Chinese seek Thai housing for outbreak risk offset
May 08, 2023
May 25, 2023
Since the beginning of the year, affected by the fluctuations between "expected" and "realistic" domestic economic recovery, the A-share market has fluctuated upwards, showing more obvious characteristics of structural differentiation. The theme rotation is fast, artificial intelligence drives the TMT sector upward, superimposed on the high popularity of China and special estimates, and the institutional heavy holding index continues to decline.
Looking back on the Spring Festival and May Day holidays this year, we have observed several typical phenomena: First, mass consumption has shown an obvious festive effect, consumption shifts towards holidays, and the off-season is lighter than in the past. Secondly, the recovery slope of the number of consumers is significantly ahead of the total consumption, implying a decline in per capita consumption. Behind the phenomenon of only shopping but not buying is the consumption downgrade of the middle class due to the slow recovery of expected income levels. Third, high-end consumption is strong, and upgrades continue. In the first quarter, the recovery speed of luxury goods in Greater China was relatively fast, and the prospects are optimistic.
The first stage of the current consumption recovery - the restoration of the consumption scene is completed, and the second stage of the recovery of consumption levels brought about by the improvement of income expectations may take a long time.
Corresponding to the stock market, expectations are always ahead of reality, and the phenomenon of rushing forward is the difficulty facing investment this year. Since the fourth quarter of last year, the market has quickly repaired the valuation to the level of a strong recovery assumption based on the recovery path of Europe and the United States, resulting in expected re-correction and sharp fluctuations in stock prices due to off-season fluctuations and weaker high-frequency data before and after the Spring Festival. Therefore, even if many companies submit high-quality performance answers in annual and quarterly reports, they must still be reflected in the stock price.
From history, the deviation between the stock price and the fundamentals always shows the characteristics of mean regression within a certain period. At this stage, we will focus on screening high-quality targets and use a more rigorous perspective to examine the effectiveness of holdings.
Overall, we remain optimistic about the future, and the periodical downturn will allow us to share the compound interest of China's consumption growth in the next five to ten years at a reasonable or even underestimated price.
From a long-term perspective, investment in consumption revolves around the relationship between price, volume, and market share:
The subdivision of emerging categories
The rise of national trends
In the context of firm confidence in China's long-term economic growth, the increase in per capita GDP will become a continuous driving force for consumption upgrades. We remain optimistic about Veblen products that can continue to increase prices in sub-categories (Note: Refers to demand and Proportional price commodities); its unique commodity attributes will help investors share the dividends of consumption upgrades.
At the same time, under the background of the new economy, the post-90s generation has gradually become the main force of consumption. The new generation's different growth backgrounds, living habits, and thinking patterns will bring about subtle changes in consumer goods. We will pay close attention to the emerging consumer goods and consumption Scenario investment opportunities. Under the personalized and diversified consumption trend, the investment stage of the category from 0 to 1 and whether the enterprise has long-term large group potential are also the focus of attention.
With the rise of the national tide based on the spread of Chinese culture and values, Chinese manufacturing and technological confidence will become the main investment line for a long time. Domestic consumer brands are one of the carriers of this connotation, which will bring long-term and sustained favorable changes in the pattern. Among them, consumer companies that can follow the trend and make a significant breakthrough in their market position are also the focus of investment.
May 08, 2023
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