Wells Fargo Fund Equity Investment Spring Strategy Conference was successfully held. Many big names talked about the spring market.
Since the beginning of the year, the A-share market has regained its vitality, igniting investors’ expectations for the future. Looking forward to the next market situation, how should everyone choose the direction? Which opportunities are worthy of attention? On March 19, Wells Fargo Fund successfully held the Equity Investment Spring Strategy Conference and the Wells Fargo Fund Investing Together March special event. The theme of the event was “After Deep V, what to buy in A-shares?” The strategy of this special event was The meeting invited Li Chao, chief economist of Zheshang Securities and best analyst of New Fortune, Cao Liulong, chief strategy analyst of Founder Securities and best analyst of New Fortune, Xu Zhixiang, manager of Fuguo New Materials and New Energy Fund, and Bai Bingyang, manager of Fuguo Insight Value Fund. Yi Zhiquan, Wells Fargo’s high-quality enterprise fund manager, and the chief securities firm joined hands with Wells Fargo’s equity fund manager to discuss the opportunities and challenges faced in investment under the spring market conditions. This strategy will be broadcast live on more than 35 platforms simultaneously, which has attracted widespread market attention.
Group photo of guests during round table session
The first half of this special strategy meeting consisted of three keynote speeches. Guest speakers Li Chao, Bai Bingyang, and Xu Zhixiang respectively brought their prospects for the market outlook from three perspectives: policy interpretation, market style, and industrial logic. In the second half of the roundtable discussion session, Ma Lan, director of asset allocation at Wells Fargo Fund Investment Consulting, served as the moderator and discussed with four guests the investment opportunities worth paying attention to in the market after the deep V trend.
Tip: The views of guests from external institutions only represent the views of themselves and their institutions on the day of release; the market views and investment philosophies of each fund manager of Wells Fargo Fund do not serve as a commitment or prediction for the investment management of the fund products they manage, nor do they constitute investment advice. The above opinions are time-sensitive and may be adjusted as market conditions change.
Li Chao: New quality productivity sets sail
/ Chief Economist of Zheshang Securities /
Li Chao
The modern industrial system needs to develop new productive forces
The government work report proposes that vigorously promoting the construction of a modern industrial system and accelerating the development of new productivity will rank first among the government’s work tasks in 2024, which means that industrial transformation and driving high-quality development are important goals. In the process of building a modern industrial system, new productive forces occupy a core position.
What is new productivity?
Definition: New quality productivity is a new type of productivity that represents new technologies, creates new value, adapts to new industries, and reshapes new momentum. The development of new quality productivity is an important measure to consolidate the material and technological foundation for comprehensively building a modern socialist country.
Composition: strategic emerging industries + future industries
The importance of future industries is highlighted
With the rapid development of science and technology and the intensification of global competition, future industries have become an important strategic area for the economic development of various countries. Forward-looking layout is of great significance for improving national competitiveness.
On the whole, the digital economy is the basis for the development of artificial intelligence. Self-reliance and self-reliance in science and technology need to rely on a new national system, and rejuvenating the country through science and education corresponds to the dividend of population quality. In the future, our country will continue to improve the quality of the labor force, optimize the allocation of labor, and gradually reduce the number of people. The dividend is transformed into a demographic quality dividend.
Bai Bingyang: Insightful value, deterministic growth following the waves
/ Wells Fargo Insight Value Fund Manager /
Bai Bingyang
Value investing comes from the study of history. Looking back at history, we can see that the market is always changing, and the future will not simply repeat itself, but also puts forward higher requirements for investment.
Dividends and micro-caps that are currently concerned and discussed in the market
Breaking down the performance of the Japanese stock market in the 1990s, the high-dividend sectors that outperformed during the market downturn mainly included electrical appliances, electricity, petroleum and coal, and construction.
But it is not only the high-dividend sectors that can outperform. During the 1990s, information and communications, transportation equipment, precision instruments, medicine and retail trade also led the overall growth ranking.
Value Strategy: Let the East, West, North, and South Wind
No matter how value investing changes, investment should start from fundamentals, observe the valuation situation, and find suitable targets. No one strategy can solve all problems, and you still need to turn over rocks to find quality stocks.
Insight into world affairs and pursuit of value
The goal of value investing is to seek the mean return of the target to common sense and reasonable conditions. It is not a clear type of asset, but a way of thinking and judgment technique that requires patience and waiting.
Xu Zhixiang: New industries, new changes, new opportunities
/ Fuguo New Materials New Energy Fund Manager /
Xu Zhixiang
More than 9 years of experience in securities industry, more than 2 years of investment management experience
Investment philosophy: Surprisingly honest, three-dimensional stock selection
Surprisingly honest
Maintain a conservative and surprising position ratio to control portfolio fluctuations;
3D stock picking
Space, pattern, and valuation are at least two of them in stock selection. For example, if there is space and valuation, it is PEG;
circle of competence
Expand from the field of new energy (photovoltaics, electric vehicles, energy storage, auto parts, wind power, power grids, new technologies, etc.) to the field of scientific and technological innovation (artificial intelligence, intelligent driving, robots, commercial aerospace, 3D printing, high-temperature superconductivity, controllable Nuclear fusion, brain-computer interface, etc.)
