1. In the second half of the year, the 10-year Treasury yield will fluctuate between 3% and 4%, and its core volatility center may be 3.5%, because the 3.5% 10-year Treasury yield is in line with the US policy interest rate target.

Based on this judgment, we can draw an important conclusion that the upward pressure on US bond yields on US stocks and global markets in the second half of the year will be less expensive than in the first half of the year.

2. A greater uncertainty and greater risk for the US stock market in the second half of the year lies in the fundamentals, which lies in the downward adjustment of US stock earnings forecasts. Beware of the risk of "killing profits" in the US stock market because of the economic downturn, which in turn leads to a new round of "killing valuations".

3. The United States "traded recession for inflation" and entered a recession in 2023, which is slowly becoming the mainstream economic expectation of the United States and even Europe and the United States.

Based on this, we judge that in the second half of the year, it is difficult for the US stock market to get rid of the bear market pattern so far this year.，At best, it is more moderate than the decline in the first half of the year.

4. After the mid-1990s, imported goods depressed American commodity inflation, and commodity items dominated the core PCE of the United States for a long time and kept the overall low level for a long time, and the trend depressed American inflation.

But now it is no longer the same. Due to the complex and changeable international environment, the impact of the epidemic, the spread of anti-globalization thoughts, and the delusion of the United States to exclude China from rebuilding the global industrial chain supply chain, long-term uncertainty has emerged in American inflation.

The end of the era of low inflation, higher inflation and more volatile markets is a long-term judgment of overseas markets.

5. China's investment clock is from recession in the first half of the year to weak recovery in the second half of the year, while Europe and the United States are still quasi-stagflation in the second half of the year, and from quasi-stagflation to recession.

6. The performance-to-price ratio of the Chinese stock market can be said to be the best in the world, especially in Hong Kong stocks. Not only compared with overseas, compared with their own, the valuation is also historically low, as the fundamentals improve, the performance-to-price ratio is very high.

7. Our strategic team devised the term "new half army". "new half army" is the pillar of science and technology creation, which includes but is not limited to "new half army".

In the long run, the biggest opportunities for China's stock market are the three major technologies-- energy technology, information technology, and national defense technology-- corresponding to the so-called "new half army."

The most important industrial chain or the biggest opportunity in energy technology is the new energy vehicle industry chain, which is the engine of the growth of China's advanced manufacturing industry.

8、Be bullish in the second half of the yearA shares, Hong Kong stocks, should lead the rise in the world, are the winners in the external turbulent environment, at least have relative returns, should change the bear market thinkingFocus on the structural market.

However, there is no need to be blindly optimistic. More conditions are needed for a round of exponential and trend bull markets for several consecutive years, which are not yet fully available.

Therefore, from an objective point of view, it is more appropriate to understand it according to the "index falling deep rebound, structural market reversal".

9. In the pursuit of profit, we take the growth stock alpha strategy as the leading strategy in the second half of the year, and the value stock trading beta strategy as the auxiliary strategy.

The Alpha strategy is divided into two categories, one is the "new half army", A-share companies are still more and more comprehensive, the new company focuses on the "new half army", and the "new half army" market will spread to a wider range of scientific and technological fields in the second half of the year. including biological breeding, agriculture, medicine, but also to specialize in the new "little giant" sinking. One is "big consumption", including A shares and Hong Kong stocks.

10. For the traditional sector in the second half of the year, we should give priority to Hong Kong stocks, because Hong Kong stocks are cheaper than A shares, and they have been more thoroughly killed in the past year. They are expected to be overly pessimistic. Once the fundamentals are improved, with high performance-to-price ratio, Davis will double-click. Market repair is more flexible.

The first thing we want to do here is Hong Kong real estate. We continue to be optimistic about these state-owned enterprise real estate with access to low-cost capital and high-quality land reserves. in addition, we can cautiously participate in "surviving" high-quality private enterprise real estate stocks.

These are the latest views shared by Zhang Yidong, chief global strategist of Societe Generale Securities on June 28 at the medium-term Strategy meeting of Societe Generale Securities.

