China Fund News reporters Fang Li and Cao Wenjing
The A-share first quarter report that has attracted much market attention is nearing the end of disclosure, which has also become a "guiding light" for market prospects. Data from
wind shows that as of April 30, 5,357 of the 5,361 listed companies in the A-share market have disclosed financial data for the first quarter of 2024. According to Shenwan first-level industries, the performance growth rate of listed companies in electronics, agriculture, forestry, animal husbandry, fishery, social services and other fields is relatively high, while the net profit growth rate of real estate, computers, materials, power equipment and other industries is negative. Judging from changes in individual stock performance, 2,835 companies' net profits attributable to parent company shareholders achieved positive year-on-year growth, accounting for 53%, of which 793 listed companies' net profits grew by more than 100% year-on-year.
What are the highlights in this year’s first quarter report? How to adjust investment strategy based on the first quarter report? Next, how will the A-share market perform? Can the "Red May" market be expected? In this regard, a reporter from China Fund News interviewed six outstanding fund managers, namely:
Chief Equity Investment Officer of Founder Fubon Fund Tang Ge
Deputy Director of Investment and Fund Manager of the Fourth Equity Investment Department of Bosera Fund Xiao Ruijin
Fund Manager of the Quantitative Investment Department of Cathay Fund Ma Yiwen
Rongtong Dividend Opportunities Theme Selected Fund Manager He Long
Chuangjin Hexin New Materials and New Energy Fund Manager Xie Tianhui
Western Lide Fund Manager Du Pengzhe
These fund managers believe that judging from the current quarterly reports, most A-shares have been listed. The company's overall performance has been steady and rising, and the overall first quarter report performance has exceeded expectations. Therefore, it is worth looking forward to the subsequent performance of listed companies, and a "red May" can be expected. Many people bluntly said that from a global perspective, Chinese assets are very attractive and they are optimistic about the investment value of A-shares and Hong Kong stocks.
The overall performance of the first quarter report exceeded expectations
China Fund News reporter: Currently, A-shares have entered the "first quarter report time". Can you share the overall situation of the industry you are concerned about and what are the highlights? What exceeded expectations? Which ones fell short of expectations?
Tange: Electronics, consumption and electricity are my main areas of focus. My investment framework is mainly to select varieties from the bottom up, so I pay more attention to the specific performance of subdivided industries and companies. Many companies in the electronics display industry chain and mobile phone industry chain performed well in the first quarter, with substantial year-on-year growth in revenue and interest rates, confirming the judgment that the industry cycle is turning upward. In terms of consumption, the liquor companies I am optimistic about also experienced year-on-year growth in the first quarter despite a high base last year. Cosmetic companies have achieved results in reducing costs and increasing efficiency, Internet companies have increased advertising revenue, and catering companies have achieved good revenue growth, but the single-store profit model has encountered problems. Here comes the challenge. Power companies generally saw substantial profit growth in the first quarter, but at the same time, electricity prices fell. Overall, most of these quarterly reports contain hope, and we can expect an upward cycle.
Xiao Ruijin: Judging from the current quarterly reports disclosed, the overall performance of most A-share listed companies has increased steadily. There are three significant features: first, the performance of the upstream resource industry generally exceeds expectations. The continued rise in crude oil, industrial metals and precious metal prices in the first quarter has driven the performance elasticity of related companies; second, the performance of companies with a high proportion of exports generally exceeds expectations. , including artificial intelligence computing power, home appliances, construction machinery and smartphone industry chain export data are relatively ideal, and pushed up the first quarter performance; third, leading companies generally have better performance, because leading companies have strong industry chain integration Capability, it is therefore able to obtain certain excess profits during the industry rebound cycle, including lithium batteries, new energy vehicles and other industry leaders, which have demonstrated good performance stability.
Ma Yiwen: Judging from the disclosure of the A-share first quarter report, the performance of various industries is basically in line with the changing trends of macro and meso high-frequency data.Among them, semiconductor chips, farming and other industries have performed better year-on-year in profit due to production capacity reduction, demand improvement or cost reduction. In addition, optical modules and other subdivisions in the highly prosperous communications sector have benefited from the iterative upgrading of AI innovation, and their growth rates have increased. It is still at a high level and may even continue to rise. In contrast, the overall performance of the real estate industry chain has declined sharply amid sluggish sales and construction data. Future opportunities may have to wait for more policy support and an improvement in supply and demand relations.
