ABC Fund Zhao Atlas: 2021 will be in an epidemic recovery period, because the overseas situation is still unclear, the overall view is a relatively long process, the monetary policy will not be more loose on the margins, but there will be no "sharp turn", which also means that the market will be from the selection of the track, the valuation of the return to the performance of the cash The degree to come up.

Nordic Fund Luo Shifeng: Based on our close tracking of the industry chain and the judgment of the industry and the development trend of the leading enterprises, 2021 is still optimistic about the catering industry chain, health care, new energy and other segments, these areas are still in a high degree of prosperity state, the medium and long term point of view has a higher investment value.

Guangfa Fund Zheng Chengran: 2021 A shares are expected to still have a structural market, but the overall valuation of further expansion of the space is limited. From the perspective of corporate earnings, A-share non-financial net attributable profit is expected to realize about 20% growth under neutral assumptions. Benefiting from the economic recovery of pro-cyclical industries, it is expected to come out of the structural market under the support of earnings.

Liang Hao, China Merchant Fund: In the medium to long term, China's assets represented by the core leading targets of A-share industries will be the key areas for domestic and foreign funds to strengthen their allocations. whether or not the incremental capital in A-share market can continue the relatively positive trend in 2020 is an important factor that will affect the market in 2021.

HSBC Jinxin Fund Lu Bin: First, optimistic about the new energy automobile, the industry's right side to accelerate to the good, the fundamentals did not see a big risk; the second is to the chemical industry as a representative of the low valuation of the cycle industry; the third is the national defense industry; the fourth is the direction of the financial and real estate to the banks and insurance as a representative of the financial industry may be out of the slow bull market.

2021, how will the A-share market interpretation? Which tracks may lead the way? Where is the market risk?

From liquidity-driven to performance-driven

Atlas Zhao: 2021 will be in a period of recovery from the epidemic. Overseas situation is still uncertain, and the recovery of the economy will be relatively long. Monetary policy will not be more loose on the margins, but it will be like the economic work conference said, "There will be no 'sharp turn'", which means that the market will return from the selection of the track, the valuation of the return to the performance of the degree of realization.

Lu Bin: 2021 will be a year of risk and opportunity. First of all, from the perspective of risk, the current market risk premium level in the history of negative 0.5 times the standard deviation below, the whole market there is a certain valuation pressure. 2021 the main risk of the market may come from the rise of industry valuation.

From the perspective of opportunity, the structural bull market characterized by a handful of high-quality leading companies over the past few years is very clear, and we can still find more investment opportunities from a number of industries. The opportunities that can be seen now include both growth stock opportunities that have been bullish for a long time, such as new energy-related industries, as well as manufacturing and pro-cyclical opportunities, such as the defense industry and the chemical industry.

Zheng Chengran: One of the main features of the macro in 2021 is economic recovery overlaid with reflation. The main drivers of China's economy come from three aspects: First, strong exports from the mismatch between supply and demand that still exists in the first half of the year, pulling the relevant manufacturing investment; second, consumption and offline services continue to be repaired; third, infrastructure and real estate investment is weakening, but taking into account the level of real estate inventories is still low, in the case of sales maintenance, real estate investment is expected to show a certain degree of resilience. Inflation, CPI and PPI will show a certain degree of upward movement, but the magnitude may not be too large. Monetary policy will maintain the current "moderate withdrawal" tone.

Comprehensive economic fundamentals and monetary policy, 2021 A shares are expected to still have a structural market, but the overall valuation of further expansion of the space is limited. From the point of view of corporate earnings, under the neutral assumption, the A-share non-financial net attributable profit is expected to achieve about 20% growth. Among them, the pro-cyclical industries benefiting from the economic recovery are expected to come out of the structural market under the support of earnings.

Liang Hao: The economic work conference gave important guidelines to keep the growth rate of money supply and social financing scale basically matched with the nominal economic growth rate, which means that, compared with the real GDP growth rate of about 2% in 2020 and the social financing growth rate of 13%, the higher GDP growth rate and pivotal downward social financing growth rate in 2021 can make the level of leverage ratio remain relatively stable. Under this certain tone, the active tight credit has no particular significance, the monetary policy is more of an orderly withdrawal of unconventional stimulus policies during the epidemic, the impact on the market is neutral.

