2023 is over, and 2024 is promising
Edited by: Xiao Ruidong
In 2023, from the rise at the beginning of the year, to the adjustment period after April, there is a gap between the market and everyone's expectations at the beginning of the year. For the whole year, the Shanghai Composite Index fell 3.70% to close at 2,974 points, and the main reason for the market's weaker than expected may be the uncertainty of overseas interest rate hikes and the lack of confidence due to the slowdown in economic recovery.
In the context of the artificial intelligence boom set off by ChatGPT, the communication, media, computer and other sectors related to the industrial chain led the year. Despite the strong performance of the US dollar in the second and third quarters, there was an outflow of northbound funds, but the net inflow for the whole year was still 43.7 billion yuan, and it has maintained a net inflow for ten consecutive years.
Source: Wind
At the current time, we can still be optimistic about the market in 2024. After the adjustment in 2023, the Shanghai Composite Index is currently valued at 12.54 times PE, which is only at the 22.77% quantile in the past ten years, and the valuation is relatively cheap, so there is no need to be overly pessimistic about the current position.
Source: Wind
In addition, the market has strong expectations for interest rate cuts, and Fed Chairman Jerome Powell previously said that the tightening cycle is over, opening the door to easing policy next year, and discussions about rate cuts have begun. The U.S. dollar index has fallen sharply in the past two months, falling more than 2% annually. Judging from market expectations, the Federal Reserve will most likely start the first round of interest rate cuts in March 2024. From the perspective of overseas liquidity environment, it is expected to improve significantly compared with 2023.
Source: Wind
Domestically, short-term economic data is still volatile. The official manufacturing PMI for December disclosed during the holiday was 49, with an expectation of 49.5 and a previous value of 49.4, and the official non-manufacturing PMI was 50.4, with an expectation of 50.5 and a previous value of 50.2. On the one hand, the PMI in December is mainly declining, and there is a certain seasonality, on the other hand, the lack of effective demand is still the main problem at present.
Source: Bureau of Statistics
Previously, the Central Economic Work Conference and other countries again proposed to reduce social financing costs, and the market expected monetary policy to be loose, and the deposit rate has been lowered in December 2023, and MLF, LPR, etc. may be adjusted in 2024. At present, the valuation is low, the internal policy continues to exert force, overseas interest rate cuts are about to start, and many factors have improved, and the bottom area can still pay attention to the investment opportunities of high-elasticity broad-based ETFs focusing on small and medium-sized caps such as the Science and Technology Innovation Board 100ETF (588120) and 2000ETF (561370).
In 2024, we can focus on investment opportunities in the semiconductor chip sector. According to the agency's forecast, WSTS expects global semiconductor sales to increase by 13% year-on-year to US$588 billion in 2024, and SEMI expects global semiconductor equipment sales to reach US$105 billion in 2024, a year-on-year increase of 4%.
In the short term, according to TrendForce, the contract price negotiation direction of memory chip NAND Flash at the end of the third quarter of 2023 has been moving towards a stop decline or even a price increase, prompting the shipment volume of NAND Flash in the third quarter to increase by 3% quarter-on-quarter, and the overall consolidated revenue to $9.229 billion, an increase of about 2.9% quarter-on-quarter.
In the fourth quarter of 2023, NAND Flash products may see both volume and price increases, and the average sales unit price of all products may increase by 13%. In the second half of 2023, mobile DRAM and NAND flash (eMMC, UFS) will not only be driven by the traditional peak season, but also Huawei Mate 60 series and other Chinese mobile phone brands are expected to stimulate other Chinese mobile phone brands to expand their production targets, and the short-term demand influx will drive up contract prices in the fourth quarter.
In addition, it is expected that Apple will launch offline sales of Vision Pro in the first quarter of 2024, and major manufacturers such as Meta, Pico and Samsung are expected to release a variety of VR brands throughout the year, driving XR product shipments back to positive growth. The recovery of the consumer electronics industry chain will also drive the increase in demand for chips.
In the long run, computing power is an important part of the development of artificial intelligence, especially computing chips, there is still a lot of room for domestic substitution. As the semiconductor chip industry chain gradually enters the stage of bottoming out and rebounding, the performance of related companies has gradually ushered in an inflection point, and the corresponding targets such as chip ETF (512760), semiconductor equipment ETF (159516), and integrated circuit ETF (159546) have benefited significantly.
