Source: Broker China
On October 25, products managed by well-known fund managers such as Ge Lan, Zhou Weiwen, and Cao Mingchang of the China-Europe Fund, and Zhao Yi and Gang Dengfeng of the Quanguo Fund published a centralized three-quarter report.
Regarding the future market, many fund managers said that the opportunities outweigh the risks at this stage, and their optimistic expectations for future market trends will not change. At the bottom, as institutional investors, they will be more patient and wait for market sentiment to recover.
Zhou Weiwen added superstar agriculture and animal husbandry, and Cao Mingchang increased his holdings of Rilt
In the third quarterly report, Zhou Weiwen analyzed the reasons for market adjustments in the third quarter and clearly indicated that the macroeconomic economy in the third quarter showed signs of bottoming out and stabilizing, mainly in terms of PMI, industrial enterprise profits, etc., and that a package of countercyclical regulation policies will begin to take effect. “The overall market trend in the third quarter was quite tortuous. The relative stability of July was quickly broken. Adverse factors such as defaults by some leading real estate companies, weak social finance growth rates, and exchange rate pressure were amplified by pessimism, causing the market to experience a sharp decline. At the end of August, under the care of policies such as relaxation of real estate-related policies, reduction of stamp duty, and further regulation of refinancing and holdings reduction, the market stabilized for a short time, then re-entered a volatile pattern.”
In terms of holdings, take Pioneer A in the China-Europe Era, which is jointly managed by Zhou Weiwen and Luo Jiaming, as an example. The third quarterly report shows that by the end of the third quarter, the fund's top ten heavy stocks were Ningde Times, Wanhua Chemical, Muyuan Co., Ltd., China Shipping, Xugong Machinery, Sen Kirin, Superstar Agriculture and Animal Husbandry, Spring Airlines, Changdian Technology, and Hualu Hengsheng. Among them, Superstar Agriculture and Animal Husbandry, Changdian Technology, and Hualu Hengsheng were all added to the top ten.
Cao Mingchang, on the other hand, discussed investment opportunities from a valuation perspective. “After three quarters of continuous adjustment, the overall valuation of the market once again reached near a historically low level. Measured from the number of undervalued individual stocks, the number of individual stocks with PE (TTM) valuations below 30 times and the number of individual stocks below 20 times all reached record highs in the entire market. Currently, market valuations are still at historically low levels, and corporate profits have gradually improved from historic lows and achieved positive growth, which will support the overall performance of the market for some time to come.”
Cao Mingchang pointed out that although the stock market did not actually improve as expected in the third quarter, it would not change his optimistic expectations about market trends over the next year or more. The market turnaround will only be late, but it won't come. “Overall, at this stage, we continue to be optimistic about the automobile manufacturing industry chain and some consumption-related industries, including related targets in the real estate industry chain. At the same time, we will also maintain our focus on individual stocks related to large market value, such as the highly underrated Big Finance.”
In terms of holdings, take the China-Europe Value Discovery, which was jointly managed by Cao Mingchang, Lan Xiaokang, and Shen Yue as an example. The third quarterly report shows that by the end of the third quarter, the fund's top ten heavyweight stocks were Ningbo Huaxiang, Rilt, Jiangshan Oupai, Huatee Emergency Response, Annabiao, Fuanna, Sophia, Lao Fengxiang, Nanshan Aluminum, and Pulley Pharmaceutical. Among them, Rilt, Jiangshan Oupai, China Railway Emergency Response, Sophia, Rilt, and Pulley Pharmaceuticals have all been added to the top ten.
In the third quarterly report, Gu Lan continued to express her long-term optimism about fields such as innovative drugs and innovative devices. She believes that the pharmaceutical sector as a whole still has good long-term investment value. Gu Lan also reviewed the situation in the pharmaceutical sector in the first three quarters. She said that the macroeconomic economy is still in the process of gradual recovery. The medical industry has been affected by the macroeconomic environment to a certain extent, and the improvement in the medical system's compliance capabilities will also disrupt the industry in the short term. The policy aspect of the industry is still relatively stable. Whether it is national negotiations on pharmaceuticals, chemiluminescence collection for IVD, etc., under the premise that the policy framework is stable, the overall direction of the industry is to provide “highly innovative,” “high clinical value,” and “cost-effective” products and services. Improving the quality of the R&D process will also contribute to the long-term healthy development of the industry.
“Going back to the test of drastic market adjustments over the past few years, we believe that through in-depth fundamental research, focusing on core high-quality growth individual stocks and avoiding permanent losses as much as possible, is an effective strategy to improve long-term performance.” Gu Lan said. She believes that looking at the current point in time, after about 2 years of adjustments, the overall valuation of the pharmaceutical sector and market holdings are at a relatively low level, reflecting relatively pessimistic fundamental expectations. With subsequent gradual improvements in fundamentals, the sector as a whole still has good long-term investment value.