Du Pengzhe: The overall performance of ’s first quarter report exceeded expectations. Along with exports, export-driven manufacturing, and related upstream resources, the performance is outstanding. In addition, the overseas AI computing power supply chain performance is in line with the expected high growth; in the technology and consumption directions, many structural sectors have exceeded expectations under low expectations. ; The performance of real estate and real estate-related industry chains is under pressure.
Xie Tianhui: I mainly focus on the manufacturing industry. The highlights in the first quarter of this year are concentrated on the export business, such as engineering machinery, power equipment, electricity meters, transformers and other industrial products. The operating income and profits of the export part have been relatively large. has increased, and the export areas are not limited to Europe and the United States, but also include South America, Africa, the Middle East, Southeast Asia, etc. In addition, consumer-oriented export chains, such as light industry and home appliance exports, also performed well in the first quarter. It can be said that the overall export chain performed well in the first quarter report, which is the highlight of this first quarter report.
He Long: The industries I focus on are mainly upstream resource products such as "copper, gold and oil", machinery in the export chain, shipping, and high-dividend public utilities. In the first quarter, both overseas demand and domestic production were in high prosperity. Therefore, the overall performance of the first quarter report of resource products and export chains was good. Industries whose first-quarter reports are lower than expected are mainly due to full expectations and declining gross profits caused by industry involution. These two characteristics exist in the automotive chain and some public utilities. The performance of individual stocks in the industry is obviously divided, and some stocks are lower than expected.
The performance of midstream manufacturing companies and consumer companies
has exceeded expectations and is even more expected.
China Fund News reporter: What are your predictions for the performance of listed companies in the next few quarters? Which industries do you think have the potential to achieve higher-than-expected performance growth in the future?
Tange: My observations in the first quarter mainly want to confirm my previous judgments on the industry cycle and company operating cycle. From the actual data and evidence, most of the companies I follow are in the process of upward cycle, so I am It is expected that the company's performance will continue to improve in the next few quarters. During the upward cycle, I am more looking forward to the performance of midstream manufacturing companies and consumer companies exceeding expectations. Some companies in the manufacturing industry have high operating leverage, and changes in capacity utilization or product prices may have a major impact on changes in performance. Some companies in the consumer industry have the ability to migrate product price bands, have the ability to manufacture hot-selling products, and have the ability to expand consumer networks. These may also result in performance exceeding expectations.
Xiao Ruijin: We have a positive view on the overall performance of A-share listed companies in 2024. Recently released data indicate that the domestic macro-economy has entered a recovery trend as a whole. It is expected that with further adjustments to domestic real estate policies and further growth in manufacturing exports, the domestic macro-economy will enter an upward trajectory and drive the continued growth of listed companies in the next 2 to 3 quarters. growth trend.
We focus on three aspects. First, the upstream resource products industry will continue to achieve good performance growth, which is mainly due to supply constraints of bulk industrial metals such as copper and aluminum and low social inventories; second, we focus on the export share. Relatively high artificial intelligence computing power, daily consumer goods such as small household appliances, capital goods such as engineering machinery and electrical equipment, and high value-added technology products such as smartphones will continue to experience high growth for a period of time; finally, focus on semiconductor equipment and new energy vehicles Leading companies in industries such as PV and photovoltaic energy storage continue to have strong industrial chain integration capabilities, continue to gain market share, and achieve performance growth that exceeds expectations.
Ma Yiwen: China is currently in a stage of economic structural transformation and upgrading. Since last year, major policies such as new quality productivity, independent controllability, and equipment updating have continued to increase.Corresponding to the performance level of listed companies, related semiconductor equipment, biomedicine, communication equipment, industrial motherboards, robots, low-altitude economy, etc. are long-term growth tracks with great potential for performance growth. In addition, with the global manufacturing industry including China recovering, the recovery in demand for some resource industries with strictly limited production capacity, such as non-ferrous metals and coal, may bring greater flexibility in price increases.
Du Pengzhe: corporate profits are reaching a relatively low point in the medium term. Looking to the future, as the economy enters the path of recovery, upstream resource products with clear supply-side structures, and structural directions with strong industrial trends in science and technology may have the potential to grow beyond expectations.
