At the Start of a Big Bull Market

Cycle

20191230-20200103

News

1. The central bank cut the reserve requirement ratio by 0.5 percentage points, releasing over RMB 800 billion into the market—a market positive.
2. The Ministry of Agriculture and Rural Affairs issued safety certificates for GM corn and GM soybeans—positive for seed companies.
3. The new Securities Law was released—positive for brokerages.

Stocks

1. TWS wireless earbud plays are retracing. Expect deep pullbacks in high-fliers like Edifier and GoerTek.

2. With GM crop certificates issued, leaders like DBN and Longping High-Tech hit limit-up and lifted agriculture names. This ag rally should end before the 2020 No.1 Central Document. Large-scale GM crop adoption is far off; it’s still concept-driven.

3. Nonferrous metals + new-energy-vehicle policies: lithium batteries (40% of NEV cost) may become the new hotspot. Watch CATL and Ganfeng Lithium.

   Keep holding Ganfeng Lithium (A+H), target a RMB 90B market cap. If a board-level new theme appears, rotate, then rotate back after the theme ends.

Funds

1. At the start of a big bull, active funds should outperform index funds. Shift some capital from index to active to gain excess returns.

2. Electronics had outsized gains in 2019—risk is high. In a broad bull, lagging sectors may catch up.

3. Sells:

   E Fund MSCI China A (006704), held 6 months, +14%.

   Orient Red CSI Competitiveness C (007658), held 3 months, +10%.

   Huabao Hong Kong Large Cap A (501301), held 2.5 months, +7% floating.

   Huatai-PB Quantitative Select (004394), held 2.5 months, +8.3%.

4. Holds:

   a. BOCOM Data Economy New Dynamics (519778), held 1 month, +10% floating.

   519778 allocates to energy conservation/environmental protection, high-end equipment, next-gen IT, biotech, new materials, new energy, NEVs, including reform beneficiaries in defense, and cyclicals like aviation and nonferrous metals. Thanks to heavy positions in Goodix and Luxshare Precision, 2019 returns doubled. Whether 2020 continues depends on Q4 portfolio changes.

   b. Guotai CSI Shenwan Securities Index (501016), held 15 days, +5% floating.

   Bull or bear, brokerages benefit most, with more elasticity than other financials.

5. Switches:

   E Fund SSE 50 Index A (110003), held 1 month, +5.% → to E Fund Emerging Growth (000404).

   000404 invests in energy conservation/environmental protection, IT, media, biotech, high-end equipment, new energy, new materials, NEVs, and transformative business models.

6. Planned buys:

   a. GF Dual Engine Upgrade Mixed (005911)

   Focuses on industrial and consumer upgrade quality names; returns doubled in 2019. If the bull continues, it should keep rising.

   519778 and 000404 both tilt to machinery and consumer electronics with little overlap; 005911 covers biotech to broaden quality names.

   b. Southern CSI Nonferrous Metals A (004432)

   A semiannual-rebalanced CSI index fund; last rebalance was Dec 2019—entering now is appropriate. Nonferrous metals have long been at lows and may rise steadily.

   c. Guotai Smart Auto (001790)

   NEVs are the main smart-car type. With policy support and maturing tech, smart cars could surge. With few listed EV makers, this fund holds upstream equipment/electronics/power parts—general-purpose and supported by domestic substitution.

Takeaways

1. Stay alert to major news. Issuing GM certificates is a first in China and signals a new era—plus No.1 Document expectations and trade-war food disputes—so DBN, Longping High-Tech, and Denghai Seed hit big limits. Pure concept trades don’t last; you can participate but stay cautious.
2. Practice deliberately: after reading news, pause 30 seconds to think about value points, linked stocks, and whether it’s bullish or bearish.
3. Value investing doesn’t require intraday minute-by-minute moves. Most news has nothing to do with your holdings; no need to monitor constantly.

Published at: Jan 4, 2020 · Modified at: Dec 2, 2025