The Zhitong Finance App learned that Fangzheng Securities released a research report saying that the economic growth center declined for the second time, highlighting the return on investment (ROE) advantages of overseas and scarce high-dividend assets. The fundamentals of overseas companies and high-dividend scarce assets have not changed much in the last two years. The popularity of current market transactions has increased significantly, mainly driven by the beta of the times: real estate has entered a downward cycle, and overseas business expansion can bring new growth points for enterprises, while high-dividend scarce assets have both stable profitability and low valuation levels in the context of overcapacity, and will usher in medium- to long-term revaluation.
▍ The main views of Fangzheng Securities are as follows:
The short/medium/long term logic for high-dividend scarce assets hasn't changed, and trading is not crowded.
(1) Until the effects of the “steady growth” policy are implemented, the short-term defensive properties of high-dividend scarce assets will continue to be prominent; (2) moving residents' deposits to insurance will increase the allocation demand for high-dividend assets in the medium term; (3) midstream manufacturing overcapacity, and the monopoly advantage of high-dividend scarce assets can increase pricing power over the long term. At the same time, the valuation level and trading congestion of high-dividend scarce assets selected based on the Lerner Index are also relatively low.
The decline in real estate and the second decline in expected returns will drive the revaluation of scarce assets with high dividends.
The economic growth rate and expected yield declined for the first time in 2010. The main line of market transactions moved from cyclical stocks with high return rates (ROE, same below) to new growth points of TMT and consumer core assets with medium returns; the current downturn in real estate will bring expected returns to a second level, consumer core assets will face a decline in ROE and valuation center, and the main line of market transactions will shift to new growth points with high dividend scarce assets with medium to low returns.
Beta of the times: The economic growth center declined for the second time, highlighting the return on investment (ROE) advantages of overseas and scarce assets with high dividends.
The fundamentals of overseas companies and high-dividend scarce assets have not changed much in the last two years. The popularity of current market transactions has increased significantly, mainly driven by the beta of the times: real estate has entered a downward cycle, and overseas business expansion can bring new growth points for enterprises, while high-dividend scarce assets have both stable profitability and low valuation levels in the context of overcapacity, and will usher in medium- to long-term revaluation.
From core assets to scarce assets: new growth points+supply-constrained upstream resources (coal/non-ferrous) +monopoly utilities (water/electricity/transport/communications).
The downturn in real estate will bring expected returns to the next level. Assets with medium to low returns (scarce assets), which were previously “ignored” by investors, will face revaluation — (1) Going overseas at a new point of growth: Unlike the incremental market from 2000 to 2010, the current manufacturing industry going overseas is more of a stock game. Not all companies with a high share of overseas business can be re-evaluated, and the global competitive advantage of the manufacturing industry needs to be further selected;
(2) Supply-constrained upstream resources: Oversupply in the global/domestic manufacturing industry will increase the pricing power of supply-constrained resource products, leading to a continuous steady recovery in the profitability of resource stocks;
(3) Pan-utilities with monopoly advantages: The transformation and upgrading of “hard technology” for high-quality development requires extensive financial subsidy support under the new national system, which will accelerate the shift of land finance to equity finance, that is, the “revaluation” of production factors (water/electricity/coal/transportation/communications) monopoly by state-owned enterprises.
High quality finance is slow, and industry allocation adheres to the “82 rule”:
It is recommended that 80% of the positions be allocated in 3 types of scarce assets over a long period of time: some resource products (coal/non-ferrous) with supply constraints, medium and special estimates (water/electricity/transportation/communications) monopoly by state-owned enterprises, and hard technology with technical barriers (AI computing power infrastructure). The remaining 20% positions can be used to compete against varieties with high phased elasticity, especially real estate chain cycle stocks (banks/real estate) where market expectations are excessively lowered and valuations are at the bottom of history.
Risk warning:
Policy implementation fell short of expectations, the downward pressure on the macroeconomy exceeded expectations, and the profit environment fluctuated beyond expectations.