In the 2019 Quarterly Report, many star fund managers said they are concerned about opportunities in the technology industry. Many have already added relevant allocations in the fourth quarter of last year; sectors such as 5G and new energy vehicles are generally optimistic about the direction fund managers are generally optimistic about.
Overall, fund managers are relatively optimistic about this year's market. Zhou Yingbo, a pioneer fund manager for the China-Europe Era, said that in the first quarter of 2020, an optimistic judgment on the equity market will be maintained, the easing environment will continue, monetary policy is expected to continue to be relaxed, active fiscal policies will continue to gain strength, the acceleration of the net worth process of bank wealth management products will in fact lead to a decline in social risk-free returns, and valuation increases are expected to continue.
Lin Peng, fund manager of Dongfanghong Ruifeng, expects that the 2020 market will spread to second-tier growth stocks, and that companies with low valuations and excellent quality will experience a revaluation of the market. “There is little risk in the short-term market. The investment strategy will focus on selecting stocks and industries, downplaying the position strategy.”
China Southern Fund Shibo is relatively cautious and has a neutral and optimistic attitude towards A-shares. He determined that the current market is still in the stage of repeated expectations before the fundamentals actually improve. At the stage of policy support and economic fundamentals, the uncertainty of expectations will increase market volatility, and they will firmly hold leading companies that can withstand fluctuations in the economic cycle and have good quality, and make investment decisions from a long-term perspective.
In terms of allocation, many well-known fund managers have increased their allocation to the technology industry in the fourth quarter of last year. The 5G industry chain, the new energy industry chain, and the media, pharmaceutical and other industries have become their key allocation directions.
Yang Fei, fund manager of Cathay Pacific Fund, said that its layout direction focuses on pan-technology and the NEV industry chain. The pan-technology sector includes the cloud computing industry chain in the context of 5G development, domestic technology substitution, etc. Zhou Weifeng, another fund manager of Cathay Pacific Fund, believes that fields such as new energy vehicles and intelligent driving are expected to create a global manufacturing leader.
The Ruiyuan Growth Value Fund, managed by Fu Pengbo, focused on TMT, pharmaceuticals, chemicals, construction materials, photovoltaics and other sectors in the fourth quarter of last year, while also laying out some hot industries and sub-new stocks.
Liu Geyong of Guangfa Fund, the winner of the 2019 Active Biased Equity Fund, said in the quarterly report that he is optimistic about the medium- to long-term investment value of the technology industry, maintains a high position, focuses on deterministic growth industries such as technological innovation and medical services, and has increased its positions in the consumer industry.
Zhou Yingbo said that after a rebound over the past six months, the valuation level of the technology sector has increased markedly, and the price/performance appeal of some of the underlying assets has declined, and individual stocks will continue to be selected in consumer electronics, semiconductors, electric vehicles, new energy, media and other sectors.
There are also some fund managers with large management scales that insist on maintaining core positions unchanged. Xie Zhiyu, fund manager of Xing Quan Heyi, said that the core position did not change much in the fourth quarter. The consumption and insurance leaders held earlier, as well as some high-quality manufacturing leaders, were firmly held until no significant changes were observed in the medium to long-term logic. The overall allocation is mainly based on medium- to long-term value varieties with medium- to long-term logical support and appropriate valuations; individual stocks such as Mango Supermedia and Guangzhou Automobile Group were added in the fourth quarter.
There are also fund managers that suggest the valuation risks of growth stocks. Yang Hao, fund manager of BOC Schroder, said that growth stocks have risen rapidly since the second half of 2019, and many are no longer underestimated or even overestimated. So-called traditional industries have the opportunity to be “refreshed” and reshaped by new science and technology and modern management, while a new batch of scarce global assets also has room for revaluation. “We shouldn't just talk about technology; we should have a new definition of core assets when it comes to core assets.”
