On June 15, Du Meng said at the J.P. Morgan Asset Management Pilot Salon that the domestic economy is a slow recovery process, just like the plane needs to taxi before takeoff, but as long as the power is there, there is no need to worry too much. Du Meng has 21 years of investment research experience and 11 years of fund management experience. Here are his core thoughts on the current market.
Economic recovery requires process
Be a little more patient with the market
Since the beginning of this year, we are all looking forward to a relatively strong rebound in the economy, but we must also understand that the past epidemic can be said to have made the economy "brake sharply", then it must require a process to recover, whether it is from corporate investment or personal consumption. But in the future, the driving force of China's economy is there, just like the plane needs to taxi for a while to take off again, we let the plane glide for a while, I am personally not particularly worried about the recovery of the economy.
Meng Du is the Deputy General Manager and Investment Director of J.P. Morgan Asset Management China
Regarding the A-share market, since the beginning of this year, it can be said that it is basically a stock market or even a reduction market, and we have seen that some foreign capital is indeed flowing out of A-shares. But we see that Jamie Dimon, chairman and CEO of JPMorgan Chase Group, and Mary Erdoes, CEO of JPMorgan Asset and Wealth Management, came to China some time ago and participated in the J.P. Morgan Global China Summit, and they attach great importance to the Chinese market and are very optimistic.
At this point in time, global financial institutions like JPMorgan, which have a long-term investment attitude towards China, may be participating in this market in reverse and more actively. For them, China is a market that is impossible to ignore, whether it is currently up or down. So from our point of view, we are still confident about the future.
At present, the valuation of many high-quality assets in the A-share market is already very cheap, but some are still experiencing killing valuations, which may be affected by some shareholding structures. But from my investment experience over the years, valuable assets will not be in this state forever, what we need is more patience.
Artificial intelligence is by no means just a topic
Or it will bring profound changes to society
This year we ushered in something new: artificial intelligence. At present, artificial intelligence has attracted a lot of attention and funds in the market, not only a simple theme hype, but more reflecting a profound industrial revolution trend.
Assuming that starting from this year, in the next three, five or ten years, this technology may have a profound impact on our lives and work, including our entire social formation, and may undergo a profound change.
So we quickly invested our research efforts to track the industry, from hardware to applications, to do research. I think there will be a lot of industrial opportunities and investment opportunities here, which can be compared to the changes brought to society by the emergence of the Internet or mobile Internet, or even greater than the changes they have brought about.
From the current point of view, we should focus on relevant investment opportunities that can participate in the global artificial intelligence industry chain. In the next 1-2 years, we are expected to witness the explosion of artificial intelligence computing power, so it is very important for investment in computing power infrastructure. Combined with the status and structure of domestic industrial development, optical modules are one of the most promising fields at present. In other areas, such as GPUs and related actions of Chinese Internet giants, we will also continue to track.
From a market perspective, the valuation of the relevant industry may have reacted at present. So how long is this wave? Our experience is not to make such predictions. Because from our research, the development of industries promoted by technological innovation is often very rapid, and its outbreak is likely to be non-linear, so all we can do is to see how much space this industry has in the future.
At present, artificial intelligence is still in the training stage, and there will be a stage of logical reasoning in the future, and its demand for industry-related will be increasing. So I don't think the wave is over. We can only see this opportunity, seize this wave, and keep tracking it.
There is no need to be too pessimistic about new energy industries such as photovoltaics
Deep integration into the global supply chain
Regarding the photovoltaic industry, we are still optimistic in the long run. First of all, we are not worried about overcapacity. Forcing the industry to innovate and evolve through overcapacity is the development logic of this industry. From the demand side, due to the low cost of power generation, the future demand of this industry is still very large, which we are relatively sure.
At present, many leaders in the A-share photovoltaic sector have fallen to the valuation of similar cyclical stocks, but in fact, from its business point of view, there is a background of significant growth in demand. The reason why the market gives a relatively low valuation may be due to short-term game factors and the factors of the original position structure, but this does not negate the growth of the entire industry. According to our understanding, the enterprises in this industry itself are also very confident in their own future.
We are still optimistic about the new energy vehicle industry chain. What we see is that investors around the world are investing in batteries or electric vehicles as a core asset for the future, and related companies in many countries are recognized in the stock market. But that's not the case at the moment. In fact, China's new energy industry, whether it is photovoltaic or battery, is very involved in the global industrial chain and is difficult to separate. The trends it represents are also globally recognized, and we don't think there's any need to be too pessimistic.
Seize opportunities with both hands
Focus on frontier industries and high-quality growth stocks with reasonable valuations
Standing at the moment, J.P. Morgan Asset Management China's equity team will focus on tracking two directions: first, represented by artificial intelligence, investment opportunities brought by the development of frontier industries in the next 5-10 years; Second, it has experienced a deep correction in the past few years and is now a high-quality industry with reasonable valuations and high growth. Both hands must be grasped, both hands must be hard.
Under such an equity investment framework, looking ahead, there are both structural market opportunities and high-growth potential sectors, and this combination is an ideal combination in my opinion. Looking at the timing of the market, whether it is A-shares or Hong Kong stocks at present, I think the whole is in a state of undervaluation, but it is just a question of when to start. We'll let the plane glide a little longer before takeoff.