rose 7.05%, mainly related to changes in market style. Specific influencing factors include:
First, the recovery of recent market transactions after the epidemic has taken a certain amount of time and has increased. As the impact of the epidemic has gradually receded from the peak, some funds in the market have begun to consider the height of the post-epidemic economic and consumption recovery, and whether it can restore the past long-term growth trend. There are uncertainties. The operator sector has a high dividend rate and strong performance growth certainty. In the short term, it may be favored by more funds in the process of marginal changes in market style.
Second, the current valuation level of telecom operators as high-quality assets is relatively low, and they have a basis for improvement. The peak period of operators’ 5G investment is basically over, and capital expenditure tends to decline, which supports the release of performance.
Third, operators are the main force in the construction of the digital economy, and will usher in revaluation in the medium and long term.
1) In terms of market position, in terms of public cloud market (IaaS+PaaS) and IDC business market share, China’s leading companies are relatively high; 2) In terms of competitiveness, operators have computing power network foundation, security assurance capabilities, and localization Differentiated competitive advantages such as service capabilities and numerous industrial chain partners; 3) In terms of business profit margins, the proportion of telecom operators’ industrial Internet in service revenue continues to increase, but the profit margins remain stable. At the same time, we believe that as telecom operators The scale of cloud computing customers has expanded, and the proportion of PaaS, SaaS and other businesses has increased. The scale effect will effectively drive the improvement of cloud computing business profit margins and contribute to the driving force for long-term profit growth (838275, diagnostic stocks).
Chuangjin Hexin Fund stated that on the first trading day in 2023, the A-share market opened low and moved high, achieving a good start. The low opening in early trading was mainly due to the general recovery of consumption and travel data on New Year’s Day, and the continued spread of the epidemic infection. The market sentiment is relatively general.
The above-mentioned fund stated that the market gradually rose afterwards, reflecting that after the previous correction, pessimism has basically been released, the market bottom is relatively solid, and the peak period of the first wave of epidemic infections has gradually passed. With the improvement of economic expectations, market sentiment is expected to Gradually recovering, the market will give a certain premium to value sectors such as banks and consumption that are more certain of economic recovery in the short term. In addition, the new track industry with clear industrial policies is also expected to benefit, and undervalued growth stocks have also achieved a stable rebound at low levels. The follow-up market is expected to stabilize and rise, but the process may be affected by the specific situation of economic recovery and fluctuate. In the direction, both the value sector and the undervalued growth sector have opportunities. It is recommended to pay attention to the allocation timing under the style rotation.
However, Bosera Fund stated that today is the first trading day in 2023. The two markets have recovered slightly. The Shanghai Stock Exchange once again stood at 3100 points. The northbound funds have a small net outflow. The market transaction momentum is still insufficient, although compared with the previous trading day. But the turnover has not yet exceeded 800 billion yuan.
“Recently, the overall sentiment of A-shares has been sluggish. Investors’ risk appetite has not improved significantly yet, and the overall situation is slightly low. The sector rotation is still fast.” Relevant investment researchers from Bosera Fund said that in 2022, amidst the impact of the epidemic and the conflict between Russia and Ukraine Under the influence of multiple factors such as the Federal Reserve’s interest rate hike, A-shares have fluctuated downwards, and the current overall valuation of A-shares is relatively low. Against the background of the weak recovery of the domestic economy, the monetary policy has not changed for the time being, and it still continues the previous stable and loose tone. There will be a volatile trend, or a balanced allocation can be appropriately carried out, and the industry sectors that benefit from “steady growth” are still worthy of attention.
The “post-epidemic recovery” market is starting
When it comes to the short-term market, many fund companies are optimistic about the future performance, believing that the market’s “post-epidemic recovery” is starting.
Wells Fargo Fund said that time is on the side of the bulls. As the peak of the epidemic in more cities passes, the impact of the epidemic on the economy has changed from shock to recovery. The improvement in travel and consumption data makes further economic recovery on the way. Mapped to A-shares, there is a significant rebound in turnover, and at the beginning of the new year, the market is often more optimistic about the economic expectations for 2023, and the short-term economy is difficult to falsify, so buying the “imagined beautiful spring” will make capital risk appetite more Well, the market’s “post-epidemic recovery” is starting.
Structurally, the computer industry related to “data elements” led the gains strongly. The “Opinions on Building a Data Basic System to Better Play the Role of Data Elements” (“Twenty Articles on Data”) was released at the end of last year to provide underlying logical support for investment in data-related industries. The superimposed computer industry has Xinchuang’s “independent and controllable” concept, so it has continued to receive attention since October last year. At the beginning of the new year, “data elements” have received funding layout, indicating that the attention of the computer industry in 2023 may be very high.
