Recently, Hong Kong stocks have undergone turbulence. Zhang Yidong, chief global strategist at Industrial Securities, believes that the bull market trend in Hong Kong stocks is still going on, and short-term shocks are when they get on the train.
Zhang Yidong believes that China's manufacturing industry has deepened its investment, and there are good companies in A-shares and Hong Kong stocks. The recovery in Europe and the United States and China's XNUMXth Five-Year Plan will be short- and medium-term opportunities.The tactical opportunity for deep value stocks has arrived, and as the fundamentals improve, they will "fireworks" "Davis double click".
Outlook: The bull market trend in Hong Kong stocks is still in place, and the short-term shock is when you get on the bus
Zhang Yidong believes that from a fundamental outlook, the Hong Kong stock market will continue to benefit from the return of value driven by profit reversal.Thanks to the cumulative effect of super-conventional stimulus policies, the large-scale application of vaccines, and the historical low levels of European and American inventories, the economic recovery driven by the active replenishment of inventories in Europe and the United States may exceed expectations.China has entered the first year of the "XNUMXth Five-Year Plan", and the upward momentum of the inventory cycle is still there.The subsequent global investment style will be conducive to profit-driven and value stock revaluation.
First, the popularity of vaccines in the United States has accelerated, a new round of economic stimulus plans have been added, and economic recovery is expected to increase.
After Biden took office on January 1, he announced that the United States would respond to the epidemic with "wartime methods", increase the amount of medical assets, expand testing, and strengthen epidemic prevention measures. The popularity of vaccines in the United States has accelerated.As of January 20, the cumulative number of vaccination doses in the United States reached 1 million, with a vaccination ratio of 29%. The vaccination rate exceeded the original plan of 2692 million.
In addition, a new round of economic stimulus plans totaling US$2020 billion passed in December 12 are being implemented gradually. In February, with a new round of fiscal subsidies superimposed on vaccination beyond expectations, US consumer demand is expected to be further restored, and US stocks are expected to lead the global investment style back to profit-driven and value revaluation.
Secondly, judging from recent data, demand in China and abroad continues to improve, the trend of active stock replenishment in mainland China continues, and economic resilience continues.
In December 2020, the profit of industrial enterprises increased by 12% year-on-year, and continued to rebound rapidly from November's profit growth; finished product inventories increased by 20.1% year-on-year, continuing the trend of restocking; exports increased by 11% year-on-year, better than expected 7.5%. Overseas production demand has remained strong in driving exports.
In January 2021, the manufacturing PMI index was 1, which was in the expansion range for 51.3 consecutive months.
Zhang Yidong also believes that from the perspective of funding, the short-squeeze game and the risk of gamma squeeze in the US stock market in early February still have aftermath, but the systemic risk is not large. China's liquidity "point brake" will end before the Spring Festival. Therefore, 2 Month is a good time to get on the bull market in Hong Kong stocks.
First of all, the recent extreme stock short-squeeze game and option gamma squeeze in US stocks have caused high-quality weight stocks to fall. This will not repeat the March 2020 version, but early February will still be full of turbulence.
The current US stock liquidity shock is only the release of gaming risks within the US stock market. It will not change the general trend of economic recovery in Europe and the United States and loose macro liquidity overseas, and will not repeat the March 2020 version.The current fundamentals and liquidity environment are completely different from those in March 3.And after the 2020 crisis, the Fed has sufficient tools to prevent the further spread of the liquidity crisis.
But the aftermath of the short-term stock market volatility has not disappeared.Wall Street institutions have joined forces to "subvert the faith" to save themselves, and it is extremely ugly.Although the risk of bankruptcy of large hedge funds is reduced, it raises business ethics and legal issues.Previously, various trading platforms arbitrarily restricted the trading of GME and other stocks, only allowed to close positions but not to buy, and some short-sellers took the opportunity to close positions.And GME short positions are still as high as 70%, short-term disturbances are still there.
Looking at the whole year of 2021, overseas monetary policy will need to cooperate with the expansion of fiscal policy, and the overseas liquidity environment will remain loose, at least it is difficult to actively tighten.At present, the substantial inflation risk in developed countries is not large, and there is even deflationary pressure. Therefore, through high debt and loose money to alleviate the deep-seated social contradictions, the road of boiling frogs in warm water and quenching thirst by drinking poison seems to continue.Otherwise, once the monetary illusion is actively pierced, it is easy to repeat the financial crisis.
Secondly, around the Spring Festival, the liquidity environment in Mainland China is expected to improve.
In the medium and long term, both Hong Kong stocks and A shares will continue to benefit from the increase of Chinese people's stock holdings and the increase of foreign capital's holdings of Chinese assets.The deepening of the interconnection mechanism has made Hong Kong stocks a core channel for China's social wealth to increase its core assets. Mainland funds invested through Southbound Stock Connect are expected to become the mainstay and "local" funds in the Hong Kong stock market. In January, a total of 1 billion yuan inflows from southbound capital through Southbound Trading.
Third, the risk appetite improves, and the attractiveness of Hong Kong stocks to capital allocation at home and abroad will improve significantly.First of all, the impact of the new crown epidemic and geopolitics will weaken in 2021, and Sino-US relations will not be worse than in 2020.Second, the IPO boom has boosted investor confidence, especially high-quality Chinese concept stocks and new economic unicorns listed on Hong Kong stocks.
Investment advice: "Empty" China refueling recovery market, after the "shock", the Hong Kong stock market bull market
Regarding investment suggestions in the market outlook, Zhang Yidong believes that the “empty” China gas recovery market should be seized and the Hong Kong stock market bull market should be launched after the “shock”.
First of all, China's manufacturing industry has deepened its investment. A-shares and Hong Kong stocks have good companies. The recovery in Europe and the United States and China's XNUMXth Five-Year Plan will be short- and medium-term opportunities.
1) The recovery in Europe and America is conducive to the boom in industries such as semiconductors, consumer electronics, automobiles and parts, home appliances, furniture and household appliances, chemicals, and industrial metals. 2) China's XNUMXth Five-Year Plan and the implementation of "new infrastructure" are conducive to the rise of advanced manufacturing, and long-term optimism about new energy vehicles, semiconductors, new energy, military industry, high-end manufacturing, industrial Internet, etc.
Second, the tactical opportunity for deep value stocks has arrived, and as the fundamentals improve, they will "fireworks" "Davis double-click".Optimizing to increase the holdings of core assets of traditional industries in Hong Kong stocks, and the subsequent popularization of vaccines and the recovery in Europe and the United States will drive the revaluation of the unexpected value of energy, non-ferrous metals, financial and real estate of Hong Kong stocks, especially the "Trump Red Packets" such as CNOOC and the three major operators. "It is expected to refer to the GME-style short-selling market.
Third, strategically look at the core assets of China's new economy, select Internet leaders, major consumer services (property, brand consumption, education, fashion, gaming, etc.), medicine, etc.
Optimistic about 1) Internet leaders: Internet leaders still have their core competitiveness. They will benefit from the “In-situ Chinese New Year” in the short term and the new business layout in the long term; 2) Medicine: select targets for performance recovery; 3) Optional consumption: refined Select industry leaders that benefit from economic recovery and whose performance exceeds expectations.
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