Zhang Yidong analyzed the market in the second half of the year, thinking that the current investment clock of US stocks is stagflation, and in the second half of the year, it is difficult for US stocks to get rid of the bear market pattern since the beginning of this year, and it is possible to bottom out in the fourth quarter of this year.

For Chinese assets, he believes that the impact of overseas risks in the second half of the year is not dangerous, weak economic recovery, loose policies, the bright spot lies in the recovery of dividends and the vitality of scientific innovation, we should change the bear market thinking and focus on the structural market.

Under the structural market, which assets are bullish for a long time? Zhang Yidong gave a very clear interpretation.

Smart investors compiled the full text of this speech and shared it with you.

Hello, everyone. The title I report to you today is "turbulent World, winner of recovery". I will communicate and report to you from four aspects.

First, look overseas; second, make some prospects for the situation of China's capital market in the second half of the year; third, share the medium-and long-term opportunities of Chinese stocks; and finally talk about investment strategies.

High inflation in the United States, policy tightening to suppress demand, and the downward pressure on the US economy in the second half of the year is even greater.

The outlook overseas is the first half of our title-a turbulent world.

A turbulent world is likely to be our focus in the next stage, both in the medium and in the long run. In the second half of the year, the investment clock in Europe and the United States is in stagflation, and the "lag" of the US stock market is even more obvious.

In the long run, we should pay attention to a new topic. The era of low inflation in Europe and the United States may be over, and it is easier to revive high inflation in the future. In this context, the revolution in energy technology is a hero of the times.

First, let's talk about the pattern of US stocks in the second half of the year.

Its investment clock is stagflation, and "inflation" will still be more obvious than "lag" at the beginning of the second half of the year. The haze of high inflation in the United States in the second half of the year is difficult to resolve because it has three risks-geopolitics, domestic politics and the global supply chain. The geopolitical impact on food and energy prices will continue, especially food prices may be a new variable. Domestic politics in the United States, this year is the political year of the mid-term elections. In the second half of the year, we should beware of black swans with high inflation, that is, strikes.

Of course, let's go back to the source. The biggest black swan this year was the geopolitical conflict in February. The geopolitical conflict brought a series of black swans, and the black swan games related to energy, supply chain, and domestic politics in the United States continued, making it difficult to quickly resolve the factors of inflation in the United States in the second half of the year, until the pressure of "lag" in the United States increased in the second half of the year.

High inflation weakens consumer demand in the United States. In the United States, household savings as a percentage of disposable income, that is, the household savings rate, is now at an all-time low. Next, there will be a serious shortage of momentum to convert savings into consumption.

In 2020, under the epidemic, the United States "helicopter dropped money" to bail out and defuse the impact of the epidemic, thus for a period of time, the US household savings rate reached an all-time high of about 30%. As a result, it has now fallen to an all-time low of about 4.4%.

High inflation in the United States and high CPI in the United States have a suppressing effect on consumer durables, and there is a negative correlation. The higher the inflation, the worse the spending power of the public. Recently, some big American technology companies have been cutting orders, which has had an impact on the Chinese companies in the industrial chain. In the next stage, the pressure on consumer durables in the United States is likely to increase further.

Superimposed by the Federal Reserve to curb inflation, policy contraction in the second half of the year-interest rate increases, table contraction will continue, thus, the tightening of the financial environment in the United States will suppress the US real estate market, thus putting more downward pressure on the US economy in the second half of the year.

From a forward-looking indicator-PMI data, the latest US PMI data for June has fallen more than expected, but it is still above the boom-bust line, more than 50 per cent, and it is likely to return below the boom-bust line in the second half of the year.

This is the economic situation in the United States.

Us bond yields may fall high in the second half of the year, but not too far from 3.5 per cent

In the face of such an economic situation, now some people are beginning to think that if they want to copy the bottom of US stocks, will the risk-free rate of return in the United States in the second half of the year be a downward trend? There are also pessimists who think that with inflation so high in the United States, will the risk-free rate of return tend to rise?

