Beta in the era of heavy positions! "double leader" of new public offering of pharmaceutical, biological, and electronic heavy positions
China Fund News reporter Li Shuchao
From the era of heavy chemical industry 20 years ago, the "five golden flowers" represented by petrochemicals, steel, automobiles, electric power, banks, etc., to financial real estate, from TMT to consumption upgrading under the wave of mobile Internet, and then from large consumption under the energy revolution, new energy to AI technological innovation to empower new quality productivity, the tide of the times has been pushing wave after wave and rolling forward.
According to the recently released 2023 fund annual report, the total market value of the power equipment industry represented by new energy held by the public offering has been "cut in half" from more than 1 trillion yuan, and the pharmaceutical and biological and electronics industries have newly promoted the "double leader" of the public offering heavy position, with a total market value of more than 760 billion yuan.
Interviewed institutions and industry insiders said that the changes in the heavy position industry of public funds reflect the changes in economic drivers and the beta of the times, which is not only an important reference for investment, but also needs to pay close attention to indicators such as inflection points and trend changes, and do a good job in contrarian investment and diversification to avoid investment risks in advance.
Historic changes in the public offering heavy position industry "chasing good assets is the unchanging proposition of public funds"
According to the data of Dongcai Choice, as of the 2023 annual report, among the first-class industries of Shenwan, the total market value of the pharmaceutical and biological industry held by public funds is 791.086 billion yuan, ranking first in the whole market, followed by the electronics industry with 762.4 billion yuan. The market value of the two industries with the highest market value of public shares increased by 8.5% and 42% year-on-year in the past year.
Correspondingly, the food and beverage, power equipment industry is the third and fourth largest industries of the public offering heavy position, the market value of the two major industries shrank by 25% and 43% respectively last year, and the total market value of the public offering was 494.6 billion yuan and 485.1 billion yuan respectively.
In particular, the power equipment industry represented by new energy reported in the middle of 2022, and the total market value of public offering holdings was as high as 1,044.7 billion yuan, becoming the first industry in history with a market value of more than one trillion yuan in public offering holdings. The new energy industry, which was once "grouped" by the public offering, also saw an extreme market, and then the market style once again turned to small and medium-sized market capitalization, and the public offering of heavy stocks suffered a cold reception.
As of the 2023 fund annual report, the total market value of the power equipment industry held by the public has fallen by 54% from its high, and it has been cut in half.
A number of interviewed institutions and people said that the changes in the heavy position industry of public funds reflect the transformation and upgrading of the mainland's economic driving force and the changes of the times to a certain extent, and reflect the changes in the capital market's perception of industrial development.
Wells Fargo Fund said that the times are changing, and chasing good assets is the constant proposition of public funds. From the perspective of the changes in the heavy position industry of public funds, public funds will not only chase the beta of the times, but also conduct in-depth research and select the alpha in the wave. On the one hand, from the perspective of the changes in the concentration of positions in the top four industries, since 2017, they have entered the upward channel and paid more attention to "fishing where there are many fish"; on the other hand, from the perspective of the ROE level of public positions, it has been showing a trend upward since 2003, which means that it is the pursuit of high-quality and good assets.
Wang Fan, a researcher at Yingmi Fund, also believes that the changes in the public offering heavy position industry are also changes in economic driving forces, whether it is the "group" new energy from 2020 to 2021, or the previous pursuit of consumption, TMT, medicine and other industry tracks, or even the earlier pursuit of cyclical industries, behind which there are multiple factors such as macroeconomy, industrial structure, policy, and the industry's own fundamentals and valuation, and the Matthew effect of the public fund industry has also intensified the trend of "grouping".