Generally speaking, the short-term market is at the bottom, and the opportunities outweigh the risks. Moreover, the “post-epidemic recovery” transaction has gradually started. As the trading sentiment picks up, the market may be positive.
China Europe Fund also stated that in 2023, A shares will usher in a good start, and the growth sector with more adjustments before the holiday will pick up. At the beginning of the new year, under the background that the economic recovery may accelerate, the market may start an industry rotation with obvious macro characteristics. Before the economic recovery and the early stage of the economic recovery, the cyclical industry is expected to outperform, and after the economic recovery trend is established, it will turn to growth. . When expectations become consistent, investors can focus on the market’s “early performance” of expectations. For example, in addition to paying attention to the performance of industries in the pre-holiday cycle, the performance of growth industries may also be earlier than market consensus expectations.
Lion Fund also stated that looking backward, the national epidemic period in January may “peak” earlier than expected, and the fundamentals are expected to usher in a turning point and there is a lot of room for recovery. As urban activities quickly return to normal and policy support increases, the rapid recovery of consumption and continued efforts in infrastructure investment will support the economy to usher in a good start.
From the perspective of the market, the strategic allocation period and the tactical entry period in January are superimposed. After the national epidemic “peaks”, a key long window will be opened. At this stage, it is recommended that the focus of allocation be more growth-oriented, focusing on areas with long-term space and flexibility.
Golden Eagle Fund stated that the domestic economy may be expected to fully absorb the impact of the current round of the epidemic, and the effects of previous policies have yet to be revealed, and expectations around economic recovery may continue to improve. In December 2022, due to the rapid spread of the epidemic in the society, Beijing, Chengdu and other cities have ushered in the peak of new confirmed cases, and have shown a rapid recovery to return to normal life. The consumption sector has been significantly repaired by the capital market. However, while restoring the consumer side, the recovery of the manufacturing production side is also worthy of attention. The real estate financing policy in the early stage has been implemented, and the impact of the follow-up policy effect on the industry’s own cycle operation remains to be tested.
In the new year, with a new beginning and a new atmosphere, in order to support the orderly recovery of the domestic economy, the monetary environment is expected to remain friendly and loose. Although the current external tightening expectations of the Federal Reserve have not improved significantly, with the subsequent decline in core inflation, the direction of the Fed’s rate hike slowdown may be confirmed, and excessively optimistic or pessimistic external liquidity is expected to be corrected.
Many fund companies are optimistic about the current investment value of the A-share market. China Universal Fund stated that the policy of stabilizing growth is expected to continue to exert force, and the domestic economy will continue to recover, and continue to be optimistic about the investment value of A shares. Overseas interest rate hike expectations and recession concerns have both heated up again in recent days, and external market disturbances continue. From a domestic point of view, the decline in external demand and weak domestic demand continue to affect the recovery momentum. Under the impact of the epidemic, the PMI data in December further fell, and the downward pressure on the economy is still high. The strategy of expanding domestic demand is advancing, and it is expected that the subsequent economy will show a recovery trend. From the perspective of the capital market, the personal pension system is officially implemented, and the liquidity of the stock market is expected to be further improved. We will continue to be optimistic about the investment value of high-quality A-share assets in the long run.
Southern Asset Management stated that since the current overall market is likely to be at the bottom of valuation, economic fundamentals, and market sentiment, it is strategically optimistic about the market for the whole year of 2023. In terms of tactics, the recovery of the economy and market confidence needs a process. In addition, the overseas European and American economies may experience recession. Therefore, the market may not have a smooth upward trend, and the probability of volatility is higher. The main contradiction throughout the year is the strength of the domestic economic recovery. At present, we need to pay attention to the strength and implementation of policies. In addition, the extent of economic recession in Europe and the United States and when the Fed’s monetary policy will change are also important factors affecting market trends. In terms of rhythm, focus on two nodes. The first is the end of the first quarter and the beginning of the second quarter, focusing on the recovery of domestic economic activities. The second node is expected to be in the third quarter, focusing on the extent of the economic recession in Europe and the United States and the response of the Federal Reserve’s monetary policy.
Optimistic about pro-cyclical, epidemic recovery sectors, etc.
When it comes to optimistic directions, procyclical and epidemic recovery sectors are optimistic, as well as digital economy, information security, and national defense security.
The macro strategy department of GF Fund stated that looking forward to 2023, a sound economy may improve the performance of A-shares on the profit side, which will drive the performance of A-shares to stabilize and improve. It is recommended to pay attention to the value of equity asset allocation.
