Large-cap stocks are "two tops eight", and it is difficult to see a carnival scene

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Although most investors have not tasted much in the recent market, the large-cap blue-chip stocks that dominate the market index have performed very well. Although they only account for the market in terms of quantity "Second", but the role of "Height Martha" in boosting the index is very obvious, and it has become the leader in the active market.

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Investors earn the index but do not make any money, which is manifested as a "twenty-eight" phenomenon in the market. The large-cap blue-chip stocks, which occupy a large market index weight, are very eye-catching. Although they only account for "two" in the market in terms of quantity, the role of "high Martha" in boosting the index is very obvious. So why have been relatively quiet large-cap blue-chip stocks become active and become the market leaders?

According to analysis, there are several reasons for the recent activity of large-cap blue-chip stocks.

The upward momentum comes from two aspects

CICC, which has been advocating to pay attention to the large-cap blue-chip stocks, is quite convincing in its analysis of the large-cap blue-chip stocks. CICC believes that the driving force of the stock market rise comes from two aspects.

First, the profit growth of traditional large-cap blue-chip stocks is much higher than market expectations, which is the biggest driving force for the overall upward trend of the market. After the disclosure of the third quarterly reports of A-share listed companies, the net profit of listed companies in the first three quarters increased by more than 20% year-on-year; only the third quarter's net profit increased by more than 40% year-on-year and 9% month-on-month.

In terms of specific industries, the growth of steel, power, and transportation infrastructure is particularly significant; while international crude oil prices continued the downward trend in September in October, the price of WTI crude oil in the United States fell by 8.2% month-on-month, and refiners and airlines became the largest The direct beneficiary of the company, the profit improvement exceeded the market consensus.

For this reason, CICC has raised the profit forecast of steel and other industries and some individual stocks for the next two years, and increased the coverage of the electronics industry. It is expected that the net profit of 179 companies under CICC's research will be in 2006 and 2007. The year-on-year growth will reach 31.7% (19.1% forecast in early October) and 22.5% (19.8% forecast in early October); 34.9% and 23.8% after excluding the commodity industry; 27.7% and 21.8% after excluding the banking sector.

Second, the stock market valuation level began to adjust structurally. Compared with the fundamentals of the large-cap blue-chip stocks, the valuation level has not risen significantly, and the overall level is still at a basically reasonable level. Judging from the changes in the valuation difference level of the A/H market in October, the A/H premium rate at the end of October was -6% and the level of -4% at the beginning of October was basically the same.

The structural adjustment of the stock market valuation level is very obvious. The large-cap blue-chip sectors such as aviation, airports, highways, electric power, and telecommunication services, which were significantly undervalued in the early stage, began to make up for the increase, and the A/H discount rate narrowed; although the steel sector saw a larger increase, due to the larger increase in overseas listed steel companies, Instead, the discount rate continued to expand. CICC believes that these sectors still have room for growth driven by future performance. After the retail, food and beverage, real estate and other consumer sectors with large growth in the early stage have undergone general adjustments, the A/H premium rate has shrunk significantly, and even turned into A/H discounts. If the performance can maintain stable growth, the investment value of leading companies still exists. . However, the adjustment may continue for stocks that are significantly overvalued or whose earnings forecasts will be lowered.

QFII's investment profits lead

In the recent large-cap stock market, not all investors have earned the index without making any money. QFII's profits are very good, and they have made a lot of money. We have to express admiration for QFII's stock-picking vision.

The Lipper Funds report shows that QFII A-share funds led the performance again in October, with an average total return of 4.90%, higher than 3.67% of domestic stock funds and 2.34% of aggressive funds.

“Comparing the characteristics of the stock market in the past two months, it can be found that the holdings of QFII A-share funds are more focused on large-cap blue chips and value stocks than domestic actively managed funds.” Lipper Fund Research Institute China Research Manager Zhou Liang said.

From the perspective of the top ten shareholders of tradable shares in the third quarterly report of listed companies, in addition to the fund holding the top position of institutional investors with a holding of more than 200 billion yuan, QFII has overwhelmed securities companies with a market value of more than 24 billion yuan, and has become a domestic market leader. The A-share market is the second largest investment institution after funds. This has a clear upward trend with the market value of 20.1 billion held by 194 companies in the two cities during this year's mid-year report. It can be seen that QFII is very optimistic about the A-share market. At present, the approved investment quota of QFII in the domestic A-share market has reached more than 8.2 billion US dollars.

The statistics of the third quarterly report also show that there are QFIIs among the top ten tradable shareholders of a total of 214 listed companies in the two cities, and almost all QFIIs are interested in large-cap blue-chip stocks. For example, many QFIIs have a soft spot for China Merchants Bank for the recent hot banking stocks in the market. The five QFIIs hold a total of 320 million shares, an increase of 379.19%, and a market value of more than 3 billion. For steel stocks, QFIIs have the heaviest positions in Baosteel, with 5 QFIIs holding a total market value of more than 2 billion yuan. In addition, QFII also showed strong optimistic intentions for Valin Pipeline, Tangshan Iron and Steel, Handan Iron and Steel, Taiyuan Iron and Steel, etc.

