Decoding The Investment Strategy Of The First Batch Of Public Offering In 2021: Making Money For Profit Growth, Optimistic About Consumption, Technology And New Energy

Near the end of the year, fund companies began to review the market situation in 2020 and study the investment strategy in 2021.

According to the incomplete statistics of the 21st century economic report, as of December 17, the first batch of five public fund companies have issued the 2021 strategy report, including Cathay Pacific, Jingshun Great Wall, Shanghai Investment Morgan, Anxin and Hua'an.

In addition, a large number of fund companies have said that the 2021 fund strategy report will be released in mid January 2021.

On the whole, the magic 2020 is coming to an end. At the end of the year, fund companies are all surprised that the world is unexpected. They have guessed the beginning of the A-share market in 2020, but have not guessed the happy ending.

Looking forward to 2021, fund companies began to be cautious, generally optimistic about the market in the first half of next year, but cautious in the second half of next year. A consensus is: "next year, the market will move from earning money for valuation appreciation to making money for profit growth."

It is worth mentioning that the first five fund companies that released the 2021 strategy report will be optimistic about consumption next year (mainly in the fields of home appliances, new energy vehicles, etc.). In addition, there are four fund companies that are optimistic about science and technology and new energy, and three fund companies are optimistic about Pro cycle, finance, new infrastructure and medicine.

Magic 2020

Public funds didn't expect to make a lot of money in 2020.

Standing at the end of 2019, almost all fund managers are firmly advising investors to reduce their investment expectations in 2020, and the reason given is that the valuation of a shares in 2020 is much more expensive than that in 2019.

However, when the epidemic hit the global economy, no one expected that the stock market ushered in a carnival, and benefited from the earliest control of China's epidemic situation and the rapid economic recovery, a shares performed quite well.

As of December 17, since 2020, the Shanghai Composite Index has risen by 11.63%, the Shenzhen Composite Index by 33.16% and the gem by 54.92%.

Jingshun Great Wall Fund pointed out in the market review in 2020 that "in 2020, the A-share market as a whole will fluctuate upward, the contribution of valuation is greater than the contribution of profit, and the industry growth differentiation is obvious."

Overall, consumption and technology led the rise in the first three quarters, and manufacturing and cycle strength in the fourth quarter.

Specifically, from January to February, the epidemic started to ferment in China, but under the catalysis of ultra loose liquidity and science and technology policies, science and technology sectors represented by semiconductors, cloud computing, 5g, new energy vehicles, etc. continued to rise.

From the middle and late February, with the global spread of the epidemic, the market sentiment turned rapidly, and the global stock market plummeted, especially the European and American stock markets, which had the highest speed of decline and the number of circuit breakers.

Since the middle and late March, countries have launched strong measures in epidemic prevention and control, monetary and financial policies, and the market panic has gradually eased.

From April to may, countries began to restart their economies, and overseas stock markets continued to rebound; domestic policy tone weakened stimulus and growth, A-share rebounded weakly, and the market continued to cluster as domestic demand and technology leaders with relatively high certainty.

In June, with the U.S. stock market rebounding to a high level, repeated Sino-U.S. frictions, and the pressure of the second epidemic, the overseas market volatility increased, and A-share continued to rise under the guidance of a small number of leading consumers and technology.

At the beginning of July, the financial leading index rose rapidly, and then entered a wide volatility pattern, and the degree of differentiation of plate valuation reached the highest in history.

From August to September, economic recovery continued, but macro and micro liquidity tightened, overseas uncertainties increased, and the market continued to adjust. The gem index was slightly lower than CSI300 for two consecutive months.

Since October, with the performance verification of the third quarter report, the landing of the U.S. general election, and the continuous recovery of the macro economy, the pro cyclical sectors with improved bottom profits of automobiles, household appliances, chemical industry, machinery and nonferrous metals have begun to strengthen.

Optimistic about the first half of 2021

Standing at the end of 2020 and looking forward to 2021, almost all fund companies will return to the old tune: there are structural opportunities, but most stock valuations are already very expensive, so we should reduce the earnings expectations. Even people from fund companies predict that the average return of equity funds in 2021 may be negative.