Zeng Hao, investment director of the first section of equity investment of Bosera Fund, said that the public offering heavy position industry largely reflects the direction of key support of national policies, as well as industries with a high degree of prosperity, and is more based on the current fundamentals or future expectations, and the long-term holding or winning rate is higher. At the same time, the public fund concentrated holdings of heavy positions in the industry is likely to mean that the market has a more unanimous recognition of these industries, if it really ushers in the outbreak of the industry, buying may obtain more significant excess returns, such as 2021, 2017, 2015, etc., corresponding to the outbreak of the new energy vehicle industry chain, the repricing of core assets, and the outbreak of the mobile Internet.
A large fund company also believes that the heavy positions held by public funds in the early stage have great advantages in terms of fundamentals, and the space is huge, which is generally in line with the trend of social development. As a bridge connecting the real economy and social funds, the public fund gives full play to the professional advantages of science and technology investment, guides more social funds to be converted into science and technology capital to nourish key industries, helps shape the virtuous cycle pattern of "science and technology-industry-finance", and strives to make more investors develop results.
Wang Tieniu, director of the evaluation center of Jinxin Fund of Jinxin, further pointed out that the changes in the public offering heavy position industry are, on the one hand, due to the fact that the related industries are affected by the Kitchin cycle and the Zhugra cycle, showing different business cycles. At the same time, it also shows that due to the short-term assessment pressure, as well as the impact of market IP, track and star, some active equity fund managers have adopted the investment strategy of chasing hot spots and holding together. "This has a greater impact on investors who buy in the later stage, the investment experience is poor, and it does not meet the requirements of high-quality development of the industry. ”
The heavy position industry is an important investment reference, and try to avoid the market of group stocks
While seeing that the public fund grasps the context of the times and the industrial cycle, the interviewed institutions and people also reminded that the heavy position industry of the public fund is not only an important reference for investment, but also needs to pay attention to the inflection point and trend changes, and try to avoid the extreme market of group stocks.
Wells Fargo Fund said that when the market value of the popular sector held by public funds is close to 60%, it is a time for in-depth reflection. In 2003, 2009, 2015, and 2021, the pinnacle of the track all turned around, and if you look at it for a long time, only food and beverage, medicine, and electronics have passed through the cycle.
For ordinary investors, Wells Fargo Fund suggests that with the rapid development of public funds, the capital trend of public funds is an important reference for investment. First of all, the heavy position industry of public funds is often the current industry trend, and it is also the direction that investors can focus on. Secondly, due to the lag in the disclosure of public fund position data, it only represents the past trend and cannot be linearly extrapolated to the future. Therefore, it is more important for ordinary investors to pay attention to some inflection points and trend changes.
Institutional sources also mentioned that for public funds to hold a certain sector, investors should pay attention to avoid the risks of the group industry, and should not blindly follow the trend of investment.
Guotai Fund said that in the investment research, public funds should strive to improve the holding experience of holders by controlling the drawdown and risk of products through in-depth value research. Avoid chasing short-term hot spots or betting on a single track, which will cause large fluctuations in the net value of the fund, and bring investors stable investment returns and a better investment experience.
Wang Tieniu also believes that from the perspective of investors, we can pay proper attention to the characteristics of the industry and the rotation of the industry. When choosing active equity funds, he suggested that more fund managers should choose bottom-up stock selection, balanced industry allocation, and not overly pursue hot tracks. In addition, investors try to avoid making investment decisions in the later stage of the industry boom cycle based only on past performance rankings, fund popularity, channel recommendations, etc., and the final results of investments made at this time are often unsatisfactory.
Industry insiders also said that in industries where the group is concentrated, more attention should be paid to contrarian investment and diversified investment.
Wang Fan suggested that for the industry where the group is too concentrated, investors should look at it with reverse thinking, avoid blindly following the trend, the group often means high valuation, most of the industry is cyclical, if the valuation is too high and the performance growth rate does not keep up, it will face a double kill, resulting in a large loss.
Zeng Hao also said that investors should not ignore the importance of risk diversification, and need to consider diversifying their funds into different industries or asset classes to reduce the risk of fund concentration positions.
