The "double cycle", which has attracted much attention from the market, is changing the logic of investors' thinking. Investors interviewed by this newspaper said that the "double cycle" is an important strategic decision for the country to deal with the current global economic and political environment, and will be the core strategy for economic development for quite a long time in the future. For the time being, "The "double cycle" strategy is expected to become an important cornerstone of slow cattle, and big finance, consumption, science and technology have become the main investment direction under the new strategic decision.

The setting tone of "double cycle" is good for slow cattle to walk steadily and far away.

"domestic great cycle" and "double cycle" is a hot word in the current market, which comes from the latest tone of economic development at the highest level of the country: "gradually form a new development pattern with domestic big cycle as the main body and domestic and international double cycle promoting each other".

In the view of Teng Tai, director of Wanbo New Economic Research Institute, this latest tone has two major strategic backgrounds. "first of all, from 2015 to 2019, China's trade surplus has fallen from its highest point year by year," he told Red Weekly. Even without the impact of the trade war and the COVID-19 epidemic, we predict that this trend of declining year by year will continue for about a decade, and basically reach a trade balance by 2030, that is, the trade surplus will be reduced to zero.

Secondly, in 2019, the total GDP of China is about 13 trillion US dollars (about 100 trillion yuan), while that of the United States is 21 trillion US dollars. In the case of a large gap in the scale of GDP between China and the United States, the total retail sales of social goods between China and the United States are almost the same. In conclusion, China needs to establish the strategic thinking of taking the domestic demand market as the main body, and our domestic demand market also has the potential to become the largest market in the world. "

In addition to the "domestic great cycle", there is also a domestic and international "double cycle". In this regard, Teng Tai said, for example, "every year, we export about 10 billion hats, 10 billion pairs of shoes and 30 billion pieces of clothing, which can only be digested by overseas markets." And some of our energy and resource products, such as oil and iron ore, are dependent on overseas markets. Therefore, the policy still emphasizes opening wider to the outside world. "therefore,Under the guidance of the "double cycle", the areas of consumption and core technology that are stuck in the neck are promising.

Wang Yichao, executive director of Cathay Pacific Yuanxin Asset Research Department, told Red Weekly that the understanding of the "double cycle" should start from answering the three core questions of economic development, that is, where does the demand come from? Where does the supply come from? Where does credit come from?

「On the demand sideWe have a huge need for 1.4 billion people to upgrade their cultural life.On the supply sideMade in China is the main force of the world economic cycle; on the credit side, that is, the financial industry, whether it is indirect financing by banks or direct financing in the capital market, it is the "blood" of the economic cycle and plays an important role in supporting the real economy. International capital flows and trade flows are very developed, and these two major international cycles can play a good role in promoting domestic and international 'double cycles'. AndIn terms of international capital flowsIt is necessary to persist in opening up to the outside world, do a good job in the construction of the capital market system, and expand and strengthen securities firms, investment banks, funds and other industries. "

Therefore, under the background of "double cycle", the status of capital market is actually rising further. Zheng Lei, chief economist of Baoxin Financial, told reporters that from the perspective of the construction of the capital market system, Science and Technology Innovation Board and the gem have implemented the registration system, giving full play to the financing role of the capital market and providing financial support for short-board technology and industries.

At the same time, the "double cycle" strategy is expected to become an important cornerstone of the slow bull market and resonate with the market. Chen Jiande, general manager of Shenzhen Private Equity Investment Fund Management Co., Ltd., told reporters, "in the internal cycle, it is necessary to enhance domestic scientific and technological competitiveness, because our country used to be export-oriented, and independent scientific and technological innovation is not as strong as it is now. Science and Technology Innovation Board and gem registration system play an important role in solving the financing problem of innovative start-up enterprises. With the listing of a large number of technology companies, many excellent companies will certainly emerge and promote the long-term development of capital. The most typical feature of a good capital market is that there are a number of excellent listed companies thriving. "

Big finance has ushered in a long-term positive, and the fundamentals of some industries have been "happy".

