Guosheng Securities: China’s core asset united front is establishing domestic capital to seize the right to speak
China is building a united front of core assets: Guosheng a strategy Zhangqi Yao, in the past: the right to intervene core assets have been closely linked since August 2018, we published numerous research reports in the hands of foreign exchange mutual admission rhythm and trend-core assets, one of whichImportant representatives are the core assets represented by large consumption, and the right to speak is in the hands of foreign countries.
Taking the change of the Food and Beverage Index / Shanghai and Shenzhen 300 as an example (food and beverage is the sector with the most capital allocation in the north), in the past few years, its net settlement scale with Lugutong has been very consistent. When it is rich in inflows, such as 18In May, June and the beginning of this year, food and beverages achieved significant excess returns, and when foreign exchange flows into circulation, the plate’s rise is lagging behind.
Therefore, the foreign entry rhythm determines the excess income of the food and beverage sector. The same applies to consumption leaders and core assets other than food and beverage.
In fact, the dominance of core assets is in foreign hands.
Why do foreign countries become the dominant variable?
The specific reasons have been repeatedly explained in the Air Force series of reports: First, from the perspective of incremental funding, foreign countries have been the most important marginal increase in the entire market over the past few years.
At the end of 16 years, the size of foreign-shared A shares was only 6.500 billion, and the latest foreign shareholding scale was close to one.
7 trillion, and public offering, insurance has become a three-legged stand (for details, see report 20180821 “Big consumption,” Nike-shaped “turning point has reached”).
Especially in 2018, global volatility has intensified, funds in emerging markets have fled, internal and external dividends have been shocked, domestic investor sentiment has fallen, but the scale of foreign exchange inflow has reached a new high, and the entry of capital to the north has reached 300 billion, which has become an important support for the A-share market.(For details, see report 20180824, “Global volatility has intensified. Why are foreign countries still buying?”
In addition, from the perspective of foreign configuration preferences, referring to the experience of Taiwan and South Korea, exchange configuration substitution has a very strong continuity, and always favors local advantageous industries and specialty industries (for details, see report 20180827, “Long Cycle Perspectives, 南京夜网 Too Many Drivers for Large Consumers”””).
For A-shares, core assets represented by large consumption leaders have always been the most preferred direction in foreign countries.
To sum up, foreign countries are the most important marginal increase in the market in the past two years, and the configuration changes are stable and the holdings are concentrated, so they have a strong influence on the trend of core assets.
Second, now: foreign turmoil has intensified, and domestic capital has seized the right to speak for three months, and the trend of core assets and foreign exchange admission rhythm have clearly deviated from January and February.Slowing down, in May, trade frictions resurrected, the global turbulence oscillated, and incident pressure increased.
However, on the other hand, core assets represented by large 杭州桑拿 consumption have continued to obtain excess returns, forming a significant departure from foreign flows.
We believe that the three major reasons for this change are profitability.
The core assets represented by consumption in the first quarterly report of the annual report have better performance stability as a whole.
And from March, the initial increase in risk can be increased, the time when liquidity is the most accommodative gradually passes, and the driving force is gradually switched from the denominator end (liquidity + risk appetite) to the numerator end.
Therefore, core assets with better performance stability are favored.
More importantly, the market’s attention to foreign countries has increased, and many investors have recognized our judgment on the “long-term trend of foreign inflows”.
Since August last year, we have drafted and written a series of foreign research reports. We have pioneered the construction of many research frameworks from multiple perspectives such as foreign admission space, configuration preferences, and Taiwan-South Korea comparison.
However, few people were interested at the time, and most investors did not realize the essence of foreign A shares and still regarded it as a secondary or disturbing variable.
However, at least one month of large-than-expected growth every year. During the period of foreign exchange exceeding the expected growth, most investors realized their influence on the core assets of A shares, only to find that the speed of the transfer of land shares was excessive and that they had excessive holdings.The size of some stocks is approaching the public insurance fund.
We are also very pleased to see that our final research results have received market attention and recognition: We judge that the current cross-inflow of A-shares is still in its infancy and will continue to welcome trillions of increments in the future, and is expected to become the largest institutional investor andThe most important source of funding.