However, fund companies are generally optimistic about the A-share market in the first half of 2021.

According to Cathay Pacific Fund, China's economic growth in 2021 will show a rhythm of high before and low after, taking into account the base effect caused by the epidemic in 2020 and the month on month recovery of the economy. In the first half of the year, the economy was warm and the policy was tight. In the second half of the year, the economy fell back, and the policy returned to neutral or even loose.

Cathay Pacific Fund is optimistic about the performance of A-share market in 2021, but believes that 2021 will be driven by performance and the overall valuation is difficult to further improve.

The reason is that from the current valuation level, the all a risk premium is at the historical 18% quantile, and the CSI 300 dividend yield / 10-year Treasury bond is at the historical 40% quantile level, which means that the valuation is at a high position and needs to wait for the digestion of the profit growth in 2021.

Jingshun Great Wall Fund also said that the economic recovery in the first half of the year is still in inertia, and the growth rate in the second half of the year may fall back marginally. The gradual withdrawal of aggregate policy, especially fiscal policy, returns to normal. As expected, market divergence only lies in the range and rhythm, not in the direction. The further tightening of monetary policy depends on the rising range of price indicators.

"The market has experienced two consecutive years of price hikes. Historically, it is the limit to raise valuations for two consecutive years, and the probability of raising valuations again next year is low. The market will go from making money for valuation appreciation to making money for profit growth. " Jingshun Great Wall pointed out.

Jingshun Great Wall believes that the profit growth rate of 20q4-21q1 listed companies will continue to expand, and the peak may be 21q1-q2. Under the effect of the base, the growth rate in the second half of the year will start to decline, but it is still expected to reach about 20% in the whole year. Therefore, in terms of rhythm, the whole year is still a structural opportunity. In the first half of the year, we should grasp the direction of profit improvement and the convergence of inter industry valuation. In the second half of the year, we can shift to defensive allocation, while in shock Long term advantage track layout.

According to the judgment of Anxin fund, the overall pattern of the A-share market in 2021 may be an index shock or a small rise, but the valuation is expected to fall in stages, the industry structure differentiation tends to be balanced, the profit driven growth is the key to stock selection, and China's equity market is optimistic for a long time.

Shanghai Investment Group Morgan analysis believes that under the theme of global recovery resonance, it is expected that the annual profit growth rate of A-share listed companies in 2021 is expected to return to more than 10%. On the whole, the impact of liquidity on the market will gradually weaken in 2021, and the importance of fundamentals will be further enhanced; the first quarter is in the typical mid recovery period, with improved profits and relatively friendly policies, which is still a good time window for doing long. After the second quarter, we need to pay attention to the direction of policy. Industries with high performance certainty may have sustained excess earnings.

Looking forward to the equity market in 2021, Hua'an fund proposes to "reduce the yield expectation in 2021 and pay attention to structural opportunities."

Investment strategy in 2021

From the perspective of investment strategy in 2021, the preferred fields of the first batch of fund companies issuing strategy reports include: consumption (5), new energy (4), technology (4), pro cyclical (3), Finance (3), new infrastructure (3), medicine (3), etc.

In the view of the investment research team of Anxin fund, the favorable factors of next year's market include: A-share profit is expected to recover in 2021, but it is expected to decline quarter by quarter. It is suggested to pay attention to the plate with the prospect of continuing such as midstream manufacturing and optional consumption. However, the turning point of financial, cyclical and service optional consumer sectors is approaching. In terms of industry policies, the focus is on the 14th five year plan and the new cycle of science and technology.

As for the suggestions on asset allocation, Anxin Fund believes that valuation needs to be digested through performance growth, which is also the core idea of equity asset allocation in 2021.

Anxin fund suggests that we should choose core assets with cycle growth and stable fundamental expectation and undervalued targets. It is expected that from the second quarter of next year, there will be a more obvious improvement direction among the pro cyclical plate, which may have realized a certain increase. It is suggested that we should start to pay attention to those that can digest the valuation through performance. Key directions include: adjusted consumer sectors such as liquor, medicine and biology, leisure services, and related sectors of science and technology business cycle, such as consumer electronics and new energy.

