Price is Key

iDiMi-Although our form is corporate, our attitude is partnership

Thoughts of the Week

In “It’s Time to Consider Small and Beautiful” on January 11, it was mentioned that the PE ratio of clustered leading stocks had risen to 51.35 times, and it was possible to switch to relatively undervalued “small and beautiful” stocks. As of March 5, the PE of brand leading stocks has fallen by 20%, while a batch of small and medium-sized stocks have seen gratifying gains. Data shows that among the top 100 stocks by gain, 94 have a total market capitalization of less than 10 billion. Buffett talks about stocks by focusing on three aspects: whether the industry has growth potential, whether the company management is excellent, and whether the stock price is cheap. Among these, whether the stock price is cheap is what short-term investment should focus on the most. “Cheap” has two meanings: one is horizontal relative price; if your PE is low and others’ PE is high, you are cheap. The trend of funds always flows from high-PE industries to low-PE industries. The industries or themes with good gains in A-shares every year are those that had poor gains and no one paid attention to before. The second is vertical relative price, that is, compared with itself, the price of a high-quality company in a high-growth industry must be constantly rising.

Event of the Week

The main goals of the 14th Five-Year Plan were released. The core keywords are development, innovation, dual circulation, rural revitalization, regional coordination, reform, common prosperity, and national security.

Market of the Week

Period: 2021-03-01 ——— 2021-03-07

4-week review: All global indices rose this week. Gains: US > Hong Kong > China. Stock Connect resumed net inflows, and Hong Kong Stock Connect continued large net inflows. Wind’s top three gaining industry sectors were catering and tourism, banking, and office supplies; the top three losers were airports, shipping, and leisure goods. Wind’s top three gaining concept sectors were medical, CRO, and mining services, the top three losers were ETC, HNA series, and semiconductors, and the effect of the local Chinese New Year was obvious.

3-week review: All global indices rose this week. Gains: A-shares > H-shares > US shares. Stock Connect saw net inflows for two consecutive weeks, and Hong Kong Stock Connect continued large net inflows. Wind’s top three gaining industry sectors were alcohol, catering, and daily chemicals; the top three losers were shipping, Internet, and gas. Wind’s top three gaining concept sectors were medical beauty, PTA, and vaccines, the top three losers were online games, rare earth permanent magnets, and lithium battery electrolyte. The effect of the local Chinese New Year is still obvious. Chips and chemicals are expected to continue to boom after the new year, and vaccines and testing will decline.

2-week review: The A-share market differentiated clearly after the Spring Festival holiday. Although market trading is still active, the leading stocks where funds are clustered continued to adjust, and small and medium-cap stocks rose generally. Wind’s top three gaining industry sectors were precious metals, coal, and petrochemicals; the top three losers were office supplies, education index, and household goods. Wind’s top three gaining concept sectors were financial participation, Chengdu-Chongqing economic circle, smart grid, the top three losers were tungsten ore, rare earths, and industrial metal electrolyte.

1-week review: Major global indices fell generally this week, the clustering collapsed, and the main forces fought on their own. Wind’s top three gaining industry sectors were environmental protection, real estate, and motorcycles; the top three losers were alcohol, automobiles, and catering. Wind’s top three gaining concept sectors were reverse merger, limit board, low-price stocks, the top three losers were high-price stocks, beverage manufacturing, and medical.

This week’s review: The declines this week tended to stabilize. Wind’s top three gaining industry sectors were forestry, steel, and energy equipment; the top three losers were precious metals, agriculture, and shipping. Wind’s top three gaining concept sectors were rare earths, copper-clad laminates, and carbon neutrality; the top three losers were rare metals, Stock Connect, and photovoltaic roofs.

Market (%)	Index	This Week	1 Week Ago	2 Weeks Ago	3 Weeks Ago
Shanghai Composite	3501.99	-0.2	-5.06	5.72	3.92
Shenzhen Component	14412.31	-0.66	-8.31	5.44	4.79
ChiNext Index	2871.97	-1.45	-11.3	2.88	5.89
Hang Seng Index	29098.29	0.41	-5.43	2.02	3.64
HSCEI	1102.97	1.68	-1.75	5.13	3.15
Hang Seng HK Chinese Enterprises	4108.99	0.84	-3.54	4.94	1.24
Dow Jones	31496.3	1.82	-1.78	0.2	1
Nasdaq	12920.15	-2.06	-4.92	-1.08	1.73
S&P 500	3841.94	0.81	-2.45	-0.28	1.24