As a high-dividend investment target, the coal ETF (515220) still has a high allocation value. In 2023, coal ETFs will rise by more than 10%, and in the case of market volatility, coal companies continue to increase the dividend ratio in the context of high cash flow, so they are also favored by funds.
At present, the dividend yield of the CSI Coal Index in the past 12 months is still as high as 8.03%, which has obvious advantages compared with other dividend indexes.
Source: Wind
As of December 26, 2023, the seven-day dynamic average of daily consumption in the eight coastal provinces of the mainland was 2.303 million tons, an increase of 300,000 tons over the same period in 2022. On the supply side, the safety production situation in the production area is still severe and complex, and many provinces continue to rectify coal mine safety accidents, and the overall supply and demand pattern is still tight.
Recently, the long-term agreement prices of large mines in Shanxi, Henan and other major coking coal producing areas have risen in the first quarter, with the main coking coal rising by 200 yuan/ton and the coking coal blending increasing by 100-200 yuan/ton. In general, the new domestic coal production capacity will be limited in the future, and high-quality coal enterprises will still have the attributes of high cash, high dividends and high dividends.
Looking forward to 2024, recently, a number of military enterprises have issued announcements on the repurchase of the company's shares, and some companies have chosen to cancel the repurchased shares, which will help improve the valuation of the industry. This half-year adjustment of the military industry may be nearing the end, and the bottom of this round of adjustment may have appeared. At the same time, a number of companies issued announcements on the signing of large contracts, and the demand for equipment upgrading during the "14th Five-Year Plan" period did not decline. Subsequently, with the launch of new models and the improvement of the scale of military trade, new orders will be gradually landed, and the prosperity of the industry will gradually increase.
Looking forward to the future, the demand for domestic aircraft is clear, and the industry may continue to boom under the background of equipment upgrading demand during the "14th Five-Year Plan" period. In terms of civil aircraft, starting from domestic substitution, more and more domestic aircraft will be reequipped with "Chinese hearts" in the future, and the penetration rate of localization will gradually increase. In terms of shipbuilding, a new round of civil ship cycle has been launched, and follow-up performance growth can be expected.
From the perspective of sector valuation, the current valuation of the military sector is at the bottom of the past 10 years, and there is more room for upward repair. The mainland's weaponry technology is advanced, and the integrity of the system is also relatively high. In the face of new changes in the pattern of international arms trade, in addition to the huge domestic demand, the military industry can also open up new growth space to the very large international arms trade market. Interested investors can pay attention to the Military ETF (512660).
Source: Wind
In the past fourth quarter of 2023, the implementation of domestic medical anti-corruption policies has eased to a certain extent. Although it will still have a certain impact on the pharmaceutical sector in the short term, it will purify the business environment and strengthen the product capabilities of enterprises in the long run. In the future, medical products with real clinical value will gradually enter the stage of good money driving out bad money, and innovative drugs and innovative devices are expected to enter a new stage of development. At the same time, the overseas export of excellent domestic manufacturing will further open the growth ceiling of domestic pharmaceutical innovation and accelerate the growth of domestic innovative drugs and innovative device enterprises.
In terms of sector events, the State Intellectual Property Office recently issued the Detailed Rules for the Implementation of the Patent Law of the People's Republic of China (Revised in 2023), which stipulates that the period of compensation for invention patent rights related to new drugs shall be reduced by 5 years from the number of days between the patent application and the date on which the new drug is approved for marketing in China. The compensation system for the patent term of new drugs under the Patent Law will greatly extend the life cycle of innovative drugs and help improve the long-term profit expectations of domestic innovative drugs.
The pharmaceutical industry is currently in the quadruple bottom area of valuation, fundamentals, policy and innovation explosion, and with the gradual increase in the Fed's interest rate cut expectations and the gradual release of global liquidity, it will have a great impact on the domestic venture capital environment. You can pay attention to the low-level layout opportunities of related targets such as biomedical ETF (512290) and innovative drug Shanghai-Shenzhen-Hong Kong ETF (517110).
Source: Wind
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National Business Daily