The core assets of A-shares are still attractive, and the Hong Kong stock market is now A “pit of gold”, said Zhou Wenqun, fund manager and head of Equity investment at Fidelity International China.
In February 2021, Red Weekly invited me to write A special article in the column of “Elites at Home and abroad Talking about the Year of the Ox” to share my overall macro outlook for 2021 and my views on the A-share market.I think Red Weekly has always been committed to presenting valuable market and investment topics for investors. I would like to thank Red Weekly again for inviting me to share the overall outlook of the A-share market in 2022, hoping to provide some reference for readers.On the whole, macro data in the fourth quarter of 2021 were better than market expectations.Despite a significant decline in real estate investment and continued weakness in consumption during this period, the two-year average GDP growth rate remained above 5%.We believe that GDP growth in 2022 is expected to remain above 5%.Starting from the end of 2021, we have seen policy setting for steady growth.The central bank has recently cut its medium-term lending facility (MLF) and lending market quoted rates (LPR).We believe the government will use further policy easing to boost infrastructure investment and stabilize property investment.The new stimulus package will not be limited to monetary policy to support the bottoming out of the real economy.In the medium term, the main challenge for the government is to control the macro leverage ratio while reviving growth and maintaining the bottom line of “no systemic financial risk”.In addition, I believe there will be no change in economic structural reform in the long run.In overseas markets, after two years of massive liquidity injections by central banks, many countries will face pressure to tighten monetary policy.Central banks’ vastly expanded balance sheets and rising inflationary pressures limit the likelihood of further easing by U.S. and European governments, so overall policy abroad is in a bind.Looking ahead to 2022, although economic development still has some uncertainties, but the policy has clearly turned, and the recent signs of economic stabilization, so I think in 2022 China’s A-share market will be stable progress, there will be A lot of investment opportunities.Looking at the global market, a-share core assets remain attractive in terms of both earnings growth and valuation, and the net inflow of foreign capital in 2021 has reached another record high. I believe the long-term trend of foreign capital increasing its a-share holdings will not change.For now, I think Hong Kong shares have A bit more of A chance than A-shares.As a market where domestic and international institutions coexist, Hong Kong stock market has more diversified capital attributes and more truly reflects China’s economic situation.This year, China’s macro economy bottomed out or will bring more attractive investment for Hong Kong stocks.From the valuation point of view, the Hong Kong stock market experienced last year’s deep adjustment is basically no bubble.I am bullish on large Internet platform companies in the Hong Kong stock market.Despite short-term policies and economic stalling, these companies, as platform companies, have a lot of customer data.I believe they will continue to play a leading role in the next era of Internet applications.In general, I am very optimistic about the big consumer sector in 2022.In 2021, consumer stocks were affected by multiple negative factors, resulting in both earnings and valuation.First of all, there is a great chance for the consumption leader to realize mean regression this year, because the income end, the cost end and the market demand end all have reversal opportunities.Secondly, the strong are always strong. I am also optimistic about the industry leaders in some segmented fields with scattered industry patterns, such as waterproof, coating and other building materials industries, chain hotels, chain pharmacies, chain restaurants and other plates.Leading enterprises make their growth sustainable by integrating the industry and increasing their own share.Finally, I like companies with structural growth over the long term.Specialized and special new enterprises include two categories. The first category is Chinese enterprises with leading advantages on the global stage, mainly including Chinese companies in the new energy vehicle parts manufacturing end;It is followed by some companies with breakthroughs in technology and space for import substitution in China, such as semiconductor, industrial coatings, mechanical parts and other sectors.A-share listed companies’ attention to ESG is expected to improve ESG investment has become one of the most important trends in the financial industry.Over the past year, many efforts have been made globally, from regulators and customers to investment institutions and listed companies, to work together for long-term sustainable economic and social development.Since 2021, China’s “dual carbon” target has been proposed, domestic listed companies have gradually realized the importance of ESG.At the same time, overseas investors, mainly in Europe, have greatly increased their requirements for ESG, and this message has been widely spread among a-share listed companies.Some companies have also suffered long-term shareholder exits due to low ESG scores.Under such stimulus, a-share listed companies are expected to gradually increase their attention to ESG.