The three major conjectures of A-shares in 2024
Author: Big Brother, Editor: Xiao Shimei
If you want to select the most depressed Internet big V in 2023, Hu Xijin may be one of the important candidates.
Hu Xijin, who entered the Shanghai Composite Index near 3100 points, although the intervention point was not high, still encountered the heavy hammer of the market. However, if we have a little understanding of the history of A-shares, if we take a slightly longer-term view of the investment cycle, we will realize that the current A-shares do have very rare investment value. Because A-shares are extremely cyclical, the most difficult time is often when an inflection point is about to appear.
Looking ahead to 2024, A-shares will undoubtedly be better than this year.
From the performance side, the continuous macroeconomic control and deepening economic transformation will surely have a cumulative effect, China's economic growth is still sufficiently guaranteed, and the performance growth of listed companies will also be strongly supported.
From the perspective of valuation, the major A-share indices have reached the lowest area in history, and there is an intrinsic driving force for valuation repair in time and space. The expectation of a new round of monetary easing brought about by the Fed's entry into the interest rate cut cycle has provided an external impetus for the valuation of A-shares to repair.
Under the background of the general trend, how will the A-share industry market interpret next year, and which directions will have better investment opportunities?
[Can tech stocks continue to soar?]
The biggest highlight of A-shares in 2023 is undoubtedly technology stocks. Electronics, communications, media, computers and other technology sectors, the annual performance of the year is wonderful, among which computing power, optical modules, games and other sub-industries, the birth of a lot of double or even more than 5 times the rise of the big bull stocks, and the overall market downturn is in stark contrast.
▲ The top 10 industry indices this year, source: straight flush
The contrarian rally of tech stocks at the end of a bear market is not without precedent.
In 2013, A-shares also performed sluggishly, and the Shanghai and Shenzhen indices have continued to fall for nearly 4 years, but the technology sector represented by TMT has seen a spectacle of overall contrarian surges, and the growth index of the gem, which is dominated by technology stocks, has even nearly doubled that year.
The contrarian outbreak of technology stocks is often accompanied by important event promotions and major industrial changes.
In 2013, the official commercial use of the 4G network became the prelude to the technology sectors such as TMT and mobile Internet. Subsequently, from 2014 to 2015, the 4G network gradually became popular, and the Internet + became the most dazzling star in the market at that time, and the companies that rose more than 10 times in the subdivided industries such as Internet + finance, Internet + game media, and Internet + life services abounded.
The background of the outbreak of A-share technology stocks this year is that the development of artificial intelligence has made the market see the prospect of a new round of industrial revolution:
At the beginning of the year, the emergence of ChatGPT in the United States drove the hype frenzy of the A-share artificial intelligence industry chain, and the short supply of NVIDIA AI chips also confirmed that the downstream large-scale model entrepreneurship was in full swing, and at the same time provided great practical support for the performance explosion of upstream memory chips, computing power, and optical modules.
In fact, with the accumulation and improvement of infrastructure such as data, computing power, and algorithms, artificial intelligence has reached the eve of a large-scale explosion. As the most important industrial transformation of human beings after the mobile Internet, the imagination space of artificial intelligence is undoubtedly larger than that of the mobile Internet, and the duration will be longer, which means larger and more long-term investment opportunities.
Combined with historical experience, the evolution of the industry, and the stronger explosiveness of technology stocks in a bull market environment, the explosion of artificial intelligence in the capital market in 2023 may only be a rehearsal. From 2024 to 2025, technology stocks represented by the artificial intelligence industry chain, including upstream semiconductors and computing power, and downstream artificial intelligence + finance, media, software, games and other AI application scenarios, may still be the most important thematic investment opportunities in the A-share market, and the science and technology innovation board, which is dominated by technology stocks, may become one of the most high-profile sectors in the market next year.
The biggest problem with investing in technology stocks is obviously cognitive barriers and risk control.
The industry behind technology companies is extremely complex and variable, and it is not easy to find good technology companies, and it is even more risky to bet on a technology industry or even a technology stock alone.
For ordinary A-share investors, equity ETFs dominated by high-quality technology stocks, especially broad-based ETFs covering more technology industries, should be a relatively more reasonable choice, because it not only solves the pain points of stock selection, but also fully controls the risks.
For example, the Science and Technology Innovation 100 ETF ChinaAMC (588800) tracks the A-share broad-based technology index Science and Technology Innovation 100, and the fund holdings are the best companies in the Science and Technology Innovation Board, which is undoubtedly safer and more reliable than actively betting on individual companies on the Science and Technology Innovation Board.