Xie Tianhui: Manufacturing companies are affected by the Spring Festival holiday. The first quarter is often the off-season of the whole year, so there is still a lot of room for improvement in the performance of the next three quarters compared with the first quarter. In addition, we are firmly optimistic about the continued recovery of the domestic economy, so we are relatively optimistic about the full-year performance outlook of listed companies. In addition, humanoid robots, resource fields, etc. are expected to have better-than-expected performance.
He Long: has entered the second quarter, and many industries have entered the peak season. Coupled with the implementation of domestic liberal credit policies and the continuation of overseas replenishment cycles, we are optimistic about the performance of listed companies in the next few quarters, especially some in the first quarter of last year. Industries with high base characteristics, such as pharmaceutical and consumer-related sub-industries. At the industry level, we believe that high-prosperity industries such as upstream resource products and export chain-related industries are expected to be relatively full, but at the individual stock level, there is still the possibility of exceeding expectations. In addition, expectations for the technology direction are low, but given the certainty of subsequent domestic computing power capital expenditures, there is also the possibility of exceeding expectations. The performance of state-owned enterprises in highly prosperous industries is also very likely to continue to exceed expectations.
The first quarter data has become a "touchstone"
Fundamentals will be the main focus for stock swaps
China Fund News Reporter: Will there be any stock swaps or adjustments to this year's investment strategy based on the first quarter report? What is the investment logic and direction of portfolio adjustment? Are there different strategies for holding positions in old funds or opening positions in new funds?
Tange: For my investment framework, quarterly reports are used to verify the judgment of the winning rate of the invested products. The situation of the first quarter report and the impact of the previous stock price performance of these products on the valuation will adjust my odds and odds of the products I focus on. Comprehensive judgment of winning rate, thereby affecting the composition and proportion of the investment portfolio. From the current point of view, we can continue to adhere to several directions of the funds managed by us. Electronics and consumption can be fine-tuned within categories, and the electric power direction can be adjusted between sub-sectors. In the investment process, there is no big difference between the strategies of old funds and new funds, but because the buying time of specific varieties is different, the same portfolio will not be completely copied, and the selected varieties and proportions will be different.
Xiao Ruijin: We will test our investment logic based on the first quarter report, but we will not make major adjustments to this year’s investment strategy.
predicts that 2024 will be the year when the domestic macro-economy bottoms out and rebounds. Therefore, the investment logic of the portfolio will mainly focus on the two dimensions of domestic demand recovery and external demand growth.
Domestic demand focuses on technology growth industries with low expectations and marginal improvement in fundamentals, focusing on the layout of new productivity sub-sectors such as artificial intelligence, digital economy, and semiconductors. External demand mainly focuses on domestic leading companies such as home appliances, engineering machinery, and new energy vehicles that have global comparative advantages and the ability to integrate industrial chains for layout. The strategies for holding positions in old funds or building positions in new funds are the same.
He Long: The first quarter report of is the most important introduction to the market situation throughout the year and the most important basis for making portfolio adjustments and clarifying the annual investment strategy. The adjustment logic of our portfolio will still follow the basic principles driven by fundamentals. We will continue to maintain the allocation of upstream resource products with obvious supply rigidity. At the same time, we will increase the allocation of domestic computing power and intelligent manufacturing related to new productivity capital expenditures, including intelligent driving. , robots, etc. In addition, we will also increase the allocation of consumer medicine and appropriately reduce the allocation of pure high dividends.
Warm wind blows frequently
"Red May" market can be expected
China Fund News reporter: Since April, the restorative market of A-shares has continued. Overseas disturbing factors have intensified, and they have entered a period of intensive disclosure of quarterly reports. How will the A-share market perform? Can the "Red May" market be expected?
Xiao Ruijin: Judging from the calendar effect of A-shares, the probability of rising in May is higher. Due to the improvement of the domestic macroeconomic environment, the first-quarter performance of some domestic listed companies this year showed good growth both year-on-year and quarter-on-quarter. Among them, industry leading companies supported by sustained fundamentals and investment logic will continue to gain valuation expansion. And presented as a more coherent investment opportunity.
However, companies whose fundamental expectations are not fulfilled and whose core competitiveness is damaged may face continued valuation contraction. In addition, from the perspective of thematic investment, some growth industries whose short-term performance has not been realized but whose long-term investment logic is relatively solid will also show a certain degree of valuation recovery after the performance period, reflecting the more distinctive characteristics of thematic investment.
