How Far Is The Stock Market From The Real Value Investment Trajectory?

The domestic stock market fluctuate in 2016, and its structure is divided. We went through the mud and sand at the beginning of the year, the rebound of growth stocks in 2-3 months, the new energy car Carnival in 4-6 months, the raising of blue chip stocks in 7-8 months, the increase in the value of blue chips in the 4-6 months, and the macro and weak recovery in 10-11 months. We also experienced the strong feeling of the black swans caused by the MSCI and A shares being lost again, the referendum in Europe, the unexpected fall of Trump and the panic of the bond market in December. We witnessed that the financial regulators jointly worked together to control the asset bubbles. The SFC postponed the strategic emerging board and cracked down on the "flicker style" restructuring. Looking back, We think that the center of the stock market will move up appropriately, which means that if the valuation of small and medium sized enterprises has been adjusted and entered a reasonable interval, we need to increase the allocation, but we still need to avoid relying on flicker restructuring, story space and other small capitalization stocks. That is to find products with innovative, management level and solid management growth stocks and return to real ones. Value Investing 。

First of all, it is estimated that the macro-economy will run smoothly in 2017. There will be no so-called "stagflation" risk of the economic cliff falling and the inflation out of control. In the four quarter of 2016, benefiting from the firm push of the supply side reform and the active replenishment of entities, PPI quickly returned to 5% in December, and PMI also stood for more than 51 in 3 consecutive months. CPI also rebounded from low to 2.1%. From the micro data, the sales growth of heavy trucks, construction machinery and other middle reaches industries was better than expected under the help of the replenishment cycle. The first quarter of 2017 may appear at the top of the various economic indicators, but our expectations for real estate investment are more optimistic than that of the market, while infrastructure investment continues to be overweight, consumer demand is rising steadily, and export performance will exceed expectations. Comprehensive assessment of economic growth into the new normal, growth in the policy target range.

Secondly, the concentration of various industries is improving, and the profits of listed companies are better than expected. In 2016, we witnessed the rise in prices of products in many industries. Under the premise of basically stable demand, the essence of supply is the contraction of supply. scale effect The total cost of large enterprises is lower than that of small and medium-sized enterprises. Therefore, small businesses in many industries will be cleared by market or administrative capacity. Ultimately, the profits of leading enterprises will benefit from the limited price increase of products, including pushing forward the supply side reform of iron and steel, natural selection of paper, chemical industry and other industries. Data show that in 2016, the net profit growth of non-financial listed companies reached 13%. I think the main reason is the improvement of the gross profit margin of the upstream enterprises. At the same time, the interest rate cut and deleveraging reduce the financial cost, and more importantly, the industry concentration degree increases and the market share expands.

Third, in 2017, investment is stable first. value 。 At the end of 2016, the central economic work conference stressed that the "stable" economy in 2017 was the main keynote, and demanded the prevention and control of financial risks and the suppression of asset bubbles. The general direction of macroeconomic policy in 2017 has been basically clarified. Under the premise of stable economic operation, monetary policy is moderately robust and the macro mobility is slightly tighter than that in 2014-2016 years. However, the allocation needs of institutional funds such as bank financing, insurance funds, pension and other institutions are still strong, and A shares are currently in a low class asset class with high performance price ratio. We suggest that we should attach great importance to the blue chip value varieties with low valuation and better liquidity, mainly based on second factors: first, the importance of "cake" is higher than the "big cake" in the macro stock structure, so the leading enterprises will enjoy premium. The other is that A shares, which are higher in low risk preference funds such as bank funds and pensions, are favored by the blue chips with sound performance and reasonable valuation.

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