Category: Money Tips Date: 2007-05-07
Newly released fourth-quarter of China Merchants Fund Investment Strategy Report noted that, despite the stock market in the fourth quarter of this year there are still some uncertain factors, but with the macro-economic situation has further uncertainty, the market economy and pessimism about corporate earnings will continue to amend, repeated shocks in the stock market will rise out of a good market, in the fourth quarter of this year should be the ideal long-term capital and strategic Jiancang time.
The report holds that macro-economic up-cycle is now in the middle of the two boom adjustment period, the current adjustment phase for the new brewing a boom cycle, growth momentum. Although the macro-economic development has begun to slow down, but if the next stage of the macro-economic regulation and control properly, the economy will continue to maintain a certain pace of development. From a macro-micro-foundation --- profitability of the business point of view, macro-economic development in the more optimistic. Inventories of finished products of enterprises began to fall, losses of industrial enterprises began to fall, profits rise. If the current trend can be maintained, the economy in order to maintain a certain speed the development of more likely.
The stock market was over-reflection of the economy and corporate profits to adjust the pressure, resulting in the overall market is undervalued. From the perspective of international investors, the current A-share market, the level of the average price-earnings ratio is only higher than the international average of about 20%, while the SSE 180 Index, Shenzhen 100 Index and the Shanghai and Shenzhen 300 Index price-earnings ratio has been lower than the MSCI Asia-Pacific region Index and the MSCI Developed World Index by nearly 20%. If, taking into account the domestic market share-trading reform of the right price to pay, taking into account the market's growth, the domestic A-share market value of the investment has been very obvious.
Investment fund shares from the pool situation, the focus of the 276's price-earnings ratio of 16.6 times from the end of 2004 dropped to 12.8 times the current than in the third quarter increased slightly, but still at historically low levels. Reduction in the level in the valuation, while the rate of net return on assets rising, which makes equity investment rate of return on the rise.
At the same time, the stock market long-term adequate supply of incremental funding. In recent years, efforts to foster institutional investors such as pension funds, corporate pension, insurance funds and QFII, the entry size of the market is increasing. Coupled with the size of the growth of mutual funds, particularly in the banking system to increase the size of the fund estimated that the annual increase in long-term capital can reach 1,000 billion yuan. About 30,000 billion at the current total market value of all A-share companies accounted for 60% of the market value of the completion of share reform, the annual reduction of non-tradable shares capped at 5%, reducing the market value of the limit of 900 million yuan, if it considered a number of industries and control of the company's request, the actual reduction of the pressure will be less than this amount. Therefore, the non-tradable shares in relation to the pressure after the share reform in terms of the long term capital supply is sufficient.
The report notes that China Merchants Fund will invest in the fourth quarter to take a proactive investment strategy, asset allocation will be taken to a higher proportion of stock investment, and a timely manner-band operation; industry and individual stock selection will be based on a reasonable valuation pay more attention to listed companies, earnings growth in 2006, and trying to grasp the split share structure reform brought about investment opportunities. In the specific investment strategy, will focus on investing in China's long-term economic growth can continue to benefit from the industry, such as the transportation industry, consumer goods, pharmaceutical and retail industries. At the same time will also be concerned about the next round of economic growth, support and give priority to the development of key industries, such as third-generation mobile communication technology (3G), rail transit investment, grid investment, resource-saving economy industries.