Ma Yiwen: The recent performance of the domestic capital market has been better than that of overseas markets. The U.S. inflation data is strong, U.S. bond interest rates and the U.S. dollar are rising. High-level U.S. and Japanese stocks have experienced adjustments and increased volatility. Especially with the sharp depreciation of the Japanese yen exchange rate, overseas funds have increased their interest in the relatively undervalued Chinese market. Attention, northbound funds are also increasing their positions in a large way. Looking forward, based on factors such as the relative stability of the RMB exchange rate, the stabilization and improvement of the domestic economy, and low valuations, we are optimistic about the performance of the A-share market throughout the year. In the short term, you may need to pay attention to the disclosure of overseas monetary policy stances and economic data during the holiday, which may cause market fluctuations after the holiday.
Du Pengzhe: Looking forward to May, the market is likely to continue its recovery trend. Although there are many overseas disturbance factors, the market response is relatively sufficient, and the performance period is over, risk appetite has increased, and the overall first quarter report is slightly better than expected.
Tange: 4 In April, listed companies intensively disclosed annual reports and first quarter reports. The different performances clearly affected the stock price performance of listed companies during this period. Overall, the subsequent performance of listed companies is worth looking forward to. In recent years, overseas markets have performed better in an inflationary environment, while the A-share market has performed flatly, creating a certain valuation gap and increasing the attractiveness of domestic assets. The emergence of overseas disturbing factors does not affect the value of domestic assets. Promoted by certain factors, it can also help attract overseas assets to pay attention to domestic assets. Some recent performances of the Hong Kong stock market are worthy of attention. I continue to be optimistic about the investment value of A-shares, and I am also optimistic about the investment value of Hong Kong stocks and Chinese domestic assets.
Xie Tianhui: After the centralized disclosure of 4’s annual report and first quarter report, many concerns about performance have been released, and the release of the new “Nine National Regulations” will help the capital market develop more soundly, and the market in May can be expected.
He Long: We are optimistic about the market in May for three main reasons: 1. At the macro level, the resilience of exports and the elasticity of the manufacturing industry have better compensated for the impact of the continued downward trend of the real estate cycle. The first quarter report allows us to market to confirm. In the second and second quarters, it is expected that macroeconomic support policies will also increase, and domestic demand may begin to gain momentum. 3. With overseas asset valuations at high levels, greater uncertainty has emerged, and there is a need for funds to switch from high valuations to low valuations. This will cause some hedging funds to continue to allocate highly cost-effective Chinese equity assets. , the recent performance of the Hong Kong stock market is an important example of the return of foreign capital.
ai, going overseas, resource products,
dividend direction or the main line of investment this year
China Fund News reporter: Stimulated by performance and policies, dividends, low-altitude economy, computing power, precious metals and other sectors have been taking turns in recent times.Based on the quarterly report disclosures, which ones do you think are likely to become the main investment lines this year?
Xiao Ruijin: Judging from the performance disclosure of , the performance of artificial intelligence computing power, export industry chain, upstream resource products and precious metals industries is relatively good. These industries have relatively solid fundamental support and continuous performance realization, so there is a higher probability Become the main line of investment this year. From the perspective of thematic investment, industries such as low-altitude economy and quantum computing have not yet entered the performance realization stage in the short term. Therefore, the first quarter performance will not have a strong driving force on stock prices. It is expected that with the end of the performance period, these industries will enter the event- and policy-driven thematic investment stage. However, due to the lack of fundamental performance support, the valuation is highly volatile.
Ma Yiwen: The main line of investment mainly comes from two aspects. On the one hand, dividends, buybacks and other events of high-quality listed central state-owned enterprises have increased intensively, including the implementation of semi-annual dividend plans. Some central state-owned enterprises have concentrated on cycles and resource products. Industry, in the volatile market, can still be considered as a bottom position allocation. On the other hand, this year may be the year of large-scale commercialization of AI. Catalytic events at the computing power, model and application level will continue to emerge. The communications and semiconductor equipment sectors that can continue to deliver performance deserve attention.
Du Pengzhe: Judging from the disclosure of the first quarter report, the performance stability of some upstream price increases and the downstream overseas proportion is relatively strong, while the performance of the midstream sector is slightly under pressure, represented by technological growth and advanced manufacturing. Emerging industries may be one of the important main lines of the market in 2024, and resource products such as gold and dividends may also have periodic opportunities.