Financial conditions will be determined to mildly turn tighter, A shares in 2020 valuation of a significant expansion of the market faces greater challenges. Considering the gradual recovery of the global economy after the landing of the vaccine and the long-term trend of China's industrial upgrading, the market may be more structural opportunities in 2021.

Epidemic is the main influencing factor

Zheng Chengran: If the economic recovery trend can be continued, listed companies earnings growth is expected to be honored, then the valuation pressure of the A shares can be released, which is an important positive factor in 2021. In addition, the "14th Five-Year Plan" plan specific content gradually clear, in line with the industrial policy guidance, with the supply of barriers to emerging industries in the direction of the demand for the existence of the possibility of exceeding expectations, which is a potential positive factor.

Liang Hao: In the medium and long term, the A-share industry core leading subjects represented by Chinese assets will be the focus of domestic and foreign funds to strengthen the configuration of the field. Domestic deposits move, the trend of northward capital stuck in the core assets is still not over, the substantial inflow of funds since 2019 has directly raised the valuation pivot of A shares, the environment of macro liquidity mildly turned tight, the A-share market incremental funds can also continue the relatively positive trend in 2020, is an important factor affecting the market in 2021.

Monetary policy, the pace of economic recovery

Potential risk points

Zhao Attainment: 2019 and 2020 public funds have received better investment returns, which also means that a period of time in the future to appear shock adjustments are a healthy market is possible. The public equity funds have made good investment returns in 2019 and 2020. In the long run, as the domestic outstanding enterprises continue to list in the country, the competitiveness continues to strengthen, which will help the market to be stable and good in the long run.

2021 liquidity will not be as loose as it was during the epidemic, which will have a certain inhibition on the expansion of valuations, implying the need to digest excessive valuations through the continued growth of performance. From this perspective, stock selection will become more difficult, growth stocks in 2021 relative to the past two years will be a bit flat, the choice of individual stocks is more important.

Zheng Chengran: There may be several potential risks: First, the recurrence of the epidemic and the effect of vaccination is still uncertain. The current consensus expectation is that overseas can realize a larger area of vaccination in the second quarter, on the basis of which, it is deduced that the overseas economy after the second quarter of 2021 appeared to be significantly repaired. If the vaccination progress is less than expected or the epidemic itself appears to exceed expectations, then the logic of the global economic recovery in 2021 may be undermined.

Second, the uncertainty of the global political situation. After Biden came to power, the market expects that the US-China relationship may see a phase of détente. If there is a change in the external trade environment, it may have an impact on industries such as technology, which is also a potential risk.

Third, the policy and the economy may be a staged dislocation. The current economic recovery trend is better, and the policy is withdrawing mildly. After the second quarter of 2021, if there is a slowdown in the economic recovery, whether there will be a corresponding policy to respond, may be a stage of disturbing market sentiment.

Liang Hao: Since 2019, the overall market valuation level has been systematically elevated, and the valuation of some industry leaders is at a historically high level. Historical experience shows that at a higher valuation level, the market may amplify some shortcomings at the macro, meso and micro levels, and volatility is increased, with short-term declines exceeding expectations. Standing at the current point in time, the macro level of the Federal Reserve's attitude towards inflation, the domestic tight credit process, the micro level of industry high-frequency data, individual stock performance are likely to become a risk release at some point in time, "catalytic" factors, but standing in the medium and long term perspective, the event of killing the valuation of the short-term release of emotions after the better intervention or The first thing you need to do is to get a good deal of money.

Looking at the restaurant industry chain, health care, new energy

Lu Bin: First, optimistic about the new energy car. The right side of the industry accelerated to the good, the fundamentals did not see a big risk, in the context of the higher valuation, to combine the fundamentals and valuation of the dynamic strategy system to capture the opportunity. Secondly, the low valuation cycle industry represented by the chemical industry. The economy continues to recover, the chemical industry cyclical attributes in the weakening of the impact of supply-side reform and safety and environmental protection and other factors under multiple restrictions, the acceleration of the industry's survival of the fittest, concentration to further enhance the barriers are more solid, in which you can find a lot of valuation of relatively low, good growth opportunities. Third, the defense industry. Fourth, the direction of financial real estate. Banks and insurance as the representative of the large financial industry may be out of the slow bull market.