The above-mentioned large fund companies also said that everything is cyclical, and there is no asset that only rises and falls. It is still necessary to objectively examine the heavy position industry of public funds, and it is necessary to keep up with the times and grasp the trend of the times in investment. If you find that the institutional group has reached a relatively extreme state, you need to be aware of the risks and avoid them in advance.
Medicine, electronics, new public offerings, food and beverage, new energy "halo is no more"
China Fund News reporter Fang Li
The direction of the position of public funds with trillions of assets has always been the focus of market attention.
Since 2020, the A-share market has fluctuated, and there has been a "big change" in the field of public funds.
According to the data of Dongcai Choice, in the first-class industry of Shenwan, the total market value of the pharmaceutical and biological industry held by public funds at the end of 2023 was 791.086 billion yuan, ranking first in the whole market, followed by the electronics industry with 762.4 billion yuan. The market value of the two industries with the highest market value of public shares increased by 8.5% and 42% year-on-year in the past year.
Industry insiders said that the public offering of the pharmaceutical biology and electronics industry in line with the low level of capital holdings, low valuation level, fundamentals are expected to improve the characteristics, behind the public offering is the dilemma reversal logic driven, not only shows the ability of public fund value discovery, but also reflects the capital market heavyweight professional investors "stabilizer" and "ballast" role.
Low valuation, low holdings, and improved fundamentals drive the pharmaceutical, biological and electronics industries to become the "new favorites" of public offerings
According to the latest data, the pharmaceutical biology and electronics industries of public offerings have grown for two consecutive years, and the market value of holdings has increased by nearly 100 billion yuan and 200 billion yuan respectively compared with the interim report in 2022.
"The pharmaceutical and electronic sectors driven by the reversal logic of the dilemma of public funds are, on the one hand, a recognition of the investment value of these industries, and on the other hand, it also highlights the role of 'stabilizer' and 'ballast stone' as a heavyweight professional investor in the capital market. At the same time, after several consecutive years of extreme interpretation of the market style, the degree of equilibrium of active public offering positions has been more obvious. An investment researcher from a large fund company believes.
Zeng Hao, investment director of the first equity investment department of Bosera Fund, said in more detail that from the perspective of long-term industrial trends, the pharmaceutical industry and the electronics industry are industries with long-term trends and large growth space, and they belong to the representative industries of the "large-market growth" style that are very favored by public funds.
Specifically, Zeng Hao believes that the core driving force for the growth of the pharmaceutical industry comes from the improvement of people's living standards, payment capacity, and the accelerating aging process. For public funds, this is a trillion-level golden track. The electronics industry is an industry that is changing with each passing day and embodies the latest achievements of global scientific and technological innovation, which is also favored by public funds.
"Specifically, from 2022 onwards, the 'anti-market increase' in the market value of investment in the pharmaceutical and electronics industries, in addition to the above-mentioned long-term thinking, there are also considerations for short-term public funds to lay out the dilemma reversal chain in advance. In 2023, the economic environment at home and abroad will show a combination of weak domestic recovery + overseas high inflation, the market will open high and go low, A-shares will fluctuate downward, and the market sentiment will be weak. At the same time, there are positive changes within the pharmaceutical and electronics industries. Zeng Hao said.
Similarly, Wang Fan, a researcher at Yingmi Fund, also said that after statistics, it can be found that aside from the market value fluctuations caused by the industry's own ups and downs, the increase in the pharmaceutical and TMT sectors by public funds has begun in the second half of 2022, among which the increase in the TMT sector has gone through the process from software to hardware, and the initial increase in holdings is mainly in the computer industry, and then gradually spread to the communication and electronics industries in the first half of 2023. Overall, these two sectors are in line with the characteristics of low capital holdings, low valuations, and expectations of improvement in fundamentals.
