Yang Delong, Qianhai Open Source Fund: Economic recovery is the main line in 2024, and the capital market can pay attention to large consumption, technology and other sectors

Cover News Reporter Zhu Ning

In 2023, factors such as the aftershocks of supply shocks, changes in the policy environment, and the transformation of the industrial structure will have a profound impact on economic growth and market performance. Under the influence of many factors, the global economic situation in 2024, China's macroeconomic trend, and the future of A-shares have become hot topics of concern to the market. In this regard, Cover News interviewed Yang Delong, Chief Economist of Qianhai Open Source Fund, to understand his views on China's macroeconomic and financial market investment opportunities in 2024.

Yang Delong, Chief Economist of Qianhai Open Source (photo provided by the interviewee)

Boosting consumption is one of the priorities for 2024

A virtuous circle of mutual reinforcement of consumption and investment is needed

"In 2024, the mainland economy will see a steady recovery, and the recovery may be further strengthened. At the beginning of the interview, Yang Delong expressed his view that China's economy continues to improve. "From the perspective of the troika that drives the economy, although the growth rate of investment in 2023 will be low and exports will also decline to a certain extent, consumption will contribute more than 80% to GDP growth in 2023, and consumption is expected to recover further in 2024. ”

"From the perspective of current economic development, boosting consumption is still one of the priorities. Yang Delong said that in terms of boosting domestic demand, it is necessary to stimulate potential consumption, expand effective investment, form a virtuous circle of mutual promotion between consumption and investment, and promote consumption from recovery to continuous expansion;

"The key to boosting consumption is to increase residents' income, the meeting stressed that it is necessary to increase the income of urban and rural residents, expand the size of middle-income groups, optimize the consumption environment, and promote large-scale equipment renewal and consumer goods trade-in. Yang Delong said that the focus is on supporting key core technology research, new infrastructure, energy conservation, emission reduction and carbon reduction, cultivating and developing new kinetic energy, improving investment and financing mechanisms, and implementing new mechanisms for public-private partnerships.

"In terms of opening up to the outside world, it is necessary to accelerate the cultivation of new momentum for foreign trade and consolidate the basic market of foreign trade and foreign investment. Yang Delong said that in 2023, the mainland will achieve steady growth in foreign trade under the poor international environment, and in 2024, it will still face the decline in economic growth in Europe and the United States, and the problem of declining demand for mainland export products.

In key areas, it is necessary to carry out reforms, plan major measures to further deepen reform in an all-round way, continuously improve and implement the two unwavering systems and mechanisms, and fully stimulate the endogenous power and innovation vitality of various business entities. Deepen the implementation of the reform of state-owned enterprises, deepen the promotion of actions, enhance core functions, improve core competitiveness, and promote the development and growth of private enterprises. Implement a number of measures in market access and other aspects to promote the development of small and medium-sized enterprises.

Policy support has been gradually implemented and risks have been resolved in an orderly manner

GDP growth expected to be 5% in 2024

For the projected GDP in 2024, Yang Delong gave an expectation of 5%. "To achieve 5% growth, we still need policy support, and the policy side must continue to amplify the moves. Yang Delong said.

"Now, policies to support the economy are gradually being implemented. Yang Delong said that the Central Economic Work Conference proposed to "establish first and then break", which means that for traditional industries, such as real estate, coal, steel, etc., it is necessary to give certain support to prevent the rise in unemployment and the decline in economic growth, so there may be greater efforts in the policy to tilt.

At the same time, in terms of monetary policy, we will continue to implement a proactive fiscal policy and a prudent monetary policy in 2024. The active fiscal policy should be moderately strengthened, improve quality and efficiency, and the prudent monetary policy should be flexible, moderate, precise and effective. "Fiscal policy should improve quality and efficiency, that is, in terms of fiscal policy, we will increase efforts to support the development of the real economy. Monetary policy should be precise and not flooded, but it should be flexible and moderate, especially in the real estate industry, where the capital chain is relatively tight, to give more support. Yang Delong said.

Regarding the two major risk areas that the market is worried about, real estate and local bonds, Yang Delong said that it is necessary to coordinate and resolve the risks of real estate, local bonds, and small and medium-sized financial institutions, severely crack down on illegal financial activities, resolutely adhere to the bottom line of no systemic risks, actively and steadily resolve real estate risks, and meet the reasonable financing needs of real estate enterprises without discrimination; Three major projects, including the transformation of urban villages, will improve relevant basic systems and accelerate the construction of a new model of real estate development.

"For the risk of local government bonds, the central government may take stronger measures in 2024 to prevent the risk spillover of local government bonds to stabilize the performance of the real estate market and the performance of local government bonds. Yang Delong said that the effective resolution of these two major risk areas is undoubtedly an important aspect of boosting investor confidence. In terms of mitigating the risks of small and medium-sized financial institutions, strong measures may also be taken to prevent the expansion of risks.

The positive economic outlook is good for the capital market

You can pay attention to large consumption, new energy and other sectors

The positive economic expectations are more conducive to promoting the rebound of the capital market. "In 2024, the mainland troika – investment, consumption and exports – is expected to rebound significantly, thus bringing opportunities to the capital market. Yang Delong said.

"Now whether it is A shares and Hong Kong stocks, in fact, have a number of low characteristics, the market has been consolidating at a low level for a long time, from the point of view of the time of falling, many white horse stocks have fallen for nearly three years, and the space for decline is basically in place, many stocks have fallen by about 50% to 70%, it can be said that the time and space for adjustment have been relatively sufficient. Yang Delong from the analysis of the specific industry of A-shares, from the direction of large consumption of brand consumer goods such as liquor, traditional Chinese medicine, food and beverages, the mainland has the world's largest population, the largest consumer market, the past three years due to the impact of external factors, consumption growth rate is low, the valuation of consumer stocks has declined sharply, and consumer stocks are expected to pass through the economic cycle, through the bull and bear cycle.

"In terms of new energy, the new energy sector exploded in three years from 2019 to 2021, because it is the general trend for new energy to replace traditional energy, and it is also the only way to achieve the dual carbon goal. Yang Delong said that now from the perspective of valuation, it has fallen to a historical low, and new energy has become a valuation depression. From the perspective of economic transformation, the performance growth of new energy is relatively certain, so when laying out the market in 2024, you can seize the opportunity of the new energy sector, or seize the opportunity of industry recovery through the layout of clean energy funds.

In terms of technology, Yang Delong believes that in 2023, represented by the sharp rise in the AI sector driven by ChatGPT, the technology sector has performed well many times. In 2024, the technology sector is expected to continue to show repeated performance, because technology is an industry that leads the direction of economic development, and it is also the direction that can be paid attention to in the future.

"There is a famous saying on Wall Street called 'vague right is greater than precise wrong', and now we vaguely know that the market is in the low zone, good companies are mistakenly killed, and the next thing we need to do is to wait patiently for the start of the market in 2024. Yang Delong said.

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