We don't approve of either.

We believe that the 10-year Treasury yield will fluctuate between 3% and 4% in the second half of the year, and its core volatility center may be 3.5%, because the 3.5% 10-year Treasury yield is in line with the US policy interest rate target.

Brad, the chairman of the federal reserve in St. Louis, is the voting committee this year. He used the Taylor rule to give guidance on the 3.5% policy rate target in May. According to the experience of the United States over the years, its risk-free rate of return is often pegged or anchored to the policy target interest rate in the medium term.

Based on this judgment, we can draw an important conclusion that the upward pressure on US bond yields on the "killing valuation" of US stocks and global markets in the second half of the year will be less than in the first half of the year, because the upward slope of US bond yields will slow. and it may have risen more in the third quarter.

In the fourth quarter, once the downward pressure on the US economy becomes more apparent, although there is no recession, it is possible that the recession will not wait until next year, but people's long-term economic expectations are further reflected, thus, in the second half of this year, US bond yields are likely to fall back high.

Even if the high falls, it will be difficult to deviate significantly from the US policy target interest rate, not far from 3.5 per cent, meaning that US bond yields will fluctuate at high levels in the second half of the year, easing the pressure on the stock market to kill valuations and making it more difficult to raise valuations across the board.

The core variable of US stocks in the second half of the year is earnings, and US stocks may bottom out in the fourth quarter, weakening the impact on Chinese assets.

A greater uncertainty and greater risk for the US stock market in the second half of the year lies in the fundamentals, which lies in the downward revision of US stock earnings forecasts. Be careful that because of the economic downturn, there is a risk of "killing profits" in the US stock market, which in turn leads to a new round of "killing valuations." among them, the core variable is still killing profits, and the pressure on the revenue side and cost side of American companies is difficult to resolve.

However, the profit forecast for US stocks in 2020 is still high and has not been significantly lowered, the risk premium is low, and US stocks are not safe.

It is a high probability that the earnings forecast for US stocks will be lowered in the second half of the year. In addition to the decline in the momentum of endogenous profits, there is another problem affecting EPS, that is, with the tightening of financial conditions, the momentum of US stock buybacks will further weaken, making it impossible to borrow money to buy back.

The United States "traded recession for inflation" and entered a recession in 2023, which is slowly becoming the mainstream economic expectation of the United States and even Europe and the United States. Based on this, we judge that the US stock market in the second half of the year, it is very difficult to get rid of the bear market pattern so far this year, at best, it is less than the decline in the first half of the year.

Taking history as a mirror, since the 1960s, when the US economy finally went into recession, the S & P index basically fell by an average of 37%, an average of 300 trading days. From the beginning of the year to now, the biggest drop in the S & P 500 is 23.34%, so the timing of the adjustment is not extreme enough.

According to historical experience, the bottom of the stock market is often four to six months ahead of the bottom of the economy, so under our neutral forecast, the US economy will enter a recession in the first half of 2023, and US stocks may bottom out in the fourth quarter of this year at the earliest.

This is the judgment of the US stock market.

In this case, what is the impact on Chinese assets? What is the impact on overseas markets?

The impact on emerging markets and even European markets should not be underestimated. In the second half of the year, beware of debt risks, economic pressure, and financial risks. This is a "secondary disaster" caused by higher US interest rates, weaker US economy and weaker US stocks.

But there is no danger for Chinese assets, the key is that we do not follow the pace of their economic cycle and do not dance with US economic policy. On the contrary, in the past few years, we have taken the initiative to further release risks in key areas of real estate and finance, and built energy and food security.

In the long run, the era of low inflation in the United States is over, and high inflation is easy to make a comeback.

On the second level, let's talk about the long-term outlook.

In the future, high inflation in the United States is easy to make a comeback, unlike in the past 30 years.