In this regard, Wang Tieniu, director of the evaluation center of Jinxin Fund of Jin'an, also said that the first reason for the increase in the pharmaceutical and biological sector by public funds is the centralized procurement policy and other reasons, and the valuation of the pharmaceutical sector has been at a historically low level in the past ten years. Secondly, from the perspective of fundamentals, due to the aging of the population and other reasons, the pharmaceutical sector has long-term development potential; thirdly, from the perspective of technology, the trend of traditional Chinese medicine, medical devices and other sub-sectors of medicine and biology is relatively better, and related stocks also have more fund attention.
Wang Tieniu also said that the public fund to increase the position of the electronics industry, on the one hand, due to the digital economy, information and innovation and other reasons, the relevant industries have good policy support and business cycle expectations, in addition to the past two years related to AI, computing power, AIGC, large models and other continued popularity, these are the main reasons for the public fund to continue to increase the position of the electronics industry.
Positive factors are still continuing, optimistic about the future opportunities in the pharmaceutical, biological, and electronic industries
Behind the large-scale increase in "real money" is the optimism of public investment and research personnel about the future opportunities in the pharmaceutical, biological and electronics industries.
Zeng Hao bluntly said that he is still optimistic about the investment opportunities in medicine, biology and electronics. "In the field of medicine and biology, the policy side has turned, the valuation is absolutely at the bottom, and the market outlook is easy to go up and down. In terms of electronics, the AI revolution is expected to continue to rise. ”
In particular, he said that the technological iteration of AI is still one of the main contradictions in electronics this year. In 2023, the industry will make a major breakthrough in large-scale models and hardware iterations, providing a solid fertile ground for the vigorous development of the industry. In 2024, we have seen a series of excellent applications at home and abroad springing up one after another, and the industry is expected to form a benign closed loop between hardware and applications. Against this backdrop, AI will drive investment opportunities across the entire industry chain, including semiconductors, software applications, ecosystem services, and manufacturing foundry.
Secondly, from the perspective of the industrial boom cycle, the fundamental cycle of the semiconductor industry will bottom out in 2023 and will continue for about 11 months. This is mainly due to the explosion of new demand for AI and new energy vehicles, as well as the significant increase in inventory replenishment to avoid the risk of geopolitical conflicts. With the migration of large models such as AIGC from large data volume forms such as cloud to small data volume forms such as mobile phones and computers, AI equipment is expected to help a new round of semiconductor cycle and promote long-term increment.
From the perspective of domestic policy, the localization process of the semiconductor industry may accelerate, and major progress has been made in domestic semiconductor manufacturing and AI model capabilities, and the industry has become immune to overseas sanctions against China.
From the perspective of valuation level, semiconductor, consumer electronics and other industries have started to "Davis double kill" in the second half of 2021, and are currently at the bottom of the fundamentals and PB quantiles, but the overall recovery momentum of the industry has begun to appear.
Wells Fargo Fund also said that it is optimistic about the pharmaceutical and electronics sectors. When talking about the pharmaceutical sector, Wells Fargo Fund said that as the Fed's interest rate cut cycle is approaching, the downward trend of U.S. Treasury yields is expected to become an important catalyst for the valuation repair of the pharmaceutical sector. Since the beginning of the year, the market has preempted the Fed's interest rate cut expectations have been revised, and U.S. Treasury yields have rebounded moderately, but interest rate cuts are still a high probability event throughout the year. On the profit side, the profitability of the pharmaceutical sector is expected to usher in an upward inflection point in 2024. In terms of the innovative drug industry chain, the global biomedical financing volume has picked up month-on-month, and the opening of the Fed's interest rate cut cycle is expected to accelerate the bottom of the innovative drug financing is expected to be repaired. From the policy side, centralized drug procurement has become normalized, the market is more rational in the face of price reductions, the negative impact is weakened, and innovative drugs may usher in valuation reshaping.