Of course, with the help of professional institutions and financial tools at the same time, we still strive to improve our cognitive ability and investment mentality, to be fully aware of the short-term uncontrollable risks of the stock market and the long-term cyclical law, any financial products with the stock market as the underlying asset, can not completely escape from this risk and law.
Investing, especially in technology stocks, is never easy.
[Can cyclical stocks reverse their dilemma?]
In the downturn of the past two years, cyclical industries such as pig breeding and lithium mining are one of the worst performing sectors, and pig prices and lithium prices have fallen sharply from rare cycle highs in previous years, resulting in huge declines in the performance and stock prices of listed companies.
From the perspective of time and space cycle, these industries in the predicament of the cycle are likely to usher in a reversal of the predicament in 2024, and the logic behind it is naturally that the production capacity will gradually clear after the price collapse, which will bring about a reversal of the supply and demand pattern of the industry and a new round of business cycle.
In the past three years, the pig price has been below 18 yuan most of the time, which has fallen below the cost price of most pig enterprises. Long-term losses have led to superimposed scale expansion, bringing cash flow pressure to a large number of pig enterprises, which means that the time for large-scale de-production capacity in the pig industry is getting closer and closer.
The current price of lithium carbonate has fallen to around 100,000, down more than 80% from the cycle high at the beginning of the year. Although the main spodumene enterprises are still profitable, the cost of lithium extraction from salt lakes has almost been broken down, and the reduction of production capacity is also about to appear. Considering the incremental demand for lithium in emerging industries such as energy storage, the lithium supply and demand pattern may usher in a reversal after the second half of 2024.
Of course, industry cycles are unpredictable, and no one can predict with complete accuracy the exact timing of a cyclical product price reversal. Taking a step back, even if pig prices and lithium prices cannot return to the upward cycle next year, they are just continuing to build momentum for a future reversal, and the cycle will only be late and will not be absent. And the longer the bottom of the cycle, the more considerable the time and space for future upward cycles.
Once the reversal comes, the performance and market value of these cyclical listed companies are extremely resilient, and it is not uncommon for some of them to have cost advantages and capacity elasticity, and it is not uncommon for their stock prices to rise tenfold in a year.
Staying focused and waiting for the reversal to come is the best attitude towards cyclical stocks in distress at this time.
[Can White Horse Stocks Make a Comeback?]
As the core asset and weighted sector of A-shares, the continuous sharp decline in large-capitalization high-performance white horse stocks is the main drag factor in this round of market adjustment.
Since the peak of A-shares in February 2021, Kweichow Moutai, which represents the white horse stocks of the traditional industry, has fallen by nearly 50%, and CATL, which represents the white horse stocks of emerging industries, has fallen by more than 60%.
The high-performing white horse stocks that have been abandoned by the market have actually not had problems in performance.
Kweichow Moutai has maintained an annual performance growth rate of about 20% in the past two years, which is amazingly stable, and the annualized growth rate of CATL's revenue and net profit in the past two years has exceeded 100%, even in the downturn of China's economy, these best companies in China have still maintained sustained and steady performance growth.
The core factor that led to the continued sharp decline of White Horse stocks was the payment for the valuation bubble that was overdrawn a few years ago.
From 2019 to 2021, the super bull market of white horse stocks, high-quality white horse stocks experienced a rare huge rise, Kweichow Moutai rose 5 times in two years, PE at the highest valuation was more than 70 times, CATL rose nearly 10 times, and PE was as high as 200 times at the highest valuation. Institutions huddle together, and retail investors follow suit, making core assets ridiculously expensive at the peak of sentiment, and also falling to the ground when the mood ebbs.
After the last two years of continuous decline, it is clear that the current White Horse stock has reached a very attractive stage.
At present, the price-earnings ratio of the Mao Index has been significantly lower than the historical median, and the Ning portfolio is even cheaper than at all times in history. Especially after the Federal Reserve cut interest rates, the long-term huge funds favored by foreign investors and institutions are expected to return to A-shares.
▲Coming from: Wind
For investors who currently hold high-performing white horse stocks, the best way is still to hold firmly.
Going long on core assets is essentially long China's national fortune. If it is long-term spare money, it is difficult to lose money in the end by allocating A-share core assets in such a cheap position.
As Hu Xijin said, as long as I don't sell, the stock market can't cut my leeks.
disclaimer
The content of this article related to listed companies is the author's personal analysis and judgment based on the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.), and the information or opinions in this article do not constitute any investment or other business advice, and Market Value Watch does not assume any responsibility for any actions arising from the adoption of this article.
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