Zhao Yi increased her holdings of Hong Kong stocks, and Kuaishou entered the top ten
On October 25, two funds under Quanguo Fund disclosed their three-quarter reports.
According to Quanguo Xuyuan's third quarterly report managed by Zhao Yi, as of the end of the third quarter, the fund's stock position was 92.08%. There have been no major changes in portfolio positions. Overall, they are more concentrated, and a small number of positions have been adjusted from high-dividend companies to Hong Kong stocks and global companies. Quan Guo Xuyuan increased its holdings of Hong Kong stocks, and the market value of Hong Kong stock investment increased from 7.4% in the second quarter to 13.01% of the fund's net asset value in the third quarter.
Quan Guo Xuyuan's top ten heavy-traded stocks include Ningde Times, Lixun Precision, Jingao Technology, Enjie Co., Ltd., TCL Central, Meituan-W, Kodali, Sanhua Intelligent Control, Xinquan Shares, and Kuaishou-W, accounting for 55.24% of the fund's net asset value. Compared to the second quarter, Kuaishou-W entered the top ten, while Yingliu Co., Ltd. dropped out of the top ten. The direction of portfolio holdings is mainly concentrated in high-end manufacturing, consumer and Internet industries such as new energy, automobiles and components, computers, electronics, machinery, and military industries, as well as enterprises with steady growth and high dividend rates.
While reviewing the operation of the portfolio in the third quarter, Zhao Yi said that with the gradual introduction of economic stimulus policies, as management's emphasis on the market further increases and the international situation improves, market sentiment is expected to improve, and the portfolio is accordingly concentrated in a more flexible direction. Afterwards, the market believed that the economic stimulus policy was less strong than expected, that the combined overseas interest rate hike cycle was longer than expected, and that the negative sentiment had never been reversed. This caused the portfolio to adjust significantly during the historical level of outflow of capital to the north in August and September.
“We believe that institutions that began to be circumvented by capital last year heavily held assets and continued to be sold off by northbound capital this year, just like a spring being continuously pushed down and pushed to the limit. Once the sentiment improves, the upward elasticity will be even higher. After our assessment, the core competitiveness of some highly globalized enterprises is clearly underestimated by the market.” Zhao Yi said.
However, Zhao Yi also said that after the past three years, the balance sheet is in the repair stage. “For example, during the physical recovery phase, one person cannot immediately participate in strenuous sports as in the past; this is also the case in the capital market, and people prefer that the market can quickly reflect all kinds of expectations.” Zhao Yi believes that the improvement in economic indicators and surrounding consumption highlights have gradually accumulated positive factors. It is necessary to give time for market sentiment to slowly recover, and the bottom stage requires even more patience. “Anyway, we think the opportunities outweigh the risks at this stage.”
Quanguo Siyuan, the second product of the Quanguo Fund, which has just been managed by Dengfeng, also revealed its quarterly report for the first time. The fund's stock position is 70.61%, which is still in the opening period. Quanguo Siyuan's top ten heavy-traded stocks are China Merchants Bank, Lixun Precision, Tencent Holdings, Ningde Times, China Merchants Shekou, Kweichow Moutai, Midea Group, Kuaishou-W, Poly Development, and Jingao Technology, which account for 36.23% of the fund's net asset value.
Gang Dengfeng said in the Third Quarterly Report that judging from the domestic situation, the signs of economic stabilization at the Politburo meeting at the end of July were very obvious, and the real estate development stage was repositioned. With the implementation of housing and non-loan approval policies in various cities, housing and non-loan approval in first-tier cities were implemented at the end of August. “Although sales in the real estate industry have not clearly recovered until now, I believe that with the gradual lifting of policies such as purchase restrictions, loan restrictions, price limits, etc. in the future, and the restoration of confidence after social life returns to normalization, differentiation between cities and stabilization of total volume can be expected.”
Gang Dengfeng also detailed Quanguo Siyuan's investment direction in the third quarterly report.
In terms of technological innovation, he is optimistic about breakthroughs in AI technology and opportunities for industrial innovation brought about by MR. He is optimistic not only that software companies and application companies with a relatively good customer base will use AI technology to increase the value of services, but also changes in interaction methods brought about by MR technology.
In a growing industry, although adjustments in the new energy industry are quite drastic, he believes that the competitiveness brought about by the company's cost differences will help leading companies overcome the industry's trough period.
In an industry where industry share is increasing, he is optimistic about opportunities in automotive parts, new chemical materials, and semiconductor equipment; in the traditional industry, he is concerned about the real estate and electrolytic aluminum sectors where supply side has clearly contracted and constrained; in addition to this, he is also optimistic about leading companies in consumer industries such as branded apparel, pharmaceuticals, food and beverage, etc.
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