Recently, China concept stocks have risen again “Hi”!

A reporter from China Fund Daily found that many Chinese concept stocks performed well. For example, the US China stock index has risen by 12.4% since May 12. In the Hong Kong market, some Chinese and Hong Kong stocks have performed strongly, and some heavyweight stocks have risen by more than 10%.

Why did the Chinese concept stocks usher in this wave of rise? Where are the next opportunities? How should the Borrowing Fund be deployed? A reporter from China Fund News interviewed six investors and talked about the market outlook for Chinese stocks? They are: Xia Haoyang, Fund Manager of GF Zhonggai Internet ETF, Wang Xinchen, Manager of Harvest Hong Kong Stock Internet Industry Core Assets Fund, Ran Linghao, Dacheng Hang Seng Technology ETF Fund Manager, Zhan Jia, Director of International Business Department of Everbright Prudential Fund, and Qu, Assistant General Manager of Great Wall Fund International Business Department Shaojie and Zhou Jiansheng, senior researcher of Nordisk Foundation.

These people believe that the unfavorable factors that previously suppressed Chinese concept stocks have changed, prompting a rebound in this wave of Chinese concept stocks. Investors who use funds to participate in China concept stocks in the market outlook should pay attention that because there are many fluctuation factors, it is not advisable to blindly chase highs or buy bottoms. In this regard, they need to be more cautious than the domestic market, and also pay attention to issues such as discounts and premiums, QDII quotas, etc.

Multiple factors prompted the rebound of Chinese concept stocks

Reporter from China Fund Daily: The Chinese concept stocks that have suffered heavy losses have rebounded significantly recently. Some heavyweight stocks have risen by more than 10%. How do you view this situation? What is the cause?

Ran Linghao: Since last year, China concept stocks have undergone major adjustments. The main reasons for the adjustment are: first, the country’s strict supervision of the Internet industry has caused market concerns and led to a sharp decline in the valuation of Internet platform companies; Second, the U.S. regulatory authorities strictly enforced the regulatory requirements on the listing status of Chinese concept stocks, which triggered the decline of Chinese concept stocks, which led to the decline of the main heavyweight stocks of Hang Seng Technology; third, the recent macroeconomic pressure in China has dragged down the performance of Chinese concept stocks.

However, in recent years, relevant factors have changed, mainly including: first, the state’s strict supervision of the Internet industry has achieved initial results, and it has initially come to an end, and the regulatory environment for Internet companies has become looser; second, the Chinese and American regulatory authorities have The supervision of Chinese stocks is being actively negotiated in order to solve the problem perfectly; thirdly, the current round of epidemic in China will gradually ease, and social and economic activities will gradually resume. The State Council has also adopted a number of measures to promote economic development, which will help economic growth. . Therefore, China concept stocks have rebounded sharply.

Xia Haoyang: In the context of some easing of the internal and external factors that suppressed the valuation of China General Internet in the early stage, such as the epidemic situation, Fed policy, etc., the China General Internet sector has been repaired recently, and the index rebounded close to 10%. From the end of May to the beginning of June, the Zhonggai Internet sector entered the first quarter results and the second quarter guidance announcement period. Judging from the performance of the main constituent stocks that have been announced, the performance performance was good or bad, and there was a certain differentiation. Some heavyweight stocks with better performance have been sought after by market funds and have experienced large gains, while the performance of heavyweight stocks with performance that is less than expected is relatively weak. Therefore, the short-term performance of Zhonggai Internet in this round is mainly due to the influence of various factors, and the overall rebound has occurred, but there is still internal differentiation.

Zhan Jia: The recent rebound in Chinese concept stocks is mainly due to two reasons. First, the Fed’s hawkish attitude has eased slightly, combined with the fall in the latest US inflation data, and the market’s outlook for the future liquidity environment has improved, so overseas growth stocks have generally rebounded. Second, a considerable part of the heavyweight stocks of China Concept Stocks belong to the platform economy, and recent domestic policies have given support to the healthy development of the platform economy.

Wang Xinchen: From three aspects, China concept stocks have adjusted a lot since the second half of 2021, making their valuations adjusted to a lower position; the second is the encouragement of policies, especially the recent related conferences and policies on the Internet. The encouragement of platform development; third, the first quarterly report was released, many companies still performed better than expected under the background of macro pressure, and looking forward to the second half of the year, after the epidemic returns to normal, everyone is confident that through their own growth and development, they will improve their performance. it is good.

Qu Shaojie: The country, society and the investment market have begun to further understand the social and economic value of Internet platform companies. In the past period of time, various parties have disagreed on the value of the platform economy. The Internet platform has developed to a stage where it has a huge volume and influence on the economy and society, and there has indeed been disorderly competition. Therefore, the state has introduced a series of measures to strengthen anti-monopoly and social security. Anti-unfair competition and the disorderly expansion of capital have also achieved the expected governance effect. At present, the rebound of Internet companies has initially met the conditions.