In terms of structure, GF Fund believes that it can be allocated along two main lines. One of the main lines worthy of attention is to fully benefit from the restoration of domestic personnel flow, the restoration of real estate data, and the procyclical direction of economic recovery. In addition, from the perspective of the industry cycle, the high-end manufacturing and technology sectors whose prosperity may improve beyond market expectations are also worthy of attention.
Relevant persons from Yinhua Fund said that they are optimistic about computers first, and computer software has two important logics: 1. The trend of pan-localization is highly certain. From a top-down perspective, we believe that the localization of major core software fields is an irreversible trend. Whether it is the localization of the government field in a narrow sense or the pan-localization of various industries, it will further evolve between 2023 and 2030, and the space for each link is large enough.
2. The performance has entered a cycle of continuous multi-quarter improvement. In the second half of 2021, the core companies of the sector began to form a relatively low profit base due to personnel expansion. Therefore, in the second half of 2022, the sector will generally be able to digest personnel costs to achieve performance restoration. Entering 2023, progress in the localization of the government and the industry is expected to bring an increase in revenue and a double-click on the profit side.
The second is optimistic about communication. Looking forward to 2023, we believe that telecom operators have three main investment logics: 1. Stable performance combined with high dividends to provide shareholders with good investment returns: On the one hand, the impact of “speed increase and fee reduction” is coming to an end, and the unit price of operators’ personal business customers has stabilized On the other hand, the peak period of 5G investment is basically over, and the ratio of capital expenditure to revenue has declined. We believe that it is expected to support the steady performance of operators.
2. Restoration of asset value of high-quality state-owned enterprises As investors’ perception of the value of listed state-owned enterprises gradually improves, telecom operators, as high-quality assets, are expected to benefit from this.
3. Digital transformation business drives valuation reconstruction: At present, telecom operators have taken the leading market share in the domestic cloud computing, IDC and other computing resource markets. Digital business revenue continues to grow rapidly. As the digital business market is increasingly concerned, We believe that the valuation system of telecom operators is expected to be restructured.
Specifically, large security industries such as the digital economy, information security, and national defense security are expected to benefit from the improvement of my country’s self-controllable level; industries such as consumption, travel, and steady growth have experienced continuous losses, and the fundamentals of the industry are historically low. level, and the industry structure is gradually improving; for power grid investment, wind-solar storage and other tracks, alpha companies need to be selected to focus on the certainty of profitability. Investors are advised to uphold the philosophy of long-term investment and value investment, with confidence and patience.
In terms of focusing on the industry, Golden Eagle Fund recommends taking into account both growth and consumption in the short and medium term, and responding to multiple changes with a balanced strategy. At the same time, it is necessary to take into account the cost performance of holding shares; in the short term, in January, it will focus on the restoration of the technology manufacturing industry after the current round of epidemics:
1. Technological manufacturing: Technological security is still an important policy focus for coordinating economic development and security in the future. Xinchuang, aerospace, semiconductors, and medical devices are important areas for independent and controllable development. Semiconductors may be expected to confirm the bottom of the industry boom in the middle of next year.
Part of the capital expenditure of the manufacturing industry has not been fully released in the three years of the epidemic. With the support of policy financial instruments, pro-cyclical manufacturing industries such as automation equipment and new medical infrastructure have shown incremental demand release. The current valuation and transaction congestion in the field of technology manufacturing are generally low, so you can focus on it.
2. Consumption: The post-epidemic travel chain (hotel/restaurant/duty-free/airport) will be significantly repaired in December 2022, but at present, from overseas experience, the process of returning to the pre-epidemic level is relatively slow, and some consumption directions are relatively different. It is difficult to go back to before the epidemic. After the short-term market is positive and optimistic, it is necessary to focus on cost performance when holding shares.
You can pay attention to the consumption fields (liquor/beer/duty-free/medical services/medical beauty) that still have their own industry development momentum (low penetration rate, product upgrades) after the co-existence of the new crown and the recovery of demand scenarios.
3. Steady growth: Real estate is still a key consideration at the policy level. The main lines of stable growth such as real estate and finance are still worthy of attention. Consumption of building materials, etc.) may see a valuation recovery market, but also because it will take time to improve the short-term prosperity, bargain hunting may be a relatively safe choice.
China Merchants Fund stated that in terms of A-share allocation, it can continue to focus on the core main line: first, social recovery. Specifically pointing to the development of large domestic demand, the current focus is on slightly lagging directions such as fashion, agriculture, packaging, and logistics.
