Core views
The overseas interest rate cut cycle is about to begin. Steady domestic growth policies are gradually being implemented, and market risk appetite is being steadily restored in stages. Small and medium capital-style valuations, which have underperformed since this year, are expected to usher in a phased recovery. Small micro cap stocks represented by the China Securities 2000 Index have high allocation value.
Point 1
At the macro level, the small micro market style is mainly affected by economic growth and the liquidity environment. As overseas recession and interest rate cut transactions gradually begin, the beginning of an overseas interest rate cut cycle is expected to open up space for domestic monetary policy. According to CME data, the market's expectation that the Federal Reserve will cut interest rates in September has reached 100%. The difference is the extent to which the US economy is falling, and the definite point is the weakening trend of the economy. Overall, the Fed's interest rate cut cycle is about to begin. With the continued implementation of the domestic steady growth policy, market risk appetite has been steadily restored in stages, which is conducive to the phased restoration of underperforming small and medium market valuations since this year.
Point 2
The China Securities 2000 Index has a remarkable small and micro market capitalization style. The distribution of constituent stock industries is relatively balanced, the concentration of individual shares is low, and there is a high level of individual risk in a single stock or industry. The impact on the overall performance of the index is limited, and investment risks are scattered to a certain extent. In terms of earnings, as of August 19, 2024, compared with other mainstream broad-based indices, the China Securities 2000 Index had outstanding earnings performance recently. The yield in the past week was -0.18%, outperforming other mainstream broad-based indices. Meanwhile, as of August 19, 2024, China Securities 2000 had yields of 1.17% and 2.35% for the past six months, respectively. It is the only index that recently recorded positive returns, and has high performance flexibility in the rebound market.
Point 3
Due to the large number of small and micro stocks, the investment process involves a large number of complex transactions, so it is difficult to invest. The Huaxia China Securities 2000 ETF (562660.SH) and ETF Linked Fund A/C (019891.OF.019892.OF) can provide investors with an efficient and convenient way to invest in small microtransactions. In terms of earnings, the Huaxia China Securities 2000 ETF performed well in different time periods. Among them, the revenue for the past month was 1.33%, and the revenue for the past half year reached 3.45%.
Risk warning
The research and analysis of fund products and indices in this report is based on historical public information, which may cause certain analytical deviations due to changes in index sample stocks; the future performance of the index is affected by multiple factors such as the macro environment, market fluctuations, and style changes, and there is a certain risk of fluctuation; this report does not cover securities investment fund evaluation business, does not include recommendations for fund products, or recommendations for any index sample stocks; historical data does not represent the future.