First of all, in terms of policies, the state’s management of Internet companies has entered a new stage, supporting the innovative development of platform companies, enhancing their international competitiveness, supporting the sustainable and healthy development of the platform economy, and encouraging platform companies to participate in major national scientific and technological innovation projects. Policy uncertainties have been basically eliminated.

Secondly, in terms of fundamentals, the domestic new crown epidemic broke out in key areas, social and economic activities were affected to a certain extent, and the advertising and transaction commission income of Internet companies declined to varying degrees. As Shanghai gradually liberalized social activities and the economy returned to normal order, the negative emotions brought about by the disruption of the epidemic also improved.

Third, in terms of valuation, the price-earnings ratio and price-to-book ratio of the Hang Seng Technology Index and the Hang Seng Hong Kong Stock Connect Index are both in the range of minus one standard deviation, which is a historical valuation bottom range.

To sum up, policies, fundamentals and valuations have created favorable conditions for the rebound of Internet companies.

Zhou Jiansheng: We believe that the short-term rebound of Chinese concept stocks is the first to repair the excessive pessimism in the early stage, and first return from excessively pessimistic valuations to reasonable valuations. On the one hand, some short-term uncertainties in the market are bound to be corrected; on the other hand, looking at the global market, concept stocks are still relatively high-quality assets, and many companies have high investment cost performance, with good assets and high prices. Low will naturally attract capital to enter.

China concept stocks rejuvenate after a short period of pain, and there may be differentiation in the future

China Fund News reporter: At this point in time, what do you think of the investment value of Chinese concept stocks? Will it perform better in the future?

Xia Haoyang: Currently, the China Internet sector is at an inflection point on the policy side, transitioning from a tight cycle to a wide cycle. The influence of overseas geopolitical conflicts and the Fed’s monetary policy is also diminishing at the margin. From the perspective of the medium and short term, many factors that suppressed the valuation of the Internet sector in the early stage have gradually eased, and Internet investment will return to performance-oriented in the future.

In terms of performance, the current economic pressure still exists, and expectations may need to be appropriately lowered for the performance of the second quarter. However, if the subsequent favorable policies for the sector are implemented accordingly, and the domestic economy recovers after the epidemic, the performance inflection point of the China Internet sector may also follow. Come, the plate may usher in a real Davis double-click in the context of low valuations.

Ran Linghao: The technology industry is the most important industry in China in the future, and the main body of China Concept Stock is the leading company in China’s technology industry, which has long-term growth and long-term investment value.

After a year or so of decline in Chinese concept stocks, from a technical point of view, the adjustment has been sufficient. In terms of valuation, it is also the lowest level in history. From the perspective of fundamentals, the regulatory environment for Internet companies may become looser in the future, and China’s macroeconomic growth rate is also expected to gradually recover. Therefore, from a high probability, the future trend of China concept stocks will be more optimistic.

Zhan Jia: The current investment value of China concept stocks needs to be supported by continuous performance, and the performance of China concept stocks may be differentiated in the future. The resilience of corporate earnings, the ability to innovate, and the ability to resist inflation are the main watersheds.

Wang Xinchen: As mentioned above, it will continue for some time. I am optimistic about the performance of these stocks. From a long-term perspective, the activity of Chinese concept stocks listed in the United States may decrease in the future, because some leading companies have encountered related challenges in listing in the United States, resulting in many Chinese concept companies that originally went to the United States to list in Hong Kong. The general era has passed, and Hong Kong stocks will gradually replace the role of US stocks.

On the one hand, Hong Kong is an offshore market, which can be financed in both Hong Kong dollars and US dollars. At the same time, under my country’s regulatory framework, there are no major data security risks. Therefore, most technologically innovative companies will turn to Hong Kong stocks. as a listing place. From this perspective, I am more optimistic about the Internet/technology of Hong Kong stocks, and many Chinese concept stocks that have been listed in the United States have completed secondary listings in Hong Kong.

Qu Shaojie: Internet companies have long promoted China’s digital transformation and upgrading, and enhanced China’s international competitiveness. After the short-term policy regulation, it will usher in a new stage of long-term development. Technological innovation is my country’s core strategy, so we are optimistic about the long-term investment value of China’s Internet. These leading Internet companies are China’s core assets before they fall, and they become cheaper core assets after falling. In the future, China will continue to compete in international competition. It is one of the engines that has a longer-term development space.

Zhou Jiansheng: We believe that the investment value of Chinese concept stocks needs to be analyzed in detail, and we cannot say good or bad in general. We believe that after this round of adjustment, China concept stocks will enter a new normal. Some companies have undergone active strategic adjustment, and after a short period of pain, they will be reborn with new vitality, and they will definitely perform well in the future; It may be slow to find a new breakthrough, and it will be neglected by the capital market.

