As April draws to a close, the annual Berkshire shareholder meeting is about to kick off, and Warren Buffett will once again sit at the long table and answer questions from dozens of audience members.
In the past year, the global economy has slowly recovered, the world pattern has accelerated, cross-border supply chains have shown resilience, and the international financial system is facing challenges.
On May 5, 2024, Warren Buffett's shareholder meeting China Investor Summit will also be held as scheduled, with the theme of "Investment and Potential", focusing on the themes of technological change, economic growth and investment evolution.
On the eve of the summit, we invited four new generation fund managers of China Industrial Securities Global Fund to participate in the Q&A for readers.
1. What to expect
Q: What do you expect to hear at this Buffett shareholder meeting?
Tong Lan: I would like to hear Warren Buffett's outlook on global geopolitical relations and future economic growth, as well as Buffett's advice to investors in the context of the current era.
Zhu Zhefeng: I'd like to know Warren Buffett's views on commodities such as gold and crude oil, as well as his outlook for several investments in Occidental Petroleum and Japan's Big Five.
2. Consumption and dividends
Consumption and dividends are both considered to be Buffett's favorite hashtags, in recent years, the performance of these two types of thematic assets in the A-share market is very different, the dividend theme has received unprecedented attention, and the consumer sector has undergone a round of adjustment, how do fund managers understand this difference?
Q: How do you understand the consumer sector in the current A-share market?
Tong Lan: At present, China's consumer market has roughly gone through a relatively extensive stage from quantity to quality. As the consumer market enters a mature period, on the one hand, homogeneous products will continue to further optimize the supply pattern, on the other hand, with the awakening of consumers' awareness of products and the generation of diversified demand for products, enterprises that can capture and tap the differentiated needs of consumers are also expected to walk out of the differentiated product route of consumer goods. In addition, with the optimization of the competitive landscape and the emergence of differentiated product supply, some industries are expected to gradually return to a reasonable level of profitability after experiencing profitability shocks, and the stability and sustainability of high-quality corporate profitability are also expected to be strengthened in this context, which are opportunities that can continue to be tracked and excavated after the industry matures.
Q: At present, there are some differences in the market about the continuation of the dividend theme, what do you think?
Zhang Xiaofeng: We tend to believe that in the current asset shortage environment, dividend assets may still have some sustainability. The 30-year Treasury is now yielding less than 2.5%, while the mainstream dividend index still has a dividend yield of 4-5%. In addition, there is no concept of excess return in the dividend itself, in fact, we can only say that the dividend is a kind of BETA, which is suitable for investors who agree with this style, and is not suitable for everyone, nor can we assert that this style will be stronger or weaker than other styles in the future.
From a regulatory point of view, the China Securities Regulatory Commission (CSRC) has recently made it clear that it will "further standardize the cash dividend behavior of listed companies, encourage and guide listed companies to pay dividends, and improve the normalized dividend mechanism", which will help enhance the long-term investment value of dividend assets, provide investors with more predictable dividend cash flow, help enhance the awareness of shareholder returns of listed companies, and rationalize corporate governance. At the same time, the above-mentioned policy also shows a red card for hollowed-out high-proportion dividends to prevent major shareholders from infringing on the rights and interests of other shareholders of listed companies.
3. New quality productivity and AI
New quality productivity is a hot word in the Chinese context in recent times, and the wave of artificial intelligence seems to put the world on the eve of great changes, while people are eagerly looking forward to the accelerated emergence of new growth momentum, on the other hand, they are also worried about the impact of new technologies on traditional industries. With the world hot and cold, how do fund managers view the crisis and opportunity?
Q: How do you understand new productivity and related investment opportunities?
Zou Xin: In our understanding, the productivity revolution is not only the upgrading and iteration of production tools, but also the expansion of new production factors, the reorganization of the production process, especially the emphasis on R&D and innovation, and the adaptive adjustment of production relations. In the past few years, while China's manufacturing industry has been further enriched, the scale of R&D expenditure and R&D expense rate of various industries have continued to increase, reflecting that all walks of life are exploring to improve productivity, and new quality productivity is by no means limited to a limited number of industries.
Looking at the development process of the world's major economies over the past two to three hundred years, non-resource-based countries must continue to focus on improving their productive capacity and emancipation if they want to improve their economic and social welfare. Most of the A-share companies are manufacturing enterprises, after experiencing the rapid learning to the world since the reform and opening up, and the demographic dividend gradually disappears, in the next 5-10 years, endogenous innovation and the mining of productivity may be a very important and even the first driving force for further industrial upgrading. Therefore, we are very concerned about the breakthrough opportunities in China's semiconductor manufacturing and related industry chains, the landing of new satellite communication methods in the civilian field, and the application of AI technology in the field of new material discovery.
Q: How do you understand the impact of AI on the investment market, and how do you capture the opportunities presented by these changes?
Tong Lan: With the technological breakthrough and iteration in the field of AI and the gradual improvement of new scientific and technological infrastructure, the implementation of technology on the application side and the improvement of efficiency have also begun to gradually penetrate into the use of terminals, and the impact on the stock industry and incremental demand will be gradually reflected in different aspects; It still requires us to keep a close track and maintain a high degree of sensitivity.
4. Multi-asset, multi-strategy
In the face of the increasing volatility of traditional assets, the call for "multi-asset, multi-strategy" is gradually emerging, quantitative strategies have triggered circle-breaking discussions, and the enthusiasm for gold purchase has continued, and the concept of asset allocation has become increasingly popular.
Q: How do you understand a strategy that combines proactive and quantitative?
Xiaofeng Zhang: We believe that pure data-driven quantitative investment, although also effective, tends to lead to correlation data mining and ignores the underlying business logic. Based on personal experience, some factors that are more in line with business logic may have a longer life cycle, such as quality, dividend yield, etc. On the other hand, I dare not easily evaluate active investment, according to my superficial understanding, in recent years, active investment is often based on bottom-up stock selection, which is reasonable, but it is easy to lead to exposure to a certain industry or style.
Q: As an investor familiar with convertible bonds, how do you understand the value of convertible bonds to asset portfolios, and how can public offerings better respond to investors' demands for multi-asset and multi-strategy?
Zhu Zhefeng: As an asset with the nature of both stocks and bonds, convertible bonds are expected to obtain higher yields without taking more credit risks in the context of declining bond yields. At present, hybrid funds in the market have the conditions to allocate large types of assets, and they need to add to the portfolio by comparing the cost performance of various assets on the premise of controlling the drawdown as much as possible.
Two live broadcasts in China and the United States
The 2024 Warren Buffett Shareholders China Investor Summit will be held in Shanghai, China and Omaha, USA, bringing together domestic and foreign investors, outstanding entrepreneurs, media professionals and other guests from all walks of life.
May 4, 2024, 18:30-22:00 (Beijing Time)
May 5, 2024, 14:00-16:30 (Beijing Time)
See you there!
Risk Warning: China Industrial Securities Global Fund promises to manage and use the fund property in good faith, diligence and responsibility, but does not guarantee that the fund will be profitable, nor does it guarantee the minimum return, investors should carefully read the fund contract, prospectus and other fund legal documents, understand the risk and return characteristics of the fund, and according to their own investment objectives, investment period, investment experience, Determine whether the fund is compatible with the investor's risk tolerance, independently judge the investment value of the fund, make investment decisions independently, and bear investment risks by yourself. The mainland fund has been in operation for a relatively short period of time and does not reflect all stages of the development of the stock market. The performance of other funds managed by the fund manager or the performance of other funds previously managed by the fund manager does not constitute a guarantee of the performance of the fund. Funds should be invested with caution and should be chosen carefully.