"In terms of valuation, medicine is currently at a historical low, and the current valuation of electronics is at about 45% of the historical quantile, and the valuation is not high. In terms of investment value, the impact of the centralized procurement policy of pharmaceuticals has slowed down, and there is a huge space for innovative drugs. In the electronics sector, new directions such as artificial intelligence are emerging one after another. Both pharmaceuticals and electronics have greater investment value in the future. An investment researcher in Beijing also said so.
Optimistic about these two sectors has become a common view in the industry. Wang Fan, a researcher at Yingmi Fund, confirmed that according to the recent visit and research of a number of fund managers by Yingmi Fund Research Institute, everyone is generally optimistic about the investment opportunities in the two industries of medicine and electronics.
The allocation value is reproduced and new energy, food and beverage are expected to "bottom out"
China Fund News reporter Zhang Ling
In recent years, under the continuous market shocks, the heavy position industry of public funds has also changed. The data shows that the two popular industries in the past, food and beverage, and power equipment, have now been replaced by pharmaceutical, biological, and electronic equipment, which have not only retreated to the "second line", but also shrank the market value of public offerings.
A number of industry insiders said that due to the impact of various factors such as capital holdings, industry valuation, capacity supply and demand, and market conditions, the market value of public funds' positions in power equipment and food and beverage has declined in recent years. However, after full adjustment, as well as the continuous economic recovery and new changes in the industry, these two major industries have regained investment value, so the market value of public holdings is also expected to stabilize and rebound in the future.
Multiple factors superimpose food and beverage, power equipment retreats to the "second line"
According to the data of Dongcai Choice, as of the 2023 annual report, among the first-class industries of Shenwan, although the food and beverage and power equipment industries rank the third and fourth largest industries in the public offering heavy position, as the two popular industries that once won the "top spot" of the public offering heavy position, the total market value of the public offering has both fallen below the 500 billion yuan mark, a year-on-year decrease of 25% and 43% respectively.
In the 2022 interim report, the total market value of public offering holdings was as high as 1,044.7 billion yuan, which was the first time in the history of public offering to hold more than one trillion yuan in the industry, and now the market value of the position has fallen by 54%, and it has been "cut in half".
"When an industry has experienced a long-term rise, a high valuation and a concentration of capital holdings, there is usually a certain amount of selling pressure, and funds tend to 'cut high and low', looking for relatively undervalued and under-allocated safer industries. Wang Fan, a researcher at Yingmi Fund, said frankly that in the past few years, public funds have continued to look for undervalued, low-level capital positions, marginal improvement in fundamentals or obvious growth industries catalyzed by policies in the market.
Wells Fargo Fund said that benefiting from consumption upgrades and funds' preference for core assets, the performance of food and beverages has also risen. With the collapse of the group at the beginning of 2021, the superimposed new energy industry has entered the fast lane, funds have shifted to the new energy track, and food and beverage have also begun to adjust deeply.
In terms of power equipment and new energy, Zeng Hao, investment director of the equity investment department of Bosera Fund, believes that the new energy industry is still an industry in a period of rapid growth and has huge room for development, so it is still one of the heavy industries of public funds. There are three main reasons for the continued decline over the past two years.
Specifically, first, after years of rapid development, the industry has a certain amount of overcapacity, which requires a correction process of supply and demand rebalancing. Second, in the short term, the overseas demand for photovoltaic is insufficient, and some traditional photovoltaic installed provinces in the north have tightened their photovoltaic installed capacity due to excessive installed capacity, and the photovoltaic installed capacity is lower than expected. In the lithium battery sector, the continuous decline in lithium carbonate prices has also led to a double kill in earnings and valuations, and the stock price performance is relatively sluggish. Third, from the perspective of transactions, after 2022, with the decline in market risk appetite and the continuous reduction of incremental funds, the power equipment sector is also under relatively large financial pressure.
