Zhang Dongdong, chief analyst of Pacific Securities: This year, A-shares are still a volatile market, and it is difficult for the Federal Reserve to cut interest rates
A-shares entered a volatile market after rising and falling back in the first half of 2023, with the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index all falling during the year, especially the ChiNext Index falling by 19.91%.
In addition, the Shanghai Composite Index fell below 2,900 points intraday at the beginning of this year, and many investors are also a little confused when looking forward to 2024. "In 2023, our gold stock yield will be around 15% (per market), and when the market environment is not ideal, we can still grasp investment opportunities at the individual stock level. At the Flush Investment Festival and 2024 Investment Strategy Conference held on January 12, Zhang Dongdong, chief analyst of Pacific Securities, gave a "booster" to the individual investors attending the meeting.
How will the A-share market be interpreted in 2024? What investment benefits will be ushered in in the implementation of the "policy toolbox" in the future? and how should resources be allocated with these questions, Silver Persimmon Finance conducted an exclusive interview with Zhang Dongdong on the day of the event.
On January 12, Zhang Dongdong delivered a speech at the Straight Flush Investment Festival and 2024 Investment Strategy Conference
At the beginning of the interview, Zhang Dongdong pointed out straight to the point that A-shares will still be a volatile market in 2024, and the probability of a trending bull market is small.
"It is expected that there will be a rebound in A-shares this year. He made this judgment in combination with domestic monetary and fiscal policy expectations. It is understood that the Central Economic Work Conference held in December 2023 proposed that in 2024, it is necessary to strengthen the counter-cyclical and cross-cyclical adjustment of macro policies, continue to implement a proactive fiscal policy and a prudent monetary policy, and strengthen the innovation and coordination of policy tools.
"If the expectation of RRR and interest rate cuts appears, and the loose monetary policy begins to be implemented, banks and real estate will rebound. Zhang Dongdong also introduced that this kind of rebound market has the characteristics of "short and fast", and it is basically difficult for investors to grasp it. As for fiscal policy, Zhang Dongdong believes that there are special treasury bonds and deficit ratio adjustments expected this year, and after the introduction of these policies, the value of the broader market represented by the CSI 300 will also rebound.
He also added that a trending bull market is more difficult to occur this year, but there is no shortage of structural markets similar to 2023. "Basically, this year is still dominated by small-cap growth technology stocks, that is, these small-cap growth technology stocks of TMT mapped by U.S. stock AI, and the absolute return for the whole year is certain. ”
It is worth mentioning that the current market generally judges that the Fed's interest rate hike cycle may enter the end and may usher in an interest rate cut this year. "We are a little bit different from the market as a whole and think that it will not be easy for the Fed to cut interest rates. At the scene of the Flush Investment Festival, Zhang Dongdong said in his speech "2024 Annual Strategy: The Way of Civil and Military, One Relaxation" that in addition to the difficulty of cutting interest rates, if the Federal Reserve starts a continuous interest rate cut cycle too early, the possibility of further interest rate hikes or phased upward adjustment of the dot plot rate hike expectations will not be ruled out this year.
"There are two main bases, one is inflation and the other is unemployment and wages. Zhang Dongdong explained that the unemployment and inflation data released in the United States at the beginning of this year have rebounded, and the first stage of judgment has been verified, and the inflationary pressure in the fourth quarter of this year still exists, mainly because the United States housing prices continued to rise in the middle of last year, and its impact on core inflation in the United States often lags by 15 months. Even judging from the Fed's official forecast of the unemployment target, the fluctuation of 4.1%~4.5% in 2024 still reflects the resilience of the U.S. labor market.
"But if the Fed cuts interest rates and dollar liquidity returns, this will have a positive impact on Hong Kong stocks and A-shares, and market valuations are also expected to rise. Zhang Dongdong said.
The scene of the Straight Flush Investment Festival and 2024 Investment Strategy Conference
Based on the judgment of this year's volatile market, Zhang Dongdong also shared some investment strategies. "From mid-November last year to the first quarter of this year, we believe that the high-dividend sector is dominant. He said that in the context of the economic slowdown and the widening of the interest rate gap between China and the United States again, such stocks have relative returns and are more advantageous. In terms of industry selection, he summarized as an example: "Cycles are better than finance. ”
Zhang Dongdong also mentioned that while carrying out a high-dividend strategy, long Treasury bonds may also be an option that can be considered. "In the period of shifting the structure from high growth rate to high quality, the downward trend of the 10-year treasury bond interest rate is certain, and the income of long-term pure bond-based products is relatively stable. ”
At the same time, he is also optimistic about the investment value of the TMT sector. In his speech, Zhang Dongdong said that in 2024, the transaction will switch between easing and tightening. "If the Fed's interest rate cut in March this year does not meet expectations, we can pay attention to overseas stocks that can be mapped to our A-share industry chain, especially small-capitalization companies, on the one hand, the ability of US stocks to realize AI earnings continues to increase, on the other hand, the high point of US bond interest rates has peaked, and the impact of interest rates on the valuation side is marginally decreasing compared with 2023. ”