Moreover, its allocation preferences will continue for a long time, so core assets represented by large consumption will continue to absorb the general trend of foreign investment inflows.
Therefore, due to the global turbulence and phased withdrawals, many investors, like us, do not think that redundant short-term withdrawals will affect their long-term market entry trend. Therefore, we can see domestic investors discarding their chips in a panic.
The most fundamental reason is that the domestic investors’ own investment style and aesthetic preferences are undergoing subtle changes, even from quantitative changes to qualitative changes.
We believe that this change has three triggers: First, in the collision with foreign countries and exchanges with foreign institutions, such as the unprecedentedly popular Buffett shareholders meeting this year, domestic investors have a deeper understanding and perception of foreign investment concepts, Its own investment style may also be affected by it.
In fact, in the past few years, the value style has been able to obtain excess returns for many times. In other words, there is also a trend in the value of the A-share market with a wide audience of trend investment.
Finally, in recent years, the structure and assessment methods of domestic investors have gradually changed, and more and more attention has been paid to long-term and low volatility.
These three factors together lead to the domestic investors’ aesthetic preference and investment style gradually moving closer to the core assets.
Third, the future: the united front of core assets is being established. First, there is a tendency of “holding cliques” of existing funds. First, from the perspective of the game of existing funds, institutional investors are showing a trend of “holding cliques” toward core assets.
To some extent, the core assets now resemble the GEM of 13-14 years, showing a clear “holding group” characteristic of existing institutions.
Taking public offerings as an example, its shareholding structure continues to concentrate on core assets.
As of the first quarter of 2019, the total size of public offering shares reached 1.
95 trillion, accounting for about 4 A shares of the total market capitalization.
Since the end of the Q1 2016 stock market’s dramatic transformation, the position structure of public offerings has changed significantly.First of all, from the perspective of position concentration, public equity funds have shown a clear concentration trend in the past three years. The share of the top 50 heavy stocks has increased from 27% in 2016 to the current 50%. The top 100 heavy stocksThe market capitalization ratio has increased from 40% to 65%.
In fact, on the industry scale, the distribution of publicly held dividends is clearly concentrated in food and beverage, financial real estate, and home appliances, while the positions of TMT and the cycle sector generally overlap; finally, comparing the list of publicly held and foreign (northbound) heavy storage stocks, you can find the pastWithin three years, the degree of overlap between capital and heavy stocks has continued to increase.
In fact, the nature of incremental funds determines that it will focus more on the perspective of core assets. The nature of incremental funds is the core factor that affects the style of the market.
For example, in the bull market in 14-15 years, under the background of the systematic relaxation of liquidity and the emergence of various levers, the main increase in the market came from households’ moving deposits and leveraged funds, with fast entry and the pursuit of high returns and flexibility.The bull market became a “mad cow”, and high-beta stocks outperformed significantly.
In fact, the bull market of A-share calendars is usually the case. This “car launched” bull market is often more emotional than rational. Therefore, the transformation of the bull market is carried out, the estimation system and value judgment will be invalidated, and the funds will continue to flock to highly elastic and strong storytelling stocks.
But this time is not the same, the medium and long-term incremental funds will be involved.
First of all, last year’s economic work conference clearly pointed out that the medium and long-term incremental funds will be dated for the capital market.
First of all, in February of this year, the market enthusiasm has increased significantly, and funding has begun to move, but the regulatory response has been very rapid, preventing short-term capital from entering the market irrationally.
In the future, the main force of incremental funds will come from the following blocks: First, social security veterans: According to data released by the Ministry of Human Resources and Social Security, as of the end of the first quarter of 2019, 17 commissioned provinces (autonomous regions and municipalities) signed 858 billion US dollars in commissioned investment contracts.There are currently US $ 624.9 billion of registered investment operations. If it grows by 11%, about US $ 68.7 billion of funds will enter the stock market.
In October 2018, the “Blue Book on Pension Finance: China Pension Finance Development Report (2018)” published in the social science literature mentioned that “the scale of basic pension investment exceeded expectations, but the current basic pension insurance fund balance for urban employees exceeds 4.