Tange: According to our research results, there are investment opportunities in many directions this year, but we have not seen any major industry trend opportunities. Personally, I feel that there is no need to be obsessed with the main line of investment, and just grasp the investment opportunities that can be grasped.
Xie Tianhui: metal sector, computing power, low-altitude economy and dividend sectors may all become the main investment lines this year. I am relatively optimistic about the metal sector. Secondly, we are optimistic about the direction of new productivity represented by the low-altitude economy. The dividend sector performed well in the first quarter and may rise more in the short term, but it still has allocation value as the economy recovers and risk-free interest rates fluctuate at low levels.
He Long: The overall market this year will return to a style driven by industry fundamentals. The market's preference for defensive assets with high dividends will gradually return to China's core assets. Capital expenditure to maintain manufacturing advantages is the core logic of core asset selection in the next stage. At the same time, supply chain restructuring will also increase capital expenditures on global infrastructure production facilities, and geopolitical uncertainty will also cause global resource products to continue to be revalued, including domestic demand-related and continuously growing medical and health industries, which are all under our control. core assets at each stage. Therefore, we continue to be optimistic about the direction of domestic substitution of advanced manufacturing, resource products, medical health, and technology.
Need to pay attention to internal and external risk factors
China Fund News reporter: How do you evaluate the risk level of the current market, especially for those companies and industries with poor performance? What other risk factors deserve attention in the future?
Tange: Judging from the valuation and performance of listed companies, the market is still in a low-risk stage, and equity assets are very attractive. But not only the A-share market, but also any market has companies that are at a disadvantage in competition, companies that need to be reborn, and companies that have over-hyped valuation bubbles. Therefore, in the current situation where the overall market risk is not high, investors should pay more attention to the company's governance risks, gaming valuation bubbles, operating performance risks, etc.
Xiao Ruijin: The overall risk level of a stocks is at a low level. The current valuation of A-shares is at a lower level compared to its own history and major overseas capital markets; some leading companies have demonstrated strong international competitiveness, industrial chain integration capabilities and performance stability, and have demonstrated strong configurations value; and the overall allocation level of foreign capital to A-shares is still at a low level, and there is certain room for adding positions.
But on the other hand, investors should be more cautious about stocks with poor performance, declining competitiveness or even risk warnings issued by stock exchanges. With the introduction and implementation of the new "Nine National Regulations", the supervision of listed companies will be more scientific and standardized. Investors should pay more attention to the fundamentals and investment value of listed companies. The value of high-quality listed companies will continue to be recognized and reflected in increased valuations. , China’s capital market will also enter a new stage of high-quality development.
Ma Yiwen: Industries with poor performance in annual reports and first quarter reports are concentrated in the real estate industry chain. Under the requirements of city-specific policies, adjustments to mortgage interest rates and purchase restrictions have been continuously introduced. The risks of the real estate industry have been taken seriously. Overall, is relatively controllable. In addition, due to the decline in product prices in the new energy industry chain, the stock prices of many companies have plummeted after the release of results. However, in fact, the demand for photovoltaics and lithium batteries is still highly prosperous. If there is a signal to clear production capacity in the future, the stock prices may rebound before the fundamentals stabilize.
Follow-up In the context of high overseas inflation, the Federal Reserve may maintain high interest rates for a longer period of time. In addition, frequent global geopolitical events may affect the risk appetite of the capital market. These are risk factors that require vigilance.
Du Pengzhe: In the context of the stabilization and recovery of the overall domestic economy, the current A-share market has a relative cost-effectiveness advantage compared with the world. For those industries with poor short-term performance, but the stock price is at a low level, and there is a logic for subsequent improvement. and companies should take an active interest in it.
Xie Tianhui: The current market risk level is not high, and the valuations of many industries and companies are still at relatively low levels. With the release of the new "Nine National Regulations", market risk appetite has rebounded. As for subsequent risk factors, in addition to the degree of my country's economic recovery, we are also concerned about Sino-US relations, interest rates and exchange rate trends.
He Long: The current domestic market risk level is far lower than overseas. At the same time, after entering the second quarter, the clarity of relevant macro factors will continue to increase the market's risk appetite. Industries with poor performance face the risk of continued decline in gross profits caused by fierce domestic competition. In the future, they still need to pay attention to the domestic competitive environment and the development and progress of overseas markets.
Editor: Captain
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