The valuation of the non-ferrous sector is very difficult to go up again

Last week, the Federal Reserve raised interest rates'boots fell to the ground'', attracted the attention of the global market. On March 16, local time, the Federal Open Market Committee (FOMC) decided to raise the federal funds rate range to 0.25%-0.5%, the first time the Fed has raised interest rates since December 2018.

So, standing at such a critical time, how to invest?

In addition, many investors will have a series of doubts recently: how to look at the financial market after the violent rebound of Hong Kong stocks? Will the share prices of giant companies with large foreign ownership continue to decline in the future? Where is the end of real estate after the special meeting on financial stability?

In this regard, 10 billion private equity Starock investment has been answered, sorted out as follows, in order to provide dinner for readers.

A:Profit persistence is better, but valuation is difficult to continue to rise, this is a process of profit and valuation confrontation, we think that non-ferrous as a whole is partial shock.

Price is the core factor of profit drive, so we have to judge the price first. Because the conflict between Russia and Ukraine has raised a lot of prices, the probability of exceeding it again in the future is relatively low, so one of the drivers in the future comes from whether prices can be maintained at a high level.

From our own research, compared with the investment of many industries, non-ferrous investment is relatively insufficient, and even lags behind. Its supply release is not fast, so we think that non-ferrous profits will remain high for some time, but we think the probability of high prices may not be too high, which is purely driven by profits.

But profit-driven is more difficult than cyclical stocks. Profit persistence is better, but valuation is difficult to continue to rise, which is a process of profit and valuation confrontation. Therefore, on the whole, we think that non-ferrous materials are partial oscillations.

A：It will be disruptive in the short term, but in the long run it depends on the profit growth of the company itself. The essence of any capital is to chase returns, and if the company has good fundamentals and can make sustainable returns, there is no big difference between foreign and domestic capital.

This is what everyone is more concerned about recently, and some institutions have done special research to see which companies have large foreign shareholdings, and it is believed that this is one of the sources of risk.

We believe that in the short term, it is a capital-side behavior, but this situation is a guess and can not be proved, so there will be some disturbance in the short-term capital side.

However, in the long run, the impact of the withdrawal of foreign capital on the share prices of these leading enterprises is relatively low. The essence of any capital is to pursue profits.

If the fundamentals of this company are good and can sustain earnings, there is no big difference between foreign capital and domestic capital, and the core is whether the long-term fundamentals of these leading enterprises are good or not.

Can we achieve sustained profit growth? Therefore, foreign ownership will be disturbed in the short term, but in the long run, it still depends on the profit growth of the company itself, which is the core. So this is not an one-to-one correspondence, but more determined by the fundamentals of the enterprise itself.

A: The core is to control the supply side of the industry can not be disorderly expansion, can not be extremely highly leveraged, so that the industry to achieve healthy natural development. The valuations of these real estate companies that survive in the future will still have some room to rise.

Starting from the three red lines of real estate in the second half of 2020, the average decline of the whole real estate industry is equivalent to the implementation of the idea of financial risk prevention, and its end point is to eliminate the relatively large leverage risk of the industry.So the core thing is to control that the industry cannot expand disorderly on the supply side.

Therefore, in this industry, it depends more on whether the company is developing steadily, and it is not necessary to remove this kind of enterprise from this market with extreme high leverage. To enable the industry to achieve a healthy natural development, rather than the achievement of these companies that have continued to increase leverage as a result of the continuous rise over the past decade.

Therefore, in the end, the assets may become a state of public utilities, which we think is possible. Because leverage is already under control, limiting house prices and land prices, it will be somewhat similar to similar public utilities, but because it has not been realized abroad, it is not certain whether there is such a situation at home, this is just our idea.

If it is a quasi-utility state, there will be some room for a rise in the valuation of this stable real estate company that can survive in the future.