Second, industrial upgrading and new industrialization. Specifically pointing to the advantageous manufacturing industry, the subdivision sector can focus on the new energy chain related sectors in the midstream materials, such as hydrogen energy, sodium batteries, energy storage, electronic chemistry, raw materials, etc., as well as the basic metals that benefit from the recovery, such as copper. Aluminum processing, chemical fiber, etc.
Third, midstream equipment. Focus on semiconductor processing equipment.
Fourth, technological breakthrough and domestic substitution. Focus on subdivided fields such as national defense and military industry.
Fifth, industries related to the reversal of difficulties. Specifically pointing to real estate and other chains, including real estate, construction, big finance, consumer building materials, small household appliances and other sub-sectors.
Morgan Stanley Huaxin Fund stated that there is a high probability that the market in early 2023 will be biased in the direction of high prosperity. On the one hand, short-term economic data is still weak, and industries with high economic correlation may lack performance catalysts, while most companies in the direction of high prosperity are still in the stage of rapid performance growth; The interpretation in the fourth quarter is relatively sufficient, and there is still a lot of room in the medium term, but in the short term, it may be necessary to wait for further verification of the fundamentals.
The Lion Fund recommends paying attention to, first, energy resource security, focusing on maintaining high growth in shipments, and energy storage and scenery that are expected to improve in the near future; second, technological security, focusing on independent controllable semiconductors and digital economy industries; third, National defense security revolves around the layout of the missile and aviation development industry chains; fourth, food security focuses on the seed industry and biological breeding. In addition, it is also recommended to focus on growth segments with greater fundamental flexibility, such as medical devices, synthetic biology, and industrial automation.
Hang Seng Qianhai said that the first trading day in 2023 ushered in a good start. The two cities stepped back on the 10-day moving average in early trading, and at the same time filled the short-term gap and then rebounded successfully. On the upper edge of the box in the early stage, the market risk appetite has picked up, and the trading sentiment of individual stocks has risen significantly. The turnover of the two cities has been enlarged, sending a positive signal, and the willingness to do more funds may gradually strengthen. In the short term, as the impact of the epidemic gradually subsides and the economic fundamentals move towards a substantial recovery, there is still room for the market to rise, and it is necessary to wait patiently for the further recovery of the recovery market.
In the long run, it will take some time for the domestic economy to digest the negative impact brought about by the spread of the epidemic. Under the expectation of a fall in external demand and a weak domestic recovery, we suggest digging along several main lines. First, the prevention and control of the epidemic in the short term The restorative opportunities under the optimization trend include sectors such as consumption and medical care. The second is the self-controllable and domestically-made alternatives under the tense international political environment and the trend of anti-globalization, including semiconductors and military industries. The third is to wait for high prosperity The emotional recovery and valuation return of the sector, we are long-term optimistic about the huge opportunities brought by the energy revolution, the sea breeze and domestic large-scale energy storage sectors are expected to accelerate the industry growth next year, and the photovoltaic and power battery sectors have new opportunities brought about by technological changes. Chance.
Hong Kong stock marketalso rebound
It is worth mentioning that the Hong Kong stock market also got off to a good start. The Hang Seng Index rebounded to over 20,000 points, and the Hang Seng Technology Index also rose by 2.53%.
Specifically, the main stock indexes in the Hong Kong stock market opened lower and moved higher. The Hang Seng Index closed up 1.84%, and the Hang Seng Technology Index rose 2.53%. Among them, the intraday amplitude of the Hang Seng Index once exceeded 4.5%. At the industry level, sectors such as the raw material industry, information technology industry, and healthcare industry experienced relatively large ups and downs, 3.15%, 2.76%, and 2.64%, respectively.
Hang Seng Qianhai Fund stated that Hong Kong stocks ushered in the first trading day in 2023. Although the opening was volatile and low, it started a strong rise soon after and remained strong throughout the day. Disk funds are active. The overall market sentiment of Hong Kong stocks is positive. If the economic fundamentals continue to recover, Hong Kong stocks may still have a chance to continue to rebound in the short term. However, during the period, we still need to pay attention to the pressure brought by the outflow of profit-making funds.
Looking ahead, the uncertainty of the epidemic may cause Hong Kong stocks to experience ups and downs in the rebound path, and more sustainable growth needs more catalysts, especially the improvement of domestic growth. At present, the triple pressures faced by Hong Kong stocks in the early stage, including the geopolitical situation affecting risk appetite, the slowdown of domestic economic growth affecting corporate profits, and the Fed’s tightening affecting financing costs and liquidity, have all eased. The recent turning point of US inflation and the domestic real estate epidemic Policies have also undergone marginal changes. We believe that the sentiment and valuation of Hong Kong stocks have gradually recovered and turned around. However, the sustainability of the rebound requires the realization of molecular profits and more follow-up policy cooperation.