Analysts said that the rise of large-cap blue-chip stocks was actually the result of a large number of incremental funds intervening in value investing.

Compared with QFII, the skill of domestic investment funds still needs to be improved. Cheng Yiquan, research director of Bank of Communications Schroders Fund, pointed out that almost all domestic funds are seriously below the benchmark allocation when facing the banking industry with sustained and stable growth and low international valuations; utilities, ferrous metals, non-ferrous metals There has been a serious deviation between the net profit created and the market value occupied. The market is correcting this error at the speed of light, and the industries that make up the various value stocks are approaching their proper valuation levels at the same rate.

Cheng Yiquan said that taking the steel industry, which has recently returned to its valuation, as an example, judging from the performance of the 2006 interim report, the net profit contributed by the industry accounted for 16.7% of the two markets, but the market value only accounted for 6.5% of the market value of the two cities in September. left and right, so at the time, it was only a matter of time before a return. Of course, the current situation is rapidly evolving in another direction. "Maybe we need to think a bit more about whether core stocks in other value groups like utilities haven't returned to the value they deserve."

The general rally is hard to reproduce

Why do QFIIs like large-cap blue-chip stocks? "In addition to reasonable valuations of large-cap blue-chip stocks, these stocks are highly liquid, and large funds pay great attention to market liquidity. And these companies are often in the leading position in the industry, and their performance growth in the next few years can be expected." Prudential Securities Investment Trust Chen Yuezi, deputy general manager of the company's investment management department, explained.

The senior person with more than 16 years of investment research experience in Taiwan told reporters, "Looking at the A-share market now, there is a feeling of deja vu. QFII's current investment behavior in mainland China has once appeared in the Taiwan market. "The entry of QFII will have a positive effect on the market, and the advanced investment ideas they bring will be gradually accepted by the market, and the situation where the stock market rises and falls together will definitely be broken.

The industry believes that the stock market is full of gold in the first half of the year, that is, the so-called "fools make money" opportunity, which the market has exchanged for the tragic decline in the past five years. This "golden era" is destined to be only historical, Phased, it cannot exist for a long time. From the perspective of valuation, the average price-earnings ratio of developing countries is 12 times, the current average price-earnings ratio of my country's A-share market is 22 times, and the average price-earnings ratio of blue-chip stocks is 15 times. The value level is still in a reasonable range, but it is difficult to see the general rally in the first half of the year.

Although QFII's investment in A-share market occupies the second position, its investment behavior may have a stronger demonstration effect than domestic funds and can be widely followed by the market. It is precisely because international investment institutions are optimistic about China's bank stocks that the prices of large-cap blue-chip stocks such as Bank of China, China Merchants Bank, and Industrial and Commercial Bank of China listed in Shanghai and Hong Kong are significantly higher than that of A-shares. Of course, QFII will not ignore the two places. valuation difference. This highlights that there are still quite a number of stocks in the A-share market with attractive valuations, and some stocks are still relatively cheap, so there is room for revaluation.

Stock index futures boosted

In addition, the approach of financial innovation such as stock index futures is also a catalyst for large-cap stocks. A research report by Haitong Securities pointed out that the stock market is the underlying market for stock index futures. After the listing of stock index futures, the impact on the stock market is mainly reflected in two aspects: one is to promote the index, and the other is to improve the liquidity and trading volume of constituent stocks. It can be seen from the running situation of the spot market index before and after the launch of the representative index futures in major overseas securities markets that the underlying stock price indexes before, at the beginning and after the official opening of the index futures have different short-term trends, but most of the medium and long-term trends are upward. climbed.

"Stock index futures will not change the long-term trend of the stock market, but in the short term, before the launch of stock index futures, the market is mainly long, and there is a high probability of shorting after the launch." said Liu Qingshan, investment director of TEDA Dutch Silver Fund.

It is precisely based on the good expectations of the future stock index futures market after the listing, and institutional investors will need to hold heavyweight stocks as a bargaining chip regardless of whether they "go long" or "short" in the future. Therefore, the recent stock market China Merchants Bank, China Merchants Bank, China The rise of a large number of large-cap blue-chip stocks such as China Unicom, Baosteel, and Yangtze Power seems to be a preview of the "stock index futures market".

Continuing the structural adjustment of valuations

For the "28" phenomenon of the recent market, CICC believes that due to the pressure of fund settlement at the end of the year, the acceleration of new share issuance and the lifting of the ban on restricted and circulating shares, capital push The stock market has risen sharply, and the possibility of creating a valuation bubble does not exist.

CICC believes that the recent trend of structural adjustment of valuations in the stock market will continue, stocks with undervalued and clear growth will continue to outperform the broader market, and stocks with overvalued or downgraded earnings expectations may continue to adjust.