Zhao Attainment: In the past two years, "consumer + technology" growth stocks performed very well, with the recovery of macroeconomic growth in the post epidemic era, liquidity margins will not be relaxed again, the growth of high growth stocks, sustainability, certainty of the requirements will be higher.

With a longer dimension, still very optimistic about the new energy sector. Although many people feel that the 2020 rise has been great, but the United States, China, Europe, the three major economies after the epidemic are continuing to increase investment. Whether it is photovoltaic or new energy vehicles, China has the world's most complete and competitive industrial chain, will benefit from the global development.

Zheng Chengran: First of all, optimize the industry in line with the direction of the current industrial policy. "The proposed draft of the 14th Five-Year Plan, the meeting of the Political Bureau of the Central Committee and the Central Economic Work Conference basically centered on the "double cycle" of industrial policy. Scientific and technological innovation and domestic demand boost is a relatively clear direction, in line with the industrial policy-oriented industries, including the field of consumer industry and high-end manufacturing and scientific and technological innovation-related fields.

Secondly, the industry benefited from the global economic recovery. 2020 China's economic recovery exceeded the expected point mainly in exports, behind the global supply and demand mismatch. China's epidemic prevention and control is effective, the supply of rapid recovery. But overseas epidemic repeated as well as financial support in different ways, consumption capacity has not been impaired but the supply capacity is slow to recover. As a result of this supply-demand mismatch, many Chinese manufacturing companies are rapidly capturing global market share. We hope to find companies that have a global competitive advantage in their own right: a short-term mismatch between supply and demand will accelerate their market share acquisition. And the repair of overseas supply after the epidemic will not cause them to give back their share. These industries include electronic components, chemicals, home appliances, automotive parts and components, and so on.

Luo Shifeng: 2021 is still optimistic about the catering industry chain, health care, new energy and other segments, these areas are still in a high degree of prosperity, from a medium to long term perspective has a high investment value.

Liang Hao: the market after two years of rise, the overall valuation has a greater lift, 2021 need to look at the longer term, preferential long-term development prospects, good growth, there are core barriers to the allocation of enterprises. Although the short-term rise is large, but in the long term, these companies still have the potential to create good returns, such as pharmaceuticals, new energy vehicles, food and beverage and some other companies in the field.

"Golden track" or differentiation

Zhao Atai: before the consumer + technology growth stocks and cyclical + financial value stocks valuation difference and the gap in the increase is large, with the economic growth rate is expected to become better, the market will enter a process of rebalancing.

Lu Bin: I am more optimistic about the new energy industry in 2021. We compare through the industry, for example, from the consumer electronics field, after the popularity of the past 10 years, the penetration rate of smart phones has been very high, the industry is very little incremental, more through category innovation to improve profitability or to compete for the market share of peers to improve performance. The consumer sector has been consistently bullish over the past five years, and many investors in the market have a clear preference for this sector. However, from our analysis, the short-term explosive performance of certain consumer sectors and the sustainability of future development is not so clear.

Zheng Chengran: Both technology and consumer have experienced a round of valuation expansion, and the valuation decile is at a relatively high level. The valuation quartile of the past five years, food and beverage, household appliances, represented by the valuation of the consumer industry in five years is almost the highest valuation level. The internal differentiation of science and technology stocks is more obvious, the valuation of the communications industry has fallen significantly, the valuation of semiconductor-related industries is relatively high.

Consumer and technology industries either have high forward earnings certainty or large forward growth space, behind which are better business models and supply barriers. In the long run, these industries are located in a relatively high-quality track, although the short-term valuation is high, but if the earnings can be realized or valuation has been adjusted back, the value of the configuration is still relatively high, after all, in the context of the pivot of the economic growth rate downward, the stability of growth and profitability is worth a certain valuation premium.

