20180828-广发证券_香港_-A-Share_Investment_Strategy__Looking_for_a_market_bottom_2页_348kb

A-Share Investment Strategy Summary

Core Content

This document outlines the investment strategy for the A-share market, focusing on identifying the market bottom and making investment recommendations based on policy changes and sector performance. The analysis is conducted by the GF Securities (Hong Kong) research team, with specific contributions from Ou Yafei and Dai Kang.

Main Views and Key Information

Policy Turnaround and Market Bottom

• Historical Precedent: In 2005, 2008, and 2012, policy changes preceded a market bottom.
• Current Policy Shift: The policy is transitioning from tightening to easing, though there are differing investor views on the direction.
• Property Sector Policy: Despite credit easing, property sector policies have remained tight in previous years with similar policy changes.
• Time Lag: There is likely a time lag between policy turnaround and the actual market bottom. Economic indicators remain sluggish, and investor sentiment is still cautious.

Market and Sector Performance During the Lag Period

• Financial and Infrastructure Sectors: These sectors typically outperform during the lag period.
• Consumer Sector: May provide excess returns but experiences share price declines later.
• Stagflation Concerns: Stagflation may prolong the period, as seen in 2012, but this is unlikely this year due to slow credit supply growth and limited inflationary pressure.

Signals for Market Bottom

• Two Key Signals:
  1. The end of share price corrections among leading companies.
  2. The emergence of policy effects.
• Policy Catalysts: Examples include the 2008 fiscal package and 2012 infrastructure investment.
• Monitoring Indicators: The report suggests monitoring August social financing data, bond yield spreads, and corporate financing changes to assess the impact of policy easing.

Investment Recommendations

• Cyclical Infrastructure Stocks: Property, cement, and banks are recommended due to potential policy support.
• Growth Stocks: Computers are suggested for alpha generation, especially if China-US trade negotiations improve, with 5G networks likely to benefit first.
• Undervalued Sectors: Retail and F&B sectors are recommended due to reasonable or low valuations compared to overseas peers.
• Investment Themes: SOE reform and 5G networks are highlighted as key themes to watch.

Risks

• China-US Trade Frictions: Continued escalation may impact the market.
• Earnings Misses: Interim earnings missing expectations could affect investor confidence.
• RMB Depreciation: Sharp depreciation of the renminbi poses a risk.

Rating Definitions

Company Ratings

• Buy: Expected to outperform the benchmark by more than 15%.
• Accumulate: Expected to outperform the benchmark by more than 5% but not more than 15%.
• Hold: Expected relative performance between -5% and 5%.
• Underperform: Expected to underperform the benchmark by more than 5%.

Sector Ratings

• Positive: Expected to outperform the benchmark by more than 10%.
• Neutral: Expected relative performance between -10% and 10%.
• Cautious: Expected to underperform the benchmark by more than 10%.

Disclaimer and Legal Information

• The report is for informational purposes only and does not constitute an offer to buy or sell securities.
• It is intended solely for GF Securities (Hong Kong) clients.
• No liability is accepted for losses arising from the use of the report, unless excluded by law.
• The views and recommendations are based on current analysis and may change without notice.
• The report may include different opinions from the proprietary trading division or sales personnel.
• The report does not take into account individual investment objectives or financial situations.

Analyst Certification and Disclosure

• Analysts certify that all views reflect their personal opinions.
• No compensation is linked to specific recommendations.
• No proprietary trading positions are held in the mentioned securities.
• No investment banking relationships with the mentioned companies in the past 12 months.
• Analysts and their associates do not serve as officers of the companies mentioned and have no financial interests in the securities.

Copyright

• This document is copyrighted by GF Securities (Hong Kong) Brokerage Limited.
• No part of the materials may be copied or re-disseminated without prior written consent.