The past 30 years have been 30 years of enjoying the dividend of globalization. Since the mid-1990s, American goods have been highly dependent on external supply, thanks to China's opening up to the outside world, especially its accession to the WTO, and imports have depressed the inflation of American goods. The commodity segment has dominated the core PCE of the United States for a long time and maintained a low overall operation for a long time, and the trend has depressed inflation in the United States.

In addition, globalization has enabled the United States to form an internal ironing mechanism for inflation in goods and services.

But now it is no longer the same. Due to the complex and changeable international environment, the impact of the epidemic, the spread of anti-globalization thoughts, and the delusion of the United States to exclude China from rebuilding the global industrial chain supply chain, long-term uncertainty has emerged in American inflation.

With the tearing apart of American society, over the past decade or so, politicians have often used easing to stimulate the economy and "grab votes", making it difficult for ordinary Americans to move from extravagance to frugality, and the tolerance of American society for economic decline has declined. In the event of a recession and rapid easing of monetary policy, US labour costs as a share of labor productivity tend to rise, and service sector inflation rebounds faster than ever before.

The balance mechanism that has depressed inflation in the United States over the past 30 years has been broken.

In addition, another factor superimposed by Europe and the United States is "green inflation". In the process of new energy replacing traditional energy, the elasticity of traditional energy supply is insufficient, and the hub of energy price fluctuation area will rise. Traditional energy still has periodic fluctuations, but as long as Europe and the United States release water to save the economy and engage in unlimited QE, energy prices will be more flexible than ever before.

The end of the era of low inflation, higher inflation and more volatile markets is a long-term judgment of overseas markets.

China's stock market now has the best performance-to-price ratio in the world, especially in Hong Kong.

The outlook for China's capital markets in the second half of the year is a safe haven for a volatile world.

First of all, let's look at the investment clock. China's investment clock is from a recession in the first half of the year to a weak recovery in the second half of the year. Europe and the United States are still quasi-stagflation in the second half of the year, and may turn from quasi-stagflation to recession.

At present, the stage of the greatest pressure on China's economy has passed.

China's economy will recover weakly in the second half of the year. Why weak recovery? Several factors.

First, external conditions are weaker than in 2020, recovery faces a little more challenges, and external demand is weaker in the second half of the year than in 2020. Second, compared with 2020, the predicament of the real estate market is still there. Third, the spread of Omicron is stronger, and the pressure on the prevention and control of the epidemic is also greater than in 2020.

There is no significant risk of inflation in China, which is lower than in Europe, the United States and even major emerging markets.

China's liquidity environment will continue to be loose, which is expected to be longer than in the second half of 2020. Abundant liquidity environment will be an important external environment for China's capital market in the second half of the year.

In global comparison, China's economy has a stronger ability to resist risks. As mentioned just now, the external environment is still relatively volatile in the second half of the year.

But in the context of turbulence, even in extreme cases, such as the debt crisis of the 1980s and 1990s, or the European debt crisis of 2012 and 2013, even if these things happen, the impact on the Chinese market will be greatly reduced. This is the ship's anti-risk.

China is the second largest economy in the world, and our greatest strength is China's internal circulation, huge domestic demand, sound industrial chain and supply chain. Under such circumstances, overseas energy inflation, food inflation and commodity inflation have much less impact on China. In addition, China's foreign debt accounts for only 15 per cent of GDP, well below the 30 per cent level of emerging markets and developing countries.

The performance-to-price ratio of the Chinese stock market can be said to be the best in the world, especially in Hong Kong. Not only compared with overseas, compared with their own, the valuation is also historically low, as the fundamentals improve, the performance-to-price ratio is very high.

The medium-and long-term opportunities for China's stock market are structural and scientific market, focusing on energy technology, information technology and national defense technology.

After talking about the Chinese market in the second half of the year, after the short-term bullish, let's talk about the medium-and long-term opportunities of the Chinese stock market.

The so-called bullish second half of the year is the beginning of a vigorous trend bull market? Or is it just a continuation of a structural market? I tend to be dominated by structural market in the medium to long term.