On the domestic front, the policy will increase policy efforts to restore economic growth momentum. Optimizing measures for epidemic prevention and control have been launched one after another, further clarifying the policy direction. Although this favorable measure has boosted market confidence, we see that the boosting effect of market sentiment is diminishing marginally, and the recent sluggish economic data indicate that further measures are needed. Great policy support. In terms of liquidity, judging from the southbound capital inflow of the Hong Kong Stock Connect, the enthusiasm of mainland investors to invest in the Hong Kong stock market has recently declined due to potential profit-taking. In addition, we have seen that after this round of rebound, the outflow pressure of overseas active funds has not changed, and the subsequent continuous inflow may need to be based on the improvement of fundamentals.
On the whole, disturbance factors at home and abroad are undergoing marginal improvement. As for the Beta-type opportunities in the market as a whole, we believe that in 2023, there is a high probability that there will be a resonance between the Fed’s interest rate hike and the stabilization and recovery of China’s economic growth. Usher in more profit (numerator side) and valuation (denominator side) repair opportunities, similar to the situation in the first quarter of 2019. In this context, we will focus on growth tracks such as the Internet, pharmaceutical biology, and optional consumption.
Winwin Fund stated that with the continuous optimization of domestic epidemic prevention policies and the intensive introduction of real estate-related support policies, the expectation of a marginal slowdown in monetary tightening by the Federal Reserve overseas has become increasingly clear, and the expectation of a “strong recovery” in the economy is gradually priced. The Hang Seng Index reached 12 on October 31 At the end of the month, it rebounded sharply, with an increase of more than 30%. On December 31, the National Bureau of Statistics disclosed that the domestic manufacturing PMI in December was 47.0%, and the non-manufacturing business activity index was 41.6%, both hitting new lows this year, reflecting that the current domestic economic fundamentals are still weak. In the context of the relatively large increase in the Hang Seng Index in the early stage, the game between “strong expectations” and “weak reality” has further intensified, so the market has experienced large fluctuations, showing a trend of opening low and moving high.
Looking back, domestically, judging from the latest big city congestion index, subway passenger traffic and other indicators, the peak speed of the epidemic at the national level is expected to exceed expectations, and may appear in early January. Some of the cities that reached the peak first can already A significant recovery in offline consumption was observed. At the same time, the Central Economic Work Conference made it clear that the expansion of domestic demand will be the top priority in 2023. Potential consumption and real estate support policies are expected to be intensively introduced, and the slope of the domestic economic recovery is expected to exceed expectations. With the possibility of stopping interest rate hikes in the middle of 2023, the general trend of slowing down the rate of overseas monetary tightening has formed, and its impact on the global liquidity environment is expected to be gradually eased. The better-than-expected internal economic recovery supports the recovery of earnings, the external liquidity environment is positive in the long term, and the valuation position of superimposed H shares is relatively low, so the market outlook can still remain optimistic.
The following factors need attention in the near future: 1) Changes in the domestic epidemic situation; 2) The introduction and implementation of various domestic growth stabilization policies; 3) The evolution of real estate and real estate financing; 4) The subsequent statement of the Federal Reserve; 5) Geopolitical conflicts evolution.
China Merchants Fund stated that with the convening of the Central Economic Work Conference in December 2022, the expectation of stabilizing the economy has risen, and the superimposed prevention and control measures have been gradually optimized. As far as Hong Kong stocks are concerned, policy catalysis has further consolidated the recovery of the Hong Kong stock market.
Continue to focus on the following sectors: the first Internet sector. The Central Economic Work Conference also affirmed the role of the platform economy in employment. At the same time, new progress has been made in the audit process of China concept stocks, which has slowed down the risk of delisting. The long-term allocation value is highlighted.
Second, the biomedical sector. The internationalization of innovative drugs is advancing steadily, and the CXO industry is still booming.
Third, the advanced manufacturing sector. The electrification and intelligence of automobiles driven by new energy vehicles has driven the demand for core components; under the background of domestic substitution, a group of powerful enterprises will create value in the process of expanding new application scenarios.
Fourth, emerging consumption – national trendy consumption, home appliances going overseas, trendy play consumption. With the increase in research and development investment, the product strength of domestic brands has risen strongly. The penetration rate of smart home is in the early stage of rapid explosion. China’s export cross-border e-commerce has grown rapidly, and Chinese manufacturing has become an important participant in overseas smart homes.
Fifth, the high-dividend stocks sector. There are many value stocks with high dividend yields and attractive valuations in the Hong Kong stock market, which deserve attention.