Looking back and looking forward｜Lin Shaoyang expects the stock market to be difficult to replicate the upward trend in 2021

Special interview

Author: Zhai Ziqian

2020-12-28 07:00

Last update date: 2020-12-28 07:00

The investment market in 2020 is very ups and downs. Events such as the outbreak of the epidemic, the U.S. election, and China’s “strong supervision” have caused the capital market to go up and down. Although scared, afterwards, it is a year full of investment opportunities. The stock market has recorded impressive gains, and individual sectors in Hong Kong have repeatedly set new highs.

Entering 2021, can the capital market continue to be strong?

Lin Shaoyang's Qijin, the managing director of Yili Investment, has performed satisfactorily this year. He accepted an exclusive interview with "Hong Kong 01". He believes that the revival of Chinese independent brands next year will still bring great investment opportunities, but three major risk factors must be paid attention to, especially next year Be extra cautious after the first season.

Over the past year, many incidents have occurred, ranging from the deterioration of Sino-US relations, the outbreak of the new crown epidemic to the global stock market crash and the US presidential election.

For Lin Shaoyang, managing director of Yili Investment, the most surprising incident this year was the new crown pneumonia epidemic.

The U.S. Federal Reserve issued a large amount of currency during the year, causing the balance sheet to rapidly rise from the level of 4 trillion US dollars at the beginning of the year to 7 trillion US dollars, causing the US dollar to fall in an orderly manner.

(Profile picture)

Epidemic reduces the credibility of the US government

The epidemic will always pass, but the impact will not be short-lived.

Lin Shaoyang said that the epidemic not only has an impact on the economy, but has also completely changed the lifestyles of the general public, and has a certain impact on international geopolitics.

Among them, the epidemic has damaged the credibility of the US government, coupled with the US printing of a large amount of currency, the Fed’s balance sheet has rapidly risen from the level of US$4 trillion at the beginning of the year to US$7 trillion, causing the US dollar to fall in an orderly manner.

The US dollar exchange rate has dropped from a high of 102.98 this year to a recent 89.89, a 12.7% drop.

The continued decline in the U.S. dollar exchange rate certainly had a significant impact on other assets. During the same period, the price of gold rose more than 40% from the March low of $1,450.9 to this year's high of $2,089.2.

Bitcoin's rise is even more exaggerated. In March this year, it was as low as US$5,000, but in December it has repeatedly broken new highs and exceeded US$25,000. The cumulative increase from the low is as high as 3.8 times.

The price of Bitcoin repeatedly broke new highs and appeared "parabolic rise". Lin Shaoyang believes that it was because the market's confidence in the central bank's currency was shaken.

What's more, investors who have only entered the market in the past five to ten years have little interest in traditional safe-haven assets such as gold. They have turned to emerging assets such as Bitcoin. The epidemic has changed the overall investment ecology.

The revival of Chinese independent brands has created many investment opportunities, among which Weilai has become one of the world's strongest companies this year.

(Image source: Weilai official website)

China's own brands revive and import substitution is irreversible

An epic epidemic has caused major changes in the global capital market, and the investment market with the most growth momentum in 2020 cannot fail to mention China.

Lin Shaoyang shares the opportunity to focus on investing in the Chinese market in the future, which is the "revival of independent brands".

Today's young consumers in China are more willing to accept domestic brands for consumption, and they like "fast sales." Products do not need a long lifespan because they are more trendy.

For example, he pointed out that young people like new energy vehicles, but they don’t necessarily have to buy Tesla. Maybe Weilai, Ideal, and Xiaopeng like them, and several companies that make traditional cars, such as Geely (0175), BYD (1211), Great Wall ( 2333) Wait, some new electric vehicles will be produced in the future.

As long as these products are affordable for consumers and the design keeps up with the trend, consumers do not mind that the quality of the products is inferior to the imported brands. "Because they have spent a few years to consume durable goods in the form of fast-moving products. It’s possible that a car won’t stand for ten years.” Although the ideal and Xiaopeng’s cars are described as “ghost glue, good fake”, Lin Shaoyang believes that these people do not understand what products consumers in China’s local market need. .

