(Original title: Huaxi strategy: A shares enter deep value in exchange for time for space)
1. The Fed’s current cycle of interest rate hikes could extend into the first quarter of next year.The latest inflation data in the US still deviates from the Fed’s 2% target and this cycle of rate hikes could extend into the first quarter of next year. The Fed will announce its interest rate decision in November next week. It is expected to raise interest rates by 75 basis points in November and by 50 basis points in December. The end point of this round of Fed rate hikes is around 5%. Before the Fed’s policy change, high US bond yields will still put some pressure on global risk assets. On the other hand, as the Fed continues to raise interest rates, the likelihood of an economic downturn in Europe and the US is increasing and weakening external demand may continue to have a depressing effect on domestic exports.
In the second and third quarters, public funds increased their holdings in the military and transportation industries and the allocation of the track industry was differentiated.Take the top ten heavyweight stocks shown by active equity funds as samples for analysis: 1) In terms of sectors, the third quarter funds increased their holdings in the military and transportation industries, etc., mainly in the aviation equipment, military electronics, express deliveries, shipping, general equipment and automation equipment 2) The concentration of holdings decreased and the proportion of the top 50 top positions in market value decreased by 3.21% on a monthly basis 3) The allocation of funds to the track industry was differentiated and electrical equipment was reduced in the third quarter. Specifically, the fund increased in the third quarter Holding Sungrow, Trina Solar, Paineng Technology, etc., reducing holdings in LONGi, CATL, Tongwei, etc. shares. Looking back, the differentiation of prosperity will increase the differentiation of internal positions and market prices of equities.
3. There is a high probability that A shares are on the lower end, so pay attention to the catalysis of positive factors.1) Looking ahead to the year, the current price / earnings ratios (excluding negative values) of Shanghai Stock Exchange 50, CSI 300, ChiNext Index, Shanghai Stock Exchange Index and Wind All A are all below the valuation level at the bottom of the ‘year on April 27; 2) From the point of view of the medium and long-term perspective, the current evaluation of Wind Quan A is only 2.3% far from the minimum level of the beginning of 2019; 3) Institutional positions continue to decline. At the end of September, the equity position of private equity funds fell to 57.5% (close to April of this year) and the public funds position of common shares fell to the lowest level of the last year; 4) From a risk premium perspective, Wind Quan A’s current equity risk premium is 3.73%, close to the average level + 2 times the standard deviation of the last three years.
4. Investment strategy: A shares enter deep value and trade time for space.At the moment, the market has taken into account the most pessimistic expectations: from the perspective of valuation, institutional positions, risk premia and other dimensions, the probability of being in the lower range is high. The current stance should not be overly pessimistic, subsequent A shares are expected to trade time for space, and the catalysis of positive factors at home and abroad must be observed. Abroad, pay attention to the expected market trend following the Fed’s November interest rate meeting; at the national level, continue to pay attention to the local epidemic situation, the optimization of epidemic prevention policies and the continued effectiveness of policies to stabilize growth. sector configuration,
1) The new energy sector is divided into areas of high prosperity, such as “accumulation of energy, wind, light“Wait;
2) fields related to “national security”, such as “Xinchuang, military industry, semiconductorsWait”;
3) Benefiting from the continuous relaxation of the “specific city” policy,propertyWait.
risk warning:The epidemic repeated itself; macroeconomic fluctuations exceeded expectations; political efforts fell short of expectations; foreign markets fluctuated considerably.
(Article Source: Huaxi Securities)