When the "double cycle" and the slow bull market "combine", the securities industry may be the first to benefit.

In fact, in the first half of the Prev hit a new high in the last two years, the performance of securities firms continued to rise. For example, according to the latest announcement from Citic Securities, the parent company's revenue reached 6.598 billion yuan in July, with a net profit of 4.443 billion yuan, an increase of 369 percent from June's net profit of 947 million yuan. The parent company of CITIC Construction and Investment achieved revenue of 3.11 billion yuan in July, an increase of 124.72% over the same period last year, and a net profit of 1.698 billion yuan, an increase of 174.65% over the same period last year. The net profit in June this year was 1 billion yuan, up 69.8% from a month earlier. Under the performance endorsement, the share prices of CITIC Securities and CITIC Construction Investment both started an upward trend.

"as far as the brokerage industry is concerned, it is obviously the most beneficial industry for the bull in the capital market. On the evening of August 6th, Citic Securities, CITIC Construction Investment, Guangfa Securities and other brokerages have announced their July results, KuaiBao.From the data point of view, the performance of securities firms has been greatly improved. After the certainty of coupon business performance growth increases and the space for market capacity improvement opens, the valuation center of coupon business is expected to continue to rise.Chen Jiande said.

Chen Jiande pointed out that after the brokerage, insurance also benefited from the bull market environment. "at present, about 10% of the total assets of insurance companies are invested in the equity market. Due to the overall recovery of the market, it can bring more investment returns for the insurance industry. At the same time, the relevant national regulatory authorities have increased the proportion of insurance investment in the equity market, which opens more room for investment in the insurance industry. In addition, since insurance funds mainly invest in blue-chip companies with high quality, undervaluation and high dividends, the listing of emerging technology companies has little impact on them. "

And brokerage, insurance belong to the big financial sector of the bank, will also be in the "double cycle" and slow bull market resonance in the attention? Bank stocks, in particular, turned straight down after a brief rebound in July, hitting an all-time low.

In this regard, Chen Jiande believes that with the increase in the proportion of direct financing in the capital market, the bad debt rate of banks that the market is worried about may be reduced. "on the one hand, the valuation level of the banking sector is expected to rise as a result of a bad decline; second, when the good performance of the banking industry itself is confirmed, the banking industry itself has a very large room for revaluation. For example, manufacturing is generally believed to be the 'main contributor' to bad banks, but the fact is that steel, non-ferrous metals, real estate and other industries do not create many bad debts. It has become easier for IPO to list, which will also help banks reduce the default rate to some extent. "

Wei Binjie, director of strategy research at Xiamen Superior Yifeng Asset Management Co., Ltd., also pointed out, "from the perspective of statistics, the non-performing rate of banks has been declining year by year since 2015, on the premise of increasing statistical standards." With the accumulation of annual profits, the core capital adequacy ratio of enterprises is also gradually improving. The market is worried about the bad rate of banks, the problem of bank profits and plans to reduce the dividend ratio, personal judgment is within the scope of control. "

At present, A shares and Hong Kong stocks have the lowest net market ratio.Citic Bank H sharesIt is only 0.33 times, and the Bank of Communications, which has the lowest net market ratio in A-shares, is 0.5 times. The one with the highest dividend rate in Hong Kong stocksMinsheng, Everbright, Bank of China, Bank of CommunicationsThey are all about 8%, and the dividend rate of A shares is about 6.6%. In response, Wei Binjie said, "the current situation of bank stocks is very similar to that of 2014." In that year, the share price of Bank of China was 2.5 yuan, with a price-to-book ratio of 0.8 times, and a dividend of 0.19 yuan, close to 8%. At that time, the defective ratio and leverage ratio of bank stocks were higher than they are now. At that time, the speculation atmosphere of the gem and small and medium-sized board will not be worse than now Science and Technology Innovation Board, the whole market is also popular with a 'talk about valuation lost in the starting line' speech. But after bank stocks bottomed in July 2014, the banking sector as a whole began to move higher. Half a year later, almost all bank stocks rose by 100%, directly wiping out all bank stocks with a price-to-book ratio of less than 100%. "