Liang Hao: Technology and consumption are the two engines that will carry China's future economic development. In the past 5-10 years, the A-share market has outperformed the market in the long run in the consumer and technology sectors.

There are a lot of consumer segments, and two are particularly important - food and beverage and pharmaceuticals. First look at food and beverage, the domestic high-end liquor industry space continued to grow rapidly, the competitive landscape is very stable, the leading companies have a strong brand premium, the moat continues to strengthen, and this pattern can not be seen in the short term to change the possibility. The pharmaceutical sector involves a particularly wide range of areas, both consumer attributes and scientific and technological attributes. With the gradual increase in the proportion of China's aging population, as well as consumer upgrades brought about by some of the new needs such as height intervention, medical beauty, pharmaceuticals, some of the leading fine-molecule industry is expected to continue to win the market.

Technology boards, such as electronics, semiconductors, new energy vehicles, etc., are in line with the direction of the national science and technology strategy to upgrade the industry. We are at the beginning of a new industrial technology cycle, and technological advances in areas such as 5G and AI will practically change our way of life, and will bring huge investment opportunities for many industries such as high-end equipment manufacturing, new materials and new energy vehicles.

Investing with the long dimension

Zhao Atai: Under the premise of "housing without speculation", the weight of residents' personal asset allocation is changing. The good performance of public funds attracts investors to transfer their personal funds. The two are mutually causal in promoting the development of equity funds. In essence, public funds are high-quality investment products in the asset allocation of ordinary investors, and investors are advised to invest in funds with a longer dimension. Many statistics have come to a similar conclusion: the longer the holding period, the more you can earn relatively more lucrative returns.

Regardless of the type of fund, it does not mean that these fund products will only go up and down all the time. Investors who invest for a longer period of time will be able to hold on to them when there are fluctuations, and when they go up, they will really get the benefits of the industry's rise. I hope that investors can join us to invest in a long-term dimension, *** with witnessing the growth of China's capital market.

Luo Shifeng: In the past two years, with the financial rigidity broken, the residents' wealth allocation began to gradually transfer to the equity fund, while the equity fund also brought better investment returns to investors. From the yield point of view, in recent years, the public equity fund's yield is higher overall, significantly exceeding the increase in the broad market index, the wealth effect also further strengthened the trend of the residents' asset allocation. The reason behind is that China's capital market continues to mature, the proportion of institutional investors increased year by year, while foreign capital continues to flow into the domestic market, making the overall investment philosophy of the A-share also gradually return to value investment. These trends are expected to continue in the future, and the booming development of equity funds is likely to be the main trend for quite a long time to come.

Liang Hao: residential deposit moving, relatively limited financial management is an important factor in the outbreak of equity funds, but behind the more core background is the past few years, the A-share market has emerged a number of industry pattern continues to improve, the company's R & D, governance level is very outstanding outstanding company, in the science and innovation board, the launch of the registration system, the A-share market, the "high-quality supply" is constantly enriched, which is the same as the A-share market. After the introduction of the Tech Innovation Board and the registration system, the A-share market has been enriched with "high-quality supply", which is a far cry from the market situation of a decade or even five years ago. Attracted by the quality supply, considering the proportion of equity assets in China's residents' assets is still low, there is reason to believe that the current trend can still be sustained.

Lu Bin: First of all, the overall performance of equity fund performance is excellent, and behind this is the better performance of the entire A-share market, although the index is not high, but shows a structural bull market. And the capital market reform to promote, A shares of good companies more and more, the residents of the funds also began to enter the market more and more, which all caused the wonderful 2020 market.

Secondly, the concept of "better to buy a fund than to speculate on stocks" is becoming more and more popular, and the professional ability of fund managers is recognized by more investors. Investment relies on in-depth understanding of the industry and forward-looking grasp, we did a lot of research on the new energy industry in the third quarter of last year, recognizing that there is no problem with the industry's fundamentals, and is about to usher in the improvement of the fundamentals and the price of the existence of a large difference in expectations, and finally a better grasp of the new energy market.

In the future, we are very optimistic about the value that good active managers bring to investors. We hope that investors will believe in the power of long-term professionalism and choose good fund products and good fund managers to help you make investments.

This article originated from China Fund News