39 trillion, but it is expected that the final entrusted investment and operating fund size may be within 1 trillion. The bottom guarantee and income protection model is not conducive to long-term value appreciation. Therefore, a small number of provinces and regions in the Blue Book take into account the safety and profitability of pensions and focus on long-term changes.Guarantee the bottom and protect the income model, give full play to the long-term attributes of pensions, long-term operation and long-term assessment.
“So in the short term, the investment and operation scale of pensions in the past one or two years may be about 1 trillion yuan. If it is increased by 11%, that is, about 110 billion yuan is invested in the stock market, an increase of about 41.3 billion yuan. But in the long term,The guaranteed income model will change, and it will be incorporated in more regions at the same time. The allocation of equity equity assets will have a conflicting increase in the proportion of investment. In the future, pension funds will still enter the stock market with hundreds of billions of funds.
Basically it is insurance capital: through the use of insurance funds surplus, the proportion of stock and fund investment in the use of capital surplus can be roughly invested into the volume of insurance capital into the stock market.
In the future, the increasing demand for endowment insurance caused by the aging of the population and the upgrading of consumption concepts, there is still room for growth in premium income.
We see that the growth rate of the balance of insurance capital use maintained at a high level from 2014 to 2016, and has declined after 2017, but remained at about 11%; the proportion of insurance funds invested in funds and stocks remained above 12% before 2017.In 2018, there was a decline, but in the first quarter of 2019, it returned to more than 12%. Therefore, we assume that the future balance of insurance fund use will increase at a growth rate of 11%, and the proportion of entering the market will maintain a growth of 12%. Insurance funds can bringAn increase of 200-300 billion.
Then comes the bank’s wealth management funds: At the end of 2018, the “Administrative Measures for Commercial Banks’ Wealth Management Subsidiaries” was officially released to relax restrictions on investment in stocks, non-standards, and product issuance and sales of bank wealth management products.
The current balance of non-capital-guaranteed wealth management products of banks exceeds 22 trillion yuan, and the implementation of wealth management subsidiary management measures means that the beginning of the formal transformation of banking wealth management products will also provide a huge long-term increase for the stock market.
Finally, although the short-term is shortened, the general direction of long-term foreign entry will not change: from a series of reports from August last year, we have pointed out that foreign exchange inflows are a megatrend long logic: 1. A shares have just separated from MSCI, according toTaiwan and South Korea experience, in the process of increasing the proportion of MSCI, the exchange will maintain a one-way inflow with a considerable delay; 2. The current allocation of a share is still low at only over 3%, referring to the rich proportion of Taiwan and South Korea(15%?
30%). Currently, the allocation is still far too low, and global funds are still “flowing to lower places”; 3. The current capital market and opening up are accelerating in an all-round way, and the access channels for international capital are continuously expanding.The flow of inflows has accelerated significantly during the financial opening phase.
Therefore, we judge that foreign inflows of A shares are still in the initial stage, and there will still be trillions of incremental conversion allocations in the future.
Therefore, from the perspective of the nature of incremental funds, in addition to foreign countries, social security veterans, insurance funds, bank financing will be an important source of incremental funds for A shares.
In addition, the investment style and assessment duration of these funds are similar to those of foreign countries, and more emphasis is placed on the allocation of medium and long-term assets. The core asset must be its most important allocation direction.
In summary, the gradual inheritance of foreign reintroduction is on the right track, and the trend of “holding groups” in public offerings continues. Incremental funds such as social security insurance, insurance funds, and bank wealth management have gradually entered the market. A unified front of core assets is being established and will become a centralized direction of capital allocation.
We are currently experiencing two rounds of simple bullish ups and downs, and another round of A-shares has undergone a major transformation from an unprecedented level. The root of the transformation is a systematic change in the structure of investors.
We will usher in a big era from retail to institutions, from trading to configuration, from Beta to Sharpe Ratio.
This will be an era of institutionalization, an era of value, and an era of core assets.
Risk warnings 1. Trade frictions fermented more than expected; 2. Macroeconomics changed more than expected.