The direction of most concern in 2024
Artificial intelligence: 1) Computing power: General artificial intelligence AGI opens up a new journey of computing power investment; 2) Embodied intelligence: The best carrier of AI in the physical world, robots and intelligent driving are the best application scenarios; 3) Intelligent terminals: AI Rapid iteration triggers innovation and upgrades in smart terminals such as wearable devices, mobile phones, computers, cars, and homes.
Commercial aerospace: Transportation capacity costs are declining rapidly. Satellite Internet is only the first step in space exploration. Focus on opportunities such as rocket manufacturing, satellite manufacturing, and ground supporting construction.
3D printing: 3D printing of military products and civilian products has entered an inflection point of heavy volume, and the trillion-dollar market has opened.
New energy and going overseas: As China’s manufacturing advantages go global, the technological progress of new energy and the opportunities for overseas manufacturing in manufacturing deserve attention.
Roundtable Forum: After Deep V, what to buy in A-shares?
1. Now, to what extent have A-shares recovered? Looking forward to the market in the second quarter and the whole year, what are the most important main lines and driving factors?
Xu Zhixiang: Equity market opportunities are worthy of attention in the coming period. On the one hand, after the previous market adjustment, the valuations of most individual stocks are currently at historically low levels, and high-quality targets can be found among relatively “cheap” assets; on the other hand, after every major crisis, Technological innovation will drive the direction of emerging industries. Currently, global technology is at the starting point of a new round of explosion. Given that our judgment of long-term things is often more accurate than short-term, and the same is true for industrial development, we must use a long-term perspective to choose emerging industries and use long-term certainty to deal with short-term uncertainty.
Bai Bingyang: Based on the present, we are confident about the long-term direction of the market. Analyzing from the stock-bond return difference model, the current economic fundamentals expectations reflected by stocks and bonds are in an abnormally low state (near -2X standard deviation), which shows that the A-share market is not bad in terms of cost performance in the medium term. However, whether the abnormally low state can definitely be repaired, or to what extent it can be repaired, it remains to be seen whether there are new changes that prompt the expected repair.
Yi Zhiquan: The current market has recovered, but it is still below the historical average. We are still optimistic about equity market opportunities in the medium and long term. The core reason is the restoration of the value of equity assets caused by the decline in risk-free interest rates. The ten-year yield has dropped from the high of 2.90% at the beginning of 2023 to the current 2.32%, a range of nearly 60BP.
Cao Liulong: From a short-term market perspective, the oversold rebound may have passed halfway. At present, when fundamental expectations have not yet reversed, the overall recovery space may be limited; in the medium and long term, the expected yield center will move downwards, and high dividends are “scarce assets” Revaluation is a medium- to long-term trend.
2. If you rank the various industries in 2024, what are the three industries or directions that you are most concerned about?
Xu Zhixiang: We mainly look forward to three directions: first, artificial intelligence, second, commercial aerospace, and third, new energy and manufacturing overseas.
Yi Zhiquan: 1. Dividend assets that benefit from the decline in risk-free interest rates; 2. Benefit from the medical health and related consumption of the aging population; 3. An excellent overseas manufacturing company.
Bai Bingyang: Compared with single-directional issues, we are mainly concerned about the bottom-up stock selection logic and the continuity of a certain logic. This is a dynamic process. Historically, taking the pharmaceutical field of manufacturing as an example, the targets we choose may be the same as others, or they may be different. In the end, the results are divergent. Taking the coal field and the new energy field as an example, whether they are optimistic about the current situation is actually divided.
Cao Liulong: The current real estate industry is in a downward cycle, AI lacks large-scale computing power infrastructure support, and the conditions for expected yields to move upward again are still not met. Against this background, we mainly focus on three types of “scarce assets”: (1) Supply-constrained assets Some resource products; (2) central state-owned enterprises with advantages in the general public utility industry; (3) “hard technology” with technical constraints.
3. How cost-effective is the current investment in high-dividend assets? Does it still have allocation value?
Yi Zhiquan: Currently, high-dividend assets still have a certain price/performance ratio. Pricing is based on current interest rates + fixed spreads, as well as the profit models of different industries and companies. Simply use the risk-free interest rate, that is, the increase in the 10-year or 30-year period to compare equally, and price the market’s beta based on the increase in the past three years. But in fact, each company’s business model is different, and companies with good business models should enjoy lower interest rates or higher pricing. At present, the market has priced beta, but it has not fully priced a good business model, company quality, and company quality.
4. The recent recovery of the stock market has also led to the restoration of the net value of partial debt hybrid funds and “fixed income +” products. How do you view the investment environment that partial debt hybrid funds and “fixed income +” products will face in the next year?
Yi Zhiquan: In the past, the “fixed income +” product experience was not good, partly because the equity market conditions in the past two years were quite extreme, and it was a unilaterally declining market. At present, the risks in the equity market have basically been cleared in the early decline. In the absence of systemic risks, the value of “Fixed Income+” gradually begins to recover. In terms of the allocation of “fixed income +”, it is mainly an asset allocation portfolio based on fixed income assets, supplemented by equity assets. Based on the judgment that the equity market will improve in the future, “fixed income +” may return to its original positioning in the future market environment.
After reading the contents of today’s equity investment spring strategy meeting of Rich Erjia, are you a little more sure about how to invest in the market outlook? If you are interested in reviewing the wonderful speeches of the guests attending today’s strategy meeting, you can review the full “dry information” of this strategy meeting on the Wells Fargo Fund video account~