Specifically, the Anxin fund suggests that it can focus on the industries with economic recovery from three directions: first, industries related to global recovery, including cycle, finance, automobile, household appliances, midstream manufacturing, as well as service consumption industries such as airports, aviation and media; second, industries benefiting from order deferral, such as medical and American, medical education informatization, cloud security, etc.; and third, long-term track high scene Gas industry, online life, work and entertainment scenes, 5g applications, new energy vehicles, new energy power generation, military industry, etc.

Jingshun Great Wall believes that at present, the systematic risk of the market is not big, but the valuation of some sectors is high and the performance of individual stocks is not realized. Therefore, it is suggested that investors should focus on mining fundamental support, achieve sustainable growth and have core competitiveness to invest in outstanding companies.

"In terms of direction, seizing structural investment opportunities, the rebalancing of market style is still continuing, the approximate rate of market valuation will further converge in the future, and the undervalued value + profit is still improving, which will be the core idea of allocation. In addition, from the perspective of strategic allocation, growth is still a long-term focus in the future, especially in emerging economies such as science and technology, medicine and consumption upgrading Jingshun Great Wall pointed out.

As for the allocation direction, Jingshun Great Wall believes that on the one hand, it is necessary to grasp the direction of low valuation + profit improvement, such as machinery, chemical industry, automobile, airport and other pro cyclical main lines, as well as large financial sectors with absolute advantages in valuation;

On the other hand, in the fundamental market, we should pay attention to quantitative strategies (such as low wave dividend strategy);

In addition, in the market environment with large market volatility and limited beta income, the advantage of absolute income will be highlighted, so it is suggested to consider the fixed income + strategy;

For the long-term strategic direction, Jingshun Great Wall suggests paying attention to emerging economies, such as science and Technology (semiconductor), medicine (innovative medicine, CXO, medical services), and consumption upgrading. If there is a correction in the middle of the year, it is a good layout opportunity;

Jingshun Great Wall specially pointed out that Hong Kong stock valuation has advantages in horizontal comparison, and hang seng index has absorbed more Internet technology companies, and the index structure is further optimized, which is more in line with the current industrial trend.

"From the bottom up, we conduct internal scoring based on five dimensions: medium and long-term trend of the industry, short-term prosperity change, short-term catalyst, valuation level (absolute and relative) and sentiment to find the most cost-effective segment of the industry. On the whole, the Internet of things, chemical fiber, cement manufacturing and household light industry are booming in the short term, with reasonable valuation and high cost performance of investment. " Jingshun Great Wall said.

Cathay Pacific Fund believes that real estate sales are expected to reach a peak in the fourth quarter of 2020, with a downward trend in 2021, and the growth rate of real estate investment will also decline compared with that in 2020. From the perspective of the industrial chain, the internal prosperity of real estate will further shift from sales and new construction to construction and completion.

For manufacturing investment, Cathay Pacific believes that the total investment in manufacturing industry has marginal recovery power, but the intensity is limited. It is more concentrated under the survival of the fittest in the industry and the structural recovery brought by the rise of equipment investment cycle. The fields represented by automation equipment, new energy sources and new infrastructure are expected to continue to rise in 2021.

In addition, Cathay Pacific Fund believes that under the "double cycle" pattern, consumption will gradually boost the economy. Offline consumption and optional consumption will continue to recover in the first half of 2021, and remain stable in the second half of 2021, and the overall consumption must remain stable.

Shanghai Investment Morgan fund is relatively optimistic about finance, nonferrous metals, chemical industry, automobile, household appliances, new energy vehicles, consumer electronics, photovoltaic, military industry, etc.

Hua'an fund suggests to adopt "dumbbell strategy" in 2021 to balance the value and growth of allocation in the industry.

On the one hand, Hua'an fund is optimistic about the global made in China, on the other hand, it is optimistic about the new economic track, including new energy vehicles / 5G and application / biomedical / large consumption, which will maintain a relatively high growth rate. In addition, the economic recovery has led to the recovery of the value plate, and the financial industry and upstream raw material industry with low valuation are expected to usher in periodic improvement and value return.

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