Producer | Wang Chenyu
Edit | Zheng Huaizhou
The keynote speaker | CICC Liu Gang
Highlights:
● U.S. stocks vs A shares, very different?
● What is the relationship between the interest rate of US treasuries and the rise and fall of US stocks?
● Is the valuation of U.S. stocks high?
Then the third part, I bring you the main content to share, which involves the most important asset in the overseas market, that is, the US stock market.
I think everyone will pay attention to whether it is direct investment in US stocks, in short, it is the world's largest market, and it is also the world's largest indicator of so-called risk appetite.
The rise and fall of the US stock market will definitely affect the hearts of everyone. If there is a large fluctuation in the US stock market, everyone will definitely worry about what is wrong and whether it will have an impact on the sentiment of A-shares and Hong Kong stocks.
All in all, the U.S. stock market is a very important and very noteworthy market, but it does have a lot of differences with the A-share and Hong Kong stock markets that we are looking at, so I am here to give you a framework introduction.
<h2>U.S. stock vs A share, very different? </h2>
Then, when analyzing the US stock market, we must pay attention to several different characteristics.
The first feature is the structure of the U.S. stock market, which involves both its internal structure and the structure of its investors.
In fact, just like the US economy we just talked about sixty or seventy percent, more than seventy percent, 2/3 are consumption, the structure of the US stock market is the same.
The so-called new economy we say is absolutely dominant, in fact, the proportion of the banking sector is very small, for example, the banking sector as an A-share, Hong Kong stocks account for a lot of the proportion of U.S. stocks, which is a typical sector feature of it.
And it's still different in the big cap and the small cap, because often investors ask us in turn, what is the reason why you see the small cap stocks in the US stocks rising so well?
Because people often directly copy that the small cap stocks of A shares have risen well, this is the growth stock that has risen well.
If you look at the internal structure, in fact, the biggest difference between the small-cap stocks of the US stocks and the small-cap stocks of A-shares is precisely the high proportion of the so-called new economy in the large market, and the proportion of the financial cycle in the small-cap stocks of the US stocks is high, which is a typical feature of its sector.
Then knowing this feature, you will not say in reverse, how the US stock market is in the liquidity or interest rate upwards, but the small cap stocks perform well, in fact, it is essentially a structural and sectoral problem.
Figure 1
There is also a point is the head concentration, in fact, the US stock market also has a very typical head concentration, the so-called we often say that these 6 FATNG stocks (Facebook, Amazon, Apple, Microsoft, Netflix, Google), its market value ratio once reached a very high position, higher than the Internet bubble, the so-called leading concentration of such a phenomenon.
I think there will be such a phenomenon in different markets, in Hong Kong stocks, A shares, because good companies are relatively scarce, and good companies will continue to grow.
But when we look at this time, in fact, we can't simply split, only look at the proportion of market value, because at that time, when the market rose the most, everyone said that it was so high, was it a high bubble?
In fact, we use another dimension, you look at its profit and the proportion of profit growth rate, you will find that in this position, its proportion is much higher than this position.
In other words, in fact, it can rise so high, and the support behind its profit growth is inseparable, and can not simply look at the proportion of market value, but in short, these are its two relatively large characteristics.
<h2>What is the relationship between the interest rate of US treasuries and the rise and fall of US stocks? </h2>
How to analyze it?
We have a method of disassembling, a model that we have built ourselves, decomposed into these factors, profits, interest rates, risk premiums, so why should these factors be disassembled?
Figure 2
In fact, it is to answer everyone's current question, how does the rise and fall of US Treasury interest rates affect the stock market?
You will find that the US Treasury interest rate is particularly interesting, and everyone will worry about it when it rises more, just like in February, it is said that the rise is rising every day, what should be done about the valuation of the market? Valuations are so high. Falling too much, just like in recent times will ask again about falling so much, is not trading so-called recession expectations.
So the rise and fall seems to be not very good, but it can not continue to move sideways, when analyzing the US stock market, why do we disassemble into three factors?
In fact, it is layered and progressive, for example, interest rates and risk premiums combined are valuations.
What is the risk premium? It is emotion, if the mood is good, it can offset the impact of interest rates, so it does not necessarily say that interest rates rise at the beginning, valuation must fall. If the interest rate reaches a certain level, it cannot be offset, and the valuation begins to fall.
But it's not that the market has to fall, I still have profits, so when the profit is not good, the interest rate reaches a certain high point, and the market will not work.
So in fact, it is a layer of progressive factors, the relationship between it and interest rates is not a linear relationship, you will find that it has a threshold, after reaching a certain high point will have an impact in turn.
Figure 3
This is also the main purpose of our dismantling, I want to know what it is driven by, I probably have a number, each piece, and what kind of prospects, and what kind of impact on the market may be brought about under different assumptions in the future.