Therefore, under the slow bull, the certainty of bank stock valuation repair is very high. In addition, in Wei Binjie's view, there are two other gains in bank stocks that should be noted. "at present, bank financial management is basically around 3%, and bank stock dividends far exceed this income. Some investors find dividends meaningless. For dilapidated bank stocks, each dividend can increase the cash dividend rate of the second year while improving the safety pad. For example, the H-share of Bank of China of HK $2.63 pays an annual dividend of HK $0.21. If the stock price has been stripped of rights, there will be a stock with a share price of zero and a net worth of more than 10 yuan after 13 years. We all know that the possibility of such a situation is very small. In addition, as far as A-share bank shares are concerned, we need to add a new income. Statistics from brainstorming show that in the latest year, the annual income of Shanghai is 10%, and that of Shenzhen is 6%. One of the highest-yielding new shares this year has a direct return of more than 200000. "

The financial sector may add new members of the "hundreds of billions of market capitalization club".

It should be noted that the data show that under the "double cycle", the financial sector may add new members of the "hundreds of billions of market capitalization club". According to Guangfa Securities's research report, six major investment directions will be derived from the "internal circulation" alone, and the financial internal circulation (finance can better serve the real economy and improve the efficiency of economic operation) is one of them.

According to the statistics of Red Weekly, there are 16, 13 and 5 members of the "100 billion market capitalization club" of banks, brokerages and insurance in the financial sector, respectively, accounting for 37.36% of all companies in the plate. The weight of all the 100 billion market capitalization companies in Shanghai and Shenzhen stock markets is only 3.35%.

In fact, the new development pattern of "double cycle" has been put forward since mid-May this year, and has been mentioned many times since then. As the representative of "foresight funds", the important shareholders of listed companies have already "heard the wind" and moved. Statistics show that in April this year, important shareholders of listed companies cumulatively increased their holdings in the financial sector to less than 0.44%. By May-July, the figures had reached 3.89%, 30.48% and 18.64%, respectively (see table 1). Specifically, in the statistical range, Jiangsu Bank, Nanjing Bank and Changsha Bank are at the top of the list of increased holdings, of which Jiangsu Bank and Nanjing Bank currently have a market capitalization of 71.114 billion yuan and 79.256 billion yuan respectively, catching up with the market capitalization of 100 billion yuan.

Table 1 A list of the increase of financial shares held by important shareholders of listed companies in the past four months

It should be noted that despite a rally in early July, the financial sector is still a "valuation depression" in A-shares, with banks, brokerages and insurance trading at 5.86 times, 34.76 times and 13.49 times earnings, respectively, while their historical median is 7.23 times, 26.38 times and 19.18 times respectively. At the same time, the financial sector is also an industry with strong performance resilience. In the banking industry, for example, affected by the COVID-19 epidemic, the net profit of nearly 70% of companies in Shanghai and Shenzhen stock markets declined in the first quarter of this year, but of the 36 companies in the banking industry, 35 achieved positive growth in net profit, accounting for 97.22%. Among them, 18 banks, including China Merchants Bank, Jiangsu Bank and Nanjing Bank, have achieved double-digit growth in net profit.

The same is true of the insurance industry, and with the continuous rise in per capita disposable income of Chinese residents (see Table 2) and the increasing enthusiasm of residents to buy insurance, in the context of expanding domestic demand, the performance of some insurance companies declined or improved in the first quarter of this year. For example, the number of Internet users of Ping an in China has increased by 20.48% from the end of 2018 to the end of the first quarter of this year (see Table 3).