Optimistic about the Internet, new car-making forces, etc.

China Fund News reporter: In your opinion, which sub-sectors in China concept stocks are more worthy of deployment?

Xia Haoyang: There are many outstanding companies in the Chinese concept stocks that deserve long-term attention from investors, especially those in the Internet sector. There are many long-term development paths for the Internet industry. It can rely on polishing its own R&D capabilities, combining digitalization with the industrial Internet, promoting globalization strategies, and developing the metaverse to open up valuation boundaries; in the future, the importance of China’s Internet may become more and more important. Significantly. Investors can fully pay attention to the long-term allocation value of Internet companies related to the above-mentioned segments in the current Chinese concept stocks, and share the dividends brought by the rapid development of the Internet.

Zhan Jia: Relatively optimistic about the layout opportunities in the fields of consumption, medicine, technology, manufacturing, and energy.

Wang Xinchen: In the field of China’s general subdivision, we are still optimistic about the Internet. Although the growth of Internet traffic has slowed down, the structural opportunities in it are worthy of attention, such as the form of short videos; Platform businesses that are expected to be fixed. These platform-based companies have suffered from the epidemic, and offline consumption has been greatly impacted, and their valuations have fallen a lot. Third, new car-making forces are worthy of attention. Many of them are entrepreneurs who came out of the Internet, representing disruptive innovation. On a global scale, the global leading companies closest to the United States are the new domestic automakers. They are keeping pace with the leaders in electrification and intelligence, and I think many companies are overtaking cars in corners to achieve Chinese car manufacturing. Industry is leading the world in the world, and it is the direction we are optimistic about.

Qu Shaojie: The investment of Internet companies in the new stage should be the best of the best. Not all technology stocks have investment value. Only those companies with high user stickiness, continuous innovation capabilities, and national development strategies have long-term investment value. Social and online shopping, as well as hard technology companies such as new energy vehicles, are all worth deploying.

Zhou Jiansheng: The platform economy leader that actively serves the national economy and people’s livelihood in the 2C field is still a good direction, and it is becoming more and more difficult to create new giants. Digital economy players who are rooted in the 2B field to help China’s economic transformation, such as cloud computing, will present long-term investment opportunities. Another type of opportunity is for companies that rely on the resources accumulated in the early stage to cultivate core technological capabilities, which may require more waiting.

It is not advisable to blindly chase highs or bottoms by participating in China Concept Stock Funds

China Fund News reporter: Against this background, how do you think investors should choose fund products if they are willing to invest in Chinese concept stocks? What to watch out for?

Xia Haoyang: It is possible to consider allocation through indexed investment. There are many ETF varieties in the China Concept Internet sector in the current market, which are targets that investors can refer to. Invest in a basket of medium-sized companies in a relatively transparent and decentralized manner. The main point to pay attention to is that some related ETFs have recently experienced a significant reduction in the subscription limit due to tight QDII quotas.

Jia Zhan: Since the US regulators have raised the audit and supervision requirements for China Concept Stocks and given a shorter time limit for adjustment, investors need to choose managers with rich investment experience in overseas markets when purchasing China Concept Fund products. Avoid abnormal fluctuations caused by delisting risks. At the same time, in the second half of the year, the Federal Reserve will start to shrink its balance sheet. There are many opportunities to open positions in the environment of declining liquidity in the international market. Investors are advised to remain patient and choose opportunities to open positions when the market is fully adjusted.

Qu Shaojie: Investing in Chinese concept stocks, on the one hand, you can buy QDII funds. At present, some Chinese concept Internet QDII funds have suspended subscriptions or large-scale subscriptions due to the QDII quota. It is difficult for investors to directly invest in Chinese concept stocks. Funds. On the other hand, many Chinese concept stocks have been listed on Hong Kong stocks for the second time, and more and more Chinese concept stocks will return to Hong Kong stocks in the future, so they can be replaced by investing in technology and Internet-themed Hong Kong stock funds.

In addition, due to US regulatory reasons, there may be unfavorable news such as forced delisting of Chinese stocks in the US market, which requires investors to pay attention. The technology and Internet-themed funds investing in Hong Kong stocks basically need not worry about this, which is also the advantage of Hong Kong stock funds compared with US Chinese stock funds.

Zhou Jiansheng: Investors should choose a fund that matches their own ideas in the concept stock layout, otherwise it is easy to feel anxious. China concept stocks are a special “group”. They are located between domestic and overseas regulators and domestic and foreign investors. There are many fluctuation factors.

This article is reprinted from: https://news.futunn.com/post/16281957?src=3&report_type=market&report_id=207710&futusource=news_headline_list
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