A fund company in Beijing believes that the decline in the market value of power equipment and food and beverage sectors is, on the one hand, due to the huge increase from 2019 to 2021, which overdraws the future upside;
In addition to the above-mentioned reasons, Wang Tieniu, director of the Jinxin Fund Evaluation Center of Jin'an, added: "In recent years, the market has continued to fluctuate, and some funds with heavy positions in new energy and food and beverage have also experienced a large net value drawdown. ”
The value of investment has reappeared, and the market value of public holdings is expected to stabilize and rebound
Since the beginning of the year, new energy stocks represented by "CATL" have bottomed out, and food and beverages represented by liquor have also continued to pull back. The above-mentioned interviewees generally believe that after full adjustment, power equipment, food and beverage have regained investment value, and the market value of public offering holdings is also expected to stabilize and rebound in the future.
"The allocation value of the industry depends mainly on changes in fundamentals. Wang Fan of Yingmi Fund believes that among them, the investment opportunities of new energy may be structural, and the valuation is relatively cheap after adjustment, but the market's concerns about overcapacity and insufficient demand do not seem to have reversed, which is still something that needs to be observed later. As for the food and beverage industry represented by liquor, it generally relies on the strength of the macroeconomic recovery and the demand and willingness of consumers to consume.
"The long-term growth logic of the two sectors still exists, and there is a good development trend of the strong and the leading concentration. This provides the basis for the repatriation of funds. At the same time, there are also relatively positive industrial signals in the short term. Bosera Fund Zeng Hao said.
In power equipment, Zeng Hao believes that clean energy transformation and sustainable development are still the focus of development for a long time in the future, and the growth logic has not changed in the long run, and power equipment still has high investment value. Many sub-sectors have good investment cost performance, such as power equipment with global competitive advantages, especially in UHV, power distribution related fields, and there are many links with a good competitive pattern in the field of electric vehicles that are also worth paying attention to.
Wells Fargo Fund believes that food and beverage have undergone previous adjustments and have been in a relatively low position in terms of valuation and expectations, and 2024 may be the year of recovery of expectations and valuations. In the long run, domestic consumption will continue to develop in the direction of consumption upgrading and brand concentration, and leading companies rely on a strong moat of intangible assets, good free cash flow, and can also return to shareholders by increasing dividends and repurchases, and the allocation value is expected to take the lead in increasing.
Wang Tieniu of Jinxin Fund believes that in terms of new energy, there is still room for prosperity in the future under the background of "double carbon" and "new three" exports continue to rise. The food and beverage industry may have a significant differentiation in the market, "for example, Moutai, Wuliangye and other leading liquor companies have more room for repair relative profits and valuations, while ordinary liquor stocks may continue to be in a relatively weak range." ”
"The counter-cyclical nature of the power equipment sector is obvious, and the catalytic point of the future industry is expected to be mainly concentrated in the two major fields of in-network and going overseas. "A large fund company said that food and beverage are mandatory consumption, which is where the rigid demand lies. However, in the context of the reversal of the wealth effect and the decline in the expected income of the middle class, the commodity value chain is ushering in a comprehensive restructuring, and continuing to find products and companies that can create and enhance consumer utility may be the most important work of domestic consumption investment in the new stage.
With the improvement of the supply and demand pattern and the continuous iteration of new technologies, the market value of public funds held by public funds in the market outlook is likely to stabilize and rebound.
Zeng Hao also said that in terms of food and beverage, economic prosperity is an important factor in determining the profitability and valuation level of the sector in the short and medium term. "In addition, the Fed's interest rate cut expectations this year provide more room for our monetary and fiscal policy. Therefore, the market value of the food and beverage sector held by the public offering will also stabilize and recover."
Wells Fargo Fund pointed out that in the future, whether it is based on the recovery of the market value of the industry itself or the change in the trend of public offering operations, there is little room for a sharp decline in the market value of the two major industries held by the public offering, and there may be fluctuations in the short term, but the long-term probability will be a state of stabilization and recovery.
Editor: Xiao Mo
Review: Muyu