Yang Delong is the Chief Economist of Qianhai Open Source Fund and a director of the China Chief Economist Forum
On Monday, the Shanghai and Shenzhen stock markets showed repeated shocks, and the A-share market has recently seen repeated shocks after standing above 3,100 points, but the market's second wave of upward signals is getting stronger and stronger. Hong Kong stocks have been strong, with the Hang Seng Index recently standing above the 19,000-point mark, rising more than 20% from its lows, forming a technical bull market and boosting investor confidence.
The rise of Hong Kong stocks is inseparable from the inflow of a large number of international capital, which has driven the upward shift of the market center of gravity, and the upward movement of the A-share market is also supported by the funds of all parties, including the inflow of domestic funds and northbound funds.
Most sectors were volatile on Monday, and the market's money-making effect improved compared to before, with the broader market starting a second wave of upward attack after breaking through 3,100 points. Although the trend of the market is full of twists and turns, the structural bull market is about to emerge, and A-shares are also expected to rebound to a certain extent driven by the continuous upward offensive of Hong Kong stocks. The recently released social finance data is lower than expected, which may have a certain impact on the short-term trend of A-shares.
The economic data for April was released, and the CPI, PPI and PMI data were in line with expectations, while the increment of social financing showed negative growth and was at a historically low level, affecting investor confidence. In April, the expectation of social finance increased by only 1.01 trillion yuan, but the actual data decreased by 198.7 billion yuan, and there are short-term and long-term reasons for the lower than expected data.
In the short term, government bonds increased by $553.2 billion year-on-year in April, but there is no need to be too worried, as the late April meeting has already pointed out the need to accelerate the issuance of special bonds, and government bond issuance is expected to increase in May and June. The increase in off-balance sheet bills of banks decreased by 314.1 billion yuan, indicating that the financial system is "squeezing water", and in order to stimulate the economy in the later stage, the state may release more funds to support the development of the real economy through the banking system. In the long run, this is mainly due to the lack of investor confidence in investment and consumer confidence.
Now that many places have gradually lifted purchase restrictions to stabilize the property market, real estate mortgages have declined significantly, and land auctions in many places have made real estate policy adjustments more and more urgent. Now there are only 6 cities in the country that have real estate purchase restrictions, and other cities have basically been liberalized, which has gradually verified my proposal in the top ten predictions in 2024, real estate purchase restrictions will be gradually lifted to release more rigid demand and increase financial support for real estate. It is expected that the remaining six cities are also expected to gradually cancel purchase restrictions to stabilize the property market and housing prices, real estate, as a pillar industry of the national economy, once there is a recovery rise, will bring support to the capital market, but also release more rigid demand.
On May 4, I went to Omaha for the sixth time to attend Warren Buffett's shareholder meeting. Although Warren Buffett is 94 years old this year, he is still in good spirits, and he has achieved a return of 43,800 times in his investment career in the past nearly 60 years by insisting on value investing, creating unprecedented achievements. Warren Buffett's success is the success of value investment, and if we want to learn Buffett's value investment philosophy, we must unswervingly learn value investment, practice value investment, and truly grow together with great enterprises.
Learning Warren Buffett's value investment philosophy is not an empty word, it must be implemented, and when the current A-share market is still near the historical bottom, the urgency of learning value investment is stronger. Because many high-quality assets are now seriously undervalued, although Buffett did not directly comment at the meeting, his successor Greg Abel made it clear that many Chinese assets such as A-shares and Hong Kong stocks are seriously undervalued. This is a very positive signal, because now that Buffett has basically delegated investment decision-making power to fund managers such as Greg Abel, whether Berkshire Hathaway can increase investment in Chinese assets in the future largely depends on the views of his fund managers.
After attending Warren Buffett's shareholder meeting, I also participated in the reception of Chinese and American investors, and shared my views on stage for the sixth time, and many views were also reprinted by many media. I mentioned that Warren Buffett has only made two investments in the Chinese market, and he has achieved huge returns, including PetroChina and BYD, which have invested in Hong Kong stocks, which have achieved great success, which has broken many people's concerns that investing in A-shares and Hong Kong stocks will not make money. In fact, A-shares and Hong Kong stocks are still suitable for value investment, but everyone must use the right method to choose the right target and the right time to enter the market.
Since the current A-shares and Hong Kong stocks have been falling for nearly three consecutive years, many stocks are seriously over-falling, and from the price point of view, there may only be three or four folds of the high, and the high point of the high point is only four or five folds, five or six folds. When good assets are greatly discounted, it is often a better time to allocate them, so it is of great significance to revisit value investing at this time.
At Warren Buffett's shareholder meeting, Buffett talked about his lifelong friend and brother, Munger. Munger passed away last November, but Munger's contribution to Berkshire Hathaway was significant, and Berkshire Hathaway would not have been able to achieve what it is without Munger. Warren Buffett even said that since I met Munger, I quickly evolved from an ape to a man, which affirmed that Munger had a great impact on Buffett's value investment system.
Warren Buffett studied under Graham and initially liked to buy some cheap companies, which also had some success. But after he met Munger, he realized that only by buying great companies and growing with great companies can he really achieve a long-term return on investment. Munger's thinking is actually similar to the famous investment guru Fisher, and Warren Buffett is the culmination of it. He said, "85% of my blood is Graham's blood and 15% Fisher's", which is why Berkshire Hathaway's investment myth has been fulfilled.
After my trip to Omaha, I took some entrepreneurs to New York to visit top investment banks on Wall Street, including Morgan Stanley and Bank of America Merrill Lynch. From the exchanges, I learned that Wall Street is gradually interested in China's high-quality assets, especially some discounted stocks, and they think that now is a better time to allocate them. Combined with the recent positive views of Goldman Sachs' investment banks, foreign investors' interest in Chinese assets is gradually increasing, and their concerns are mainly about the uncertainty of policies in some industries, which affects their investment enthusiasm. The Ministry of Commerce has said that the introduction of policies in the industry should seek the opinions of the financial authorities in advance, which means that in the future, in terms of industry policies, uncertainty is reducing or even eliminating, which further dispels the doubts of international capital.
In fact, these Wall Street financial institutions, they are more interested in investing in which assets can make money, and will not be too affected by geopolitics. Because capital is profit-seeking, and there is no love or hate. Therefore, we have to look at the current investment value of A-shares and Hong Kong stocks from a fundamental perspective, the current stock markets in Europe, the United States and Japan are at historical highs, while A-shares and Hong Kong stocks are near the historical bottom, although they have rebounded from the bottom by about 20%, but there is still a lot of room compared with the high. At the reception for Chinese and American investors, I mentioned that if many investors say that it has rebounded from the bottom now, is it too late to enter the market, then if the market really returns to 2,600 points, do you dare to buy? In fact, when the market fell to 2,600 points before, many people completely lost confidence and did not dare to invest.
Now the market has entered the rising stage from the left to the right, and the national team has also increased its efforts to enter the market many times after the Spring Festival this year, and the center of gravity of the market is constantly moving upward, so don't miss the opportunity to open a position on the right side now. The pessimists are correct, the optimists move forward, and we should look more at the future to make investments, and seize the opportunity of this market by sticking to value investment, being a good shareholder of the company or allocating high-quality funds.
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