Table 2 list of per capita disposable income of Chinese residents over the years

Table 3 customer operation of Ping an of China in the past two years

The hot consumer track adds long-term logic, "short board" and "long board" all have opportunities.

In the big finance ushered in a long-term positive, and part of the target toward the market capitalization of hundreds of billions of dollars at the same time, the market continues to be optimistic about the consumer track, but also because of the "double cycle" and add a new long-term logic.

Even if China's GDP growth slows to 5.5%, the size of China's consumer market will grow from $4.4 trillion in 2016 to $6.1 trillion in 2021, according to the report "New Trends in China's consumption: three driving Forces shaping China's New customer base" jointly released by Boston Consulting Group (BCG) and Alibaba. The size of China's consumer market has maintained double-digit growth for 14 years in a row, and it is bound to surpass the United States to become the world's largest consumer market in the next two or three years.

Xu Chuanhua, chairman of Yilo Investment, told reporters, "from the prospect of expanding domestic demand, the capacity utilization rate of some industries in China is relatively low, mainly concentrated in iron and steel, coal, non-ferrous and chemical industries, and the pressure on capacity removal is still great. At the same time, China's photovoltaic, 5G and high-end equipment represented by high-speed rail have international competitiveness, and the structural opportunities of our country in the future can come from the "deficiency board" or from the "forged plate". "

Combined with the background of the epidemic, online consumption as a "long board" has almost completed "universal popularization", which itself contains huge investment value. Xu Chuanhua believes that "E-commerce, game entertainment platforms, products and content providers can be seen as two different industrial chains for logical analysis." First of all, the central position of the e-commerce value chain is the e-commerce platform, because the leading monopoly effect of e-commerce is very obvious, and the merchant is almost a completely competitive market, and most of the merchants will be laid out on each platform, so consumers have little stickiness in choosing e-commerce. The central position of the value chain of the game entertainment platform is the content provider, because most content providers will sign exclusive agreements with the platform, at this time, consumers will be more sticky to the content providers than to the platform. From the perspective of investment opportunities, the trend of the concentration of Internet advantage resources to head enterprises is irreversible, giving priority to Internet giants such as Tencent, Meituan and Ali as long-term investment targets. "

Of course, the "long board" is not just online consumption. Chang Shisan, chairman of Kangzhuang Asset, pointed out, "as far as international competitiveness is concerned, it is mainly the leader in some subdivided areas, such as new energy, 5G technology, Internet of things, subdivided medical field, and so on. In terms of expanding domestic demand, resources in the medical field are relatively scarce, especially those related to aging and some enterprises related to vaccines. We believe that with the transformation of the economic structure, the trend of people's life from food and clothing to the pursuit of quality and health will not change, so there are core technological advantages, monopoly and brand advantages, as well as R & D advantages. Companies in the leading areas of the industry will still be able to cross the bull bear in the future. "

In terms of "deficiency", the domestic pharmaceutical field is not only the focus of the market, but also one of the directions of policy support for the "domestic cycle". Du Xiangyang, chief analyst of Southwest Securities Pharmaceutical and Biological Group, told reporters that the epidemic is expected to further promote national investment in public health, and areas related to hospital construction and medical equipment industry are expected to benefit. At the same time, related medical testing laboratories, IVD consumables and other areas are also expected to usher in rapid development.

Du Xiangyang further explained that from the perspective of domestic pharmaceutical innovation, since 2015, the state has continuously introduced policies to encourage and guide enterprise innovation, while introducing policies such as volume procurement for generic drugs and proprietary Chinese medicines to suppress the prices of related products, while realizing health insurance control fees and optimizing the payment structure, guide pharmaceutical companies to innovate and research and develop. In recent years, the innovative drug research and development strength of domestic enterprises has increased rapidly, and the research and development progress of PD-1 and other drugs has reached the world's leading level, constantly meeting the medical needs of domestic patients, and has become the core driving force to drive the circulation in the pharmaceutical industry. The outbreak of innovative drugs has also led to the development of the domestic CXO industry (referring to CRO/CMO/CDMO/CSO). It is expected that innovative drugs and CXO will be excellent long-term investment tracks.