Because this recovery is not expected to be similar to the strong recovery after the 4 trillion-year Plan, nor is it expected that China's economy will have another full-scale Juglar cycle similar to that of the 2000s.

What we are facing now is a structural, technological innovation-driven Jugla cycle. Although the aggregate economy is still relatively stable, or even in a state of deceleration and transformation, the biggest bright spot of China's economy or the strongest voice of the times is Science and Technology.

For Kechuang, our strategy team devised the term "New half Army". "New half Army" is the backbone of Science and Technology Chuang, which includes but is not limited to "New half Army".

Recently, some people have been saying that "half" will not work, because the overseas semiconductor cycle is downward. will it be affected? But in essence, we use "half" to refer to information technology.

In the long run, the biggest opportunities for China's stock market are the three major technologies-- energy technology, information technology, and national defense technology-- corresponding to the so-called "new half army."

The first is energy technology. Overseas has now moved from an era of low inflation to an unstable era of relatively high inflation, and the breaking point of this high inflation is precisely energy technology.

而The most important industrial chain or the biggest opportunity in energy technology is the new energy vehicle industry chain, which is the engine of the growth of China's advanced manufacturing industry.

I have continued to say in the past two years that China's new energy vehicle industry chain is like real estate in the era of 2003 and 2004, when real estate drove China's urbanization and industrialization, but now, China's new energy vehicle industry chain drives energy technology, or drives a new round of China's Jugla cycle, driven by science and technology.

The space behind the new energy vehicle lies in the development of electrification and intelligence, which makes the broad industrial chain of Chinese cars, whether independent brand vehicles, domestic parts and related TMT, ushered in a golden age.

New energy also includes wind, light, nuclear, hydrogen, as well as some new energy-related electrical equipment, systems, there are many opportunities.

The second is information technology, which is the winner or loser in the global "lag" era, including artificial intelligence, basic software and hardware, cloud computing and so on. In particular, China's choked areas with semiconductors as the core pay more attention to the subdivided industries that can cooperate with the "new" and "army", and pay more attention to the fast-growing demand for electric vehicles, scenery and energy storage.

The third is national defense science and technology, in turbulent times, how to ensure China's internal circulation, that is, national defense science and technology. Defense science and technology can promote scientific and technological innovation and train a large number of small giants who specialize in new subdivisions. The boost of national defense science and technology to civil science and technology is also very significant. The conversion of military industry to civilian use was once the original driving force of computer aerospace aviation and other high-tech industries.

Finally, a summary.The Jugla cycle of China's advanced manufacturing industry will continue to maintain high prosperity, and we should be looking for Alpha in the direction of high prosperity.

For the capital market, whether it is A shares, Hong Kong stocks, Science and Technology Innovation Board, gem, the main board, the most dynamic areas of investment and financing are around the direction of promoting scientific and technological innovation and promoting economic transformation. Especially optimistic about Science and Technology Innovation Board, he will slowly grow from a current teenager to a middle-aged man in the next few years, shouldering the greater mission of China's scientific and technological innovation.

In the second half of the year, A shares and Hong Kong stocks are the winners in the external turbulent environment, so we should change our bear market thinking, but we should not be blindly optimistic.

Finally, let's talk about the investment strategy. The strategic point of view is clear-cut.Be bullish in the second half of the yearA shares, Hong Kong stocks, should lead the rise in the world, are the winners in the external turbulent environment, at least have relative returns, shouldChange the thinking of bear marketFocus on the structural market.

It is not difficult to rebound a technical bull market from the low to the high of the second half of the year, that is, a rise of 2800, according to the low of Hong Kong stocks in the first half of the year, whether it is 1800000 of Hong Kong stocks or 20% of A shares.

However, there is no need to be blindly optimistic. More conditions are needed for a round of exponential and trend bull markets for several consecutive years, which are not yet fully available. The impact of geopolitical conflicts, high inflation and epidemics on China's capital markets is slowly dissipating in the first half of the year, but it will still have an impact in the second half of the year.

Therefore, from an objective point of view, it is more appropriate to understand it according to the "index falling deep rebound, structural market reversal".

