Value Investing Or Big Trend For A Share Market

Since the beginning of this year, the market has shown new features such as low volatility, low turnover, and improved valuation of white horse stocks.

Although the market rose in the first quarter, the number of stocks in the two cities rose much less, but the money making effect in the market weakened.

In the context of tighter regulation, faster IPO and a gradual increase in the proportion of institutions, many industry insiders say that A shares will pay more attention in the medium to long term.

In the future market or two level differentiation, investors should take the initiative to adapt to the new market changes, abandon the over speculation mode of operation, and dig more investment opportunities from the fundamentals.

Looking back on the trend of this year's market, it can be described as "no surprise", with a smaller fluctuation.

The Shanghai stock index has the lowest 3044.29 points in the year, the highest 3295.19 points, and the upper and lower intervals are only 8%.

If the fluctuation is minimal in terms of a single day's rise and fall, the Shanghai stock index has only risen by more than 1% per day on the three trading day so far, and there has not been a single day's rise or fall of over 2% so far.

This phenomenon has been very rare in the past 10 years, while other indices have similar situations.

Shen Wan Hongyuan's previous data show that the overall market volatility of A shares has been lower than the central level from 2009 to 2014, and almost all of the industry's volatility has dropped significantly below the historical 10% percentile.

At the same time, since the beginning of the year, the A share market turnover has returned to a historical low, close to the overall level from 2012 to 2013.

Against this background, most stocks are shaking sideways.

Since the end of last year, A shares are thousands of strands. Apart from the new shares and the recent Xiong an concept stock, most stocks have been sluggish, "a private person who declined to be named said frankly," such a market is more difficult to make money.

In this regard, Qianhai open source chief economist Yang Delong told reporters analysis, "A share market volatility reduction is mainly due to three reasons: first, after the stock market disaster, the market risk preference has been reduced, investors are more concerned about the fundamentals of the company; two, after the opening of Shenzhen and Hong Kong, the valuation system of A shares and Hong Kong stocks has gradually moved closer, and some valuations of small cap stocks have been compressed; three, tighter regulation has led to lower market volatility, and the crazy speculation of hot money on theme stocks has been suppressed."

National Gold

Zhou Zuhua, an analyst at wealth management center, pointed out: "since last year, the SFC has been strictly supervising and promoting the legalization construction of A shares, cracking down on speculative speculation deviating from value investing, and the soil of long-term investment and value investing is taking shape.

At the level of listed companies, regulators tighten the refinancing policy and accelerate the IPO process. The extension of M & A of small and medium-sized companies is expected to weaken, and the shell value is reduced. The valuation premium of small cap stocks begins to return to the mean.

In recent years, although A shares are still dominated by individual investors, the structure of investors has changed significantly.

From the perspective of the number of accounts, China still relies mainly on individual investors, and its personal accounts account for more than 90%. However, from the perspective of the market value of shareholding, the proportion of individual investors has begun to decline in recent years, while the proportion of market capitalization of industrial capital held by institutions and general legal persons has gradually increased.

After the 2015 stock market crash, the national team represented by CSI,

And so on, the new institutional capital has entered the field and the strength of the organization has increased greatly.

By the end of last year, the scale of stock fund accounts for about 1 trillion and 300 billion yuan, about 2 trillion and 700 billion yuan of private equity funds, and 1 trillion and 800 billion yuan of insurance funds, while the scale of public offering funds (including stock and mixed type) is about 2 trillion and 600 billion yuan.

In addition, last year's three quarterly report showed that the national team held a stock market value of about 1 trillion.

The industry generally believes that in the future, with the pensions entering the market and A shares being incorporated into MSCI, institutional investors will make considerable progress, and the structure of A share investors will gradually change from individual ownership to institutional leading.

According to Haitong Securities research, different stages of investor structure in the dominant funds, the market style will also be greatly changed.

In the 2005-2007 year, the large scale development of the public fund raised the blue chip bubble; in the 2013-2015 year, the development of private equity fund promoted the small and medium sized stock market; since 2016, the absolute income investors such as insurance and bank financing have been growing, and the investment strategies and styles of different institutions are different, making the market style more diversified.

Zhou Zuhua analysis said, "with the size of the gradual lifting of the ban, the current A share market has the highest circulation market value is the general corporate shareholders, accounting for 60%, the institutional market share accounted for about 15%, personal investors holding market value accounted for 25%.

But from the volume of pactions, individual investors account for 80% of the turnover.

The structure of investors in A shares is still in the early stage of market development. However, from the perspective of stock market development, the structure of investors will undergo a stage of evolution from individuals to institutions, but this change will not happen overnight. Regulators need to constantly improve market rules, and they will be able to complete the market through a long game.

"Data show that after the stock market crash, the proportion of institutional investors in A shares has increased," Yang Delong told reporters. "With pensions entering the market, A shares will be incorporated into MSCI in the future, and foreign capital flows into A shares through Shenzhen, Hong Kong, Shanghai and Hong Kong, the proportion of institutional investors in the future market will further improve, and the game will become the mainstream of the market."

It is worth mentioning that although most of the stocks are not performing well this year, there are still a number of undervalued white horse stocks, which are continuously being sought after by funds, such as Guizhou's stock price approaching 400 yuan mark; pharmaceutical stocks leading Dong'e Ejiao, Yunnan Baiyao, household appliances GREE electric, and Mei group are all approaching or refreshing their record highs.

In addition, although most TMT

The trend of stocks is weak, but the industry's leading shares, such as GoerTek shares, Hikvision and Dahua shares, have increased by more than 20% during the year, far outperforming the industry average.

Reporters noted that the above stocks have stable growth performance and low valuation.

To this end, some institutions have proposed that A shares will become US stocks and Hong Kong stocks in the future.

Shen Wan Hongyuan gives 3 core characteristics of A share return to value investment: first, leading shares can give valuation premium, while small cap premiums begin to return to mean value; two, volatility decreases; three, turnover rate decreases.

Haitong Securities chief strategist Xun Yugen pointed out that since the end of Shenzhen and Hong Kong through the formal opening of the two funds flow more smoothly, market linkage is also stronger, the two markets will inevitably merge in the future.

Hong Kong stock value investment philosophy is more popular, the market blue chip stock premium and stable turnover, small cap stocks are relatively low valuation.

How can investors cope with the new changes in the market? Zhou Zuhua said that although A shares evolve to mature markets such as US stocks, it will take a long time, but this is a major trend and is also consistent with the long-term stable development of the market.

Only by adhering to the concept of value investment and abandoning the rise and fall, can investors adapt to the general trend of the market.

Yang Delong told reporters that in the face of the coming of the institutionalization era, small and medium investors should gradually adjust their asset allocation and increase the proportion of products such as funds, so as to share some of the investment returns brought by some well performing institutions.

An investment manager of the eastern securities brokerage management department told reporters that Hong Kong stocks were blue chip stocks valued at a premium, active pactions, and small cap stocks valuations were relatively low, the paction is scarce, the future A shares valuation system and market conditions are likely to be the same.

The trend of A share return to value investment is irreversible. Although some theme stocks are hyped up for a while, they will eventually return to value.

Li Daxiao, chief economist of British securities, pointed out that stocks with high valuations, such as subject stocks, small stocks, pseudo growth, junk stocks and so on, are of medium and long-term risks.

Under the changing market environment, investment logic and investor structure, the bubble burst should be a big probability event.

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