He emphasized that the emergence of China's independent brands will usher in huge investment opportunities.

In addition to new energy vehicles, Lin Shaoyang mentioned that there are opportunities for independent brands to emerge in markets such as sporting goods, condiments, and medical equipment, and import substitution is irreversible.

Among them, domestic medical device manufacturers have a very small market share, only 1% to 2% or even lower. When the quality of their products is close to international brands, their market share will increase rapidly.

In addition, the market value of some international medical brands can be as high as one trillion Hong Kong dollars, while the market value of rising stars in the Chinese market is only tens of billions. Therefore, he believes that there are still many investment opportunities in this area.

After Biden comes on the field, it is possible to rejoin the TPP to contain China.

(Reuters)

The three major risk factors next year, if the United States joins TPP, it will be more spicy for China

There is still less than a week to enter 2021. Although the Hang Seng Index still recorded negative returns throughout the year, many stocks have achieved impressive gains. Among them, the king Tencent (700) once broke the top and reached 625 yuan, and the market value was close to 6. Trillion yuan.

However, Lin Shaoyang is more cautious about the outlook for next year. Among them, he believes that recovery stocks have seen a lot of rebounds and put forward three risk factors.

First of all, many countries have begun to arrange for people to be vaccinated, but whether these vaccines will have side effects that make some people unwilling to get the vaccine, or whether there are claims for compensation when large-scale problems arise.

Moreover, the effectiveness of the vaccine is questionable. When the virus mutates, the vaccine is more likely to fail. In disguised form, humans have the opportunity to coexist with the virus for a long time, and the pace of economic restart is hindered.

In addition, regarding Sino-US relations, Lin Shaoyang pointed out that many people believe that Sino-US relations will improve after Biden is on the court, but he does not agree.

He pointed out that Trump used to fight alone with China, which is actually more favorable for China to deal with.

Because Biden’s skills in the international political arena are far more mature than Trump’s, and many allies support his foreign policy, if the United States re-uses the Trans-Pacific Partnership Agreement (TPP) to contain China in the future, it will be more than unilateral trade negotiations. "hot".

"Will the United States re-introduce a multilateral trade agreement that is good for China to isolate China? This risk is not taken into account by many investors."

Third, the relative stock prices of technology stocks that have pushed the global stock market upward this year are already relatively high. It will be more difficult to repeat this year's performance next year. If technology stocks are the locomotive driving the market up, the momentum next year may not be as strong as this year.

Lin Shaoyang said that the current interest rate has been as low as zero, and the chance of negative interest rates is small, so the incentives for low interest rates in the future have been reduced, and the valuation has also been at a high level.

He believes that the growth momentum of technology stocks and growth stocks next year will mainly depend on the company's internal earnings per share growth.

If the market still records positive returns next year, it is estimated that it will be less than this year.

Lin Shaoyang did not dare to look down on the performance of the capital market in the first quarter of next year.

(Photo by Huang Baoying)

Be more cautious after the first quarter of next year

However, Lin Shaoyang did not dare to underestimate the performance of the capital market in the first quarter of next year. Among them, because the US stock market is still in a big bull market, it seems to be the most rapid rise in the bull market. %, individual industries such as cloud computing, SAAS, and new energy vehicles have recorded increases of up to 40% to 50%. In contrast, the Hong Kong stock market’s cumulative increase of 10% in November can be described as "wet and wet."

He mentioned that the Hang Seng Index rebounded at 26,100 points this month. As the performance of US stocks is still relatively strong, it may drive the Hong Kong stocks to record positive returns throughout the month.

However, he emphasized that if the US stock market continues to rise in the first quarter of next year, there is a chance to drive the Hong Kong stock market to rise, but it will be difficult to rise after the first quarter, especially the increase in the first quarter is too significant, and it is necessary to be more cautious about the market outlook.

Looking back and looking forward | Lin Shaoyang, leader of pharmaceutical stocks, chooses only four major CRO sectors in the dark horse next year

Lin Shaoyang Investment Strategy