In the first half of the year, Chinese capital markets, especially Hong Kong stocks, experienced the test of the darkest hour earlier, and then basically identified the bottom area in the second quarter. Fundamentals improve the relatively loose monetary environment faced by China's capital markets. From March to mid-June, the Hang Seng Technology Index, the Hang Seng Index and the Shanghai Composite Index have significantly outperformed the global stock markets.

In the second half of the year, with the easing of the epidemic, the fundamentals of China's capital market will improve along with the economic recovery.

Now, we can change the bear market thinking, but do not be blindly optimistic, do not easily think about the index bull market, but should be down-to-earth to look for opportunities for improvement in China's fundamental segments.

Opportunities for improvement are considered in two dimensions:First, growth stocks according to the Alpha strategy, and value stocks according to its performance-to-price ratio, I summed up as a focus, that is, the pursuit of profit.

In the general direction of chasing profitsWe putThe alpha strategy of growth stocks is the dominant strategy in the second half of the year, and the beta strategy of trading value stocks is the auxiliary strategy.

The Alpha strategy is divided into two categories, one is the "new half army", A-share companies are still more and more comprehensive, the new company focuses on the "new half army", and the "new half army" market will spread to a wider range of scientific and technological fields in the second half of the year. including biological breeding, agriculture, medicine, but also to specialize in the new "little giant" sinking. One is "big consumption", including A shares and Hong Kong stocks.

The alpha strategy in Hong Kong stocks focuses on "big consumption", while the beta strategy focuses on real estate.

Let's focus on the Alpha in Hong Kong stocks. Alpha in Hong Kong stocks should pay attention to the endogenous growth momentum in the long term and gain a foothold in the short term.

Therefore, the focus of Hong Kong stock growth stocks is on "big consumption", which is divided into several parts:

First, cars.Hong Kong stocks in the new energy vehicles, smart vehicles related to the whole vehicle, parts, there are some good targets.

Second, the Internet is a characteristic of Hong Kong stocks.Benefiting from the economic recovery and marginal improvement of policies in the short term, we can revalue and rebound according to the value of consumer stocks; in the long run, we will be divided and optimistic about the industrial chain related to technology empowerment, especially cloud computing and smart driving.

Third，Property management is also a characteristic plate of Hong Kong stocks.Once the real estate sector stabilizes in the second half of the year, the property management of Hong Kong stocks will regain alpha attributes, both beta and alpha. We are optimistic that the property management of those with strong endogenous growth momentum and high independent management, especially the property management of private enterprises, which are like invincible Xiaoqiang, may be more flexible.

Apart from thatSocial services, food and beverage, sports shoes and clothing, medicine, express delivery, there will be Alpha opportunities to benefit from recovery in the second half of the year.

After talking about Alpha, let's talk about beta trading in traditional industries to see the ratio of performance to price. The traditional field is different from the emerging industry or the growth field, the growth field depends on the elasticity of profit and the prospect of the future, so-called addition and multiplication. In the traditional field, in the long run, subtraction, the rest is king, the profit is stable, and the recovery beta in the short term.

We are concerned aboutThe traditional sector in the second half of the year gives priority to Hong Kong stocks, because Hong Kong stocks are better than Hong Kong stocks.A-shares are cheaper and have been killed in the past year.得More thoroughly, the expectation is overly pessimistic.So once the fundamentals improve, with high performance-to-price ratio, will usher in Davis double-click, the market repair of greater flexibility.

The first thing we want to do here is Hong Kong real estate. The real estate industry has experienced a tragic liquidation, and now the leftovers are king; as the economy recovers, Hong Kong property stocks have the greatest expectation gap and beta flexibility in the traditional field. We continue to be optimistic about these state-owned enterprise real estate with access to low-cost capital and high-quality land reserves. in addition, we can cautiously participate in "surviving" high-quality private enterprise real estate stocks.

In addition to real estate, brokerages, banks, insurance and energy also have the allocation of bonds in Hong Kong stocks.