"from the perspective of domestic pharmaceutical consumption, it covers a relatively wide range, including vaccines, blood products, retail drugstores, physical examination, ophthalmology, oral cavity and other different tracks, which are less negatively affected by health insurance policy as a whole. with the general trend of upgrading domestic consumption and the sustained growth of public demand for high-end medical care, the industry is expected to maintain long-term development and become an important driving force for circulation in the pharmaceutical industry.

From the point of view of the big cycle, self-controllable and domestic substitution will be the main development direction, represented by the innovative device industry. At present, the scale of China's medical device market continues to grow rapidly, reaching 600 billion yuan in 2019. And there are many subdivided tracks, but at present, the localization rate of most tracks is less than 40%, and the proportion of localization in high-end fields is even lower. It is expected that as domestic enterprises continue to achieve technological breakthroughs in the future. And with high performance-to-price ratio and significant channel advantages, the localization rate will continue to improve, the next decade will still be a decade of gold development in the equipment industry, with outstanding investment value. Du Xiangyang said so.

The chip and software industry began the "BOE moment", and the investment logic was lengthened.

Completely different from the investment opportunities of big finance and consumer races, the "double cycle" is mainly to solve the problem of "existence" or even "life and death" in semiconductors and other technology industries. The most obvious feeling in the market is the restriction on the introduction of chips in China, which is also the key reason to stimulate the sharp rise of chip stocks in the secondary market.

Before the "domestic cycle" policy, many local technology enterprises actually survived by relying on the domestic market. Financial blogger @ Tang Shi Director Sima Qian told reporters that the R & D costs of most science and technology enterprises are very high, so they need a stable source of profits to support their R & D reinvestment and reproduction. "for example, the panel business of BOE An and TCL looks very strong today, but their starting point is very low, climbing up the hill bit by bit. This phenomenon can only happen in China, because we have a strong internal market, and as long as the products they produce are available, there is a good chance that they will survive. Internal circulation does not directly participate in international competition, which is also the advantage of a semi-closed market. For example, two leading companies, Ningde era and BYD, have emerged in the field of new energy vehicles, which also rely on the internal circulation market. "

Kong Lingfeng, chairman of Xinran Investment, further pointed out that only when technology companies survive first can they become bigger and stronger. He believes that China's photovoltaic and electric vehicles, that is, new energy, as well as consumer electronics, are industry races with comparative advantages in the field of science and technology in China. "what they have in common in all aspects of batteries in the fields of consumer electronics, photovoltaic and electric vehicles is that the technical barriers are not high. Chinese companies have cost advantages over Europe and the United States, and technological and manufacturing advantages over Southeast Asia.

At present, photovoltaic power generation accounts for about 3% of the global power generation structure. Photovoltaic prices have dropped sharply in the past four or five years, and will continue to decline in the future. It will certainly be lower than the price of coal power. Then the clean energy characteristics of photovoltaic power generation, zero operating cost advantages, will be fully reflected, of course, there are huge investment opportunities. The leading companies in the entire silicon material, silicon wafer, battery and other industries are all in China, such as Longji shares in the photovoltaic field, Central shares, Sunshine Power, etc., Ningde era in the electric vehicle field, and BYD, the whole vehicle company. And Yiwei LiNeng, Xinwanda and so on, are the leading companies. "

What is facing a situation similar to that of BOE when it started from scratch is the chip and software industry. In terms of policies, on August 4, the State Council issued "several policies for promoting the High-quality Development of the Integrated Circuit Industry and Software Industry in the New era" to formulate and promulgate policies and measures in eight aspects, such as finance and taxation, investment and financing, research and development, import and export, talents, intellectual property rights, market application, and international cooperation. The "certain policies" make it clear that all integrated circuit enterprises and software enterprises established in China, regardless of the nature of ownership, can enjoy the relevant policies in accordance with the provisions. Starting from the profit-making year, the key software enterprises encouraged by the state shall be exempted from enterprise income tax from the first to the fifth year, and shall be levied at a reduced rate of 10% in subsequent years.