So divided into several pieces, because we have just dismantled three factors, profitability, because the overall forecast and analysis framework of profitability, for China for the U.S. stock market and the A-share market are the same, I mainly talk about the slightly different points.
When exactly the performance period of the US stock market begins, it has a fixed point in time, that is, the middle of the next month after the end of each calendar quarter to the middle of the next month.
For example, after the end of the second quarter of June 30, its performance period lasted from mid-July to mid-August, so we can follow suit, and at least we know where the performance period of the US stock market is.
Because the performance period of the US stock market still has an impact on the performance of the market, such as how Apple's performance is, how Tesla's performance is in the past two days.
But in the U.S. stock market, we often pay more attention to this thing, earnings forecasts. Earnings forecasts are forecasts of the overall market consensus expectations and earnings adjustment sentiment, which may be more sensitive to changes in the market.
To put it bluntly, we should look at forward-looking expectations, not just statically look at historical performance, so this is a piece of profit, I think we just need to grasp these two points.
<h2>Is the valuation of U.S. stocks high? </h2>
Valuation has always been a problem that the market is more concerned about, and everyone has always been entangled in the problem. The valuation of US stocks seems to be an unsolved mystery, is it high or not?
In fact, people often say that the valuation is high or not, just pull a line to see the historical level, but this way is the most static way in our view.
Because first, it can not be portrayed, for example, I stand at this time, you seem to have a high valuation, but you can not portray what I just said about the interest rate environment, because low interest rates can theoretically support higher valuations; and can not portray the marginal impact of profitability, so it can only give us a general static feeling.
Figure 4
If we dynamically disassemble the three factors just now and synthesize a model, we can see that the current valuation level is actually a level that the current growth and liquidity environment can support, rather than simply being on the high side.
Then, from the trend of interest rates, you can see that when interest rates are gradually high, the beginning is the level of interest rates, not that a high valuation will come down immediately, it is a process of first having such a positive correlation that goes up like this, and then after reaching a certain high level, it is a process of inverse correlation.
That's what I just said, when it is high to a certain extent, it will have an impact in turn, so we generally analyze the valuation in this way, rather than statically looking at the valuation.
Even at the current valuation, I don't think it's an exaggeration or a very high situation.
The third factor is the leverage of the market, just like we often say in the A-share market how much margin or leverage there is, in fact, the US stock market also has this situation.
Figure 5
For example, this is the financing balance of the US stock market, here is its options, these two indicators in fact, usually everyone does not need to pay more attention, but when you see the extreme value.
For example, the leverage price is too high, like the beginning of 18 years and when the market fluctuates, there may be some positions, and even the situation of blowing up, we need to pay attention to the changes in positions and valuations, and at that time in turn to verify whether there is a relatively large pressure on the market.
In terms of seasonality, we take this point out separately because the US stock market has a more obvious seasonality, and one of the most widely spread sayings is selling in May.
Figure VI
But in fact, when you pull this figure out, one of the misunderstandings we have been trying to clarify is that the US stock market has never been true historically.
On the contrary, when it performs the worst, it is all in August and September, and it is often in August and September, and the reason is very simple.
Because many investment managers are absent in the summer and summer, and at the same time it has a called Santa Claus Offensive, Christmas Offensive, called Santa Claus Reddy at the end of the year, so the end of the year generally performs well, which is its typical two seasonal characteristics.
So in the future, when you sayell in May, you must pay attention to this picture. You can note that there are many times when it's notell in May, it should be properly said to beell in August or September, and then there's a seasonal rally at the end of the year.
The style of rotation is also a problem that we need to focus on when it comes to US stock analysis.
For example, whether the NASDAQ is rising well, or Jones is rising well, should the growth sector increase the allocation, or should I allocate the financial cycle?
In fact, to some extent, it is the same as our answer, whether to buy the ChiNext board or buy real estate finance in A shares, it also has its inherent laws.
Figure VII
In order to illustrate this problem, in fact, my chart is from the epidemic, divided into three types of plates in different categories to see its evolutionary context, you will find that each evolutionary context is related to the change of policy at each point in time.
Because I'm not taking out all the macro context here, but if you remember the macro context of the United States that I talked about earlier, including every policy change, there are driving factors behind it.
To put it simply, for example, why the NASDAQ has been able to rise sharply in recent times, the relative financial cycle is falling. What I just said about the DECLINE in US Treasury interest rates and the decline in inflation expectations are essentially trading this thing, just like the recent rebound of the ChiNext board of A-shares.
Therefore, under the rotation of the style plate, we will use the interest rate as a gripper to analyze its style change and the reasons behind the style evolution.
Then interest rates in turn involve the direction of interest rates, the driving factors of interest rates, whether it is real interest rates or inflation expectations and term structure, whether you are bull flat, bull steep, or some other trend, will have an impact on the style.
The above is the analytical framework that we often use when studying US stocks.
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