According to Guosheng Securities, the overall income tax rates for the computer sector from 2015 to 2019 are 14.30%, 14.57%, 11%, 22.09% and 24.39%, respectively. The new tax policy significantly reduces the tax burden on software companies, benefiting companies that have not yet made a profit.

In this regard, Kong Lingfeng said, "in the State Council's policy on integrated circuits, there is a very important word is the strength of the whole country, which is of great value." In fact, the investment logic of integrated circuits has been lengthened. From a very long-term point of view in the future, the most scarce technology field in China, with semiconductors and operating systems as the core, really reflects the long-term value trend. "

Sima Qian, director of Tang History, said that the latest tax policy on semiconductors and software is actually to encourage "internal circulation" and guide the climbing of technology and production capacity. "We can't reach the latest chip design and manufacturing technology, so we'll do what we can do first. For example, 28nm chip, how much TSMC can do, how much SMIC can do or even lower, then the 28nm chip market will completely become a dominant company. Because the strong internal circulation market can provide significant support for 28nm chips, it can be said that all of them can be consumed through the internal circulation. In this way, the enterprise will have the money to participate in the external circulation. "

Wang Yichao further pointed out, "Import substitution is indeed an important opportunity for domestic companies in the industrial chain." Because, the technology industry has a very important feature: whether the technical parameters are temporarily ahead or not is not important, it is most important to have more users to use, even if the technical parameters lag behind for a short time, more users will promote the iteration of technology upgrading. In the end, the winner in the competition of technology path is not the one with the best technical parameters, but the one used by more people. Therefore, I put forward a point of view that China's huge consumer market is an important driving force for China's scientific and technological progress. "

Another technological concept that attracts market attention as well as semiconductors and software is 5G. From the overall investment of 5G, it is better than expected. In this regard, Wang Yichao believes that the 5G industry should be analyzed from two aspects, one is hardware equipment manufacturing and network investment construction, and the other is software and applications. "I think the innovative application model of 5G may appear in the field of industrial Internet of things in B-end (enterprise manufacturing side), as well as artificial intelligence and robotics in C-end consumption. "

However, Li Yuying, deputy general manager of Tianfeng Securities Shenzhen Branch, warned that a gust of technology wind at the end of 2019 has made technology stocks very hot and highly valued. He is optimistic about high-end manufacturing with R & D or channel capabilities.

In terms of the direction of investment in the second half of the year alone, Kong Lingfeng believes that it depends either on the performance-to-price ratio of valuation, or on the certainty of industry status or trend, such as the areas where semiconductors represent the general direction of the country. and the aforementioned areas of photovoltaic, electric vehicles, and consumer electronics. Xu Chuanhua pointed out: "in the second half of the year, we will continue to track and analyze the dynamic development of macro and industry, take the national policy as the guide, and select industries that are in line with the trend of economic development at home and abroad as the main investment direction, including medicine, consumption, science and technology, and other fields. At the same time, we will always pay attention to the macroeconomic recovery signals, judge the cyclical inflection points of related industries, and seize the recovery opportunities of traditional infrastructure, energy and chemical industry, automobile and aviation and other cyclical industries. "

On the whole, Chen Jiande said, "now is on the road to a bull market, for investors, it is recommended to make full use of the opportunity of the bull market." At the same time, we should pay attention to the fact that many stocks are valued at more than 100 times, and some stocks have single-digit valuations, such as banking, insurance, real estate, infrastructure, public utilities and other sectors. In the capital market, the average value must return in the medium to long term. "