Sun Song

Increasing policy support to both supply and demand sides has significantly lowered the risk of economic slowdown. We expect steady economic growth for the year. The tail risk of market liquidity has been alleviated, with overall valuations at historically low levels. This positions us to seek structural investment opportunities with a prudent but optimistic mindset.

We believe that investment returns are the result of value creation by companies; thus we will navigate market uncertainties with the certainty of company values. Under the new macro growth paradigm and market environment, our investment will focus on the following three areas: 

1) high-dividend stocks that are of investment appeal amid the falling interest rates of long-term bonds, in particular companies that operate robustly and can maintain dividend payments over the long term; 

2) consumption sectors such as food & beverage, and pharmaceutical with either established business models and high entry barrier, or with growing demand; 

3) manufacturing industries that are globally competitive and have global expansion, such as automotive, auto component manufacturing, and other industries that maintain high prosperity.

Economic growth won’t come without challenges. Setbacks happen when the economy “shift gears,” and capital market may magnify the challenges in the short run. But from a medium- to long-term perspective, we are buoyant about the resilience and potential of China’s economy and will continue to identify promising companies that bring stable returns.

Li Jianfeng

After three years of adjustment, we believe the Hong Kong stock market presents significantly increased investment opportunities. First, after market adjustment and the valuation factors have fully priced in, stocks that follow independent industry trends are expected to be primarily driven by the fundamentals. Therefore, we believe that stock selection is particularly important this year. In addition, anticipated rate cuts in the overseas markets are making high-dividend assets in the Hong Kong stock market very appealing and, therefore, high-dividend stocks should be addressed upon stock selection. Moreover, excess returns are also sourced from high-dividend assets that have a low initial valuation but robust cash flows and healthy balance sheets, and are dependable dividend payers and on track for growth.

With respect to diversification, global markets also make for long-term investment targets that supplement domestic returns, given the soft landing of developed economies and the rapid advancement of the technology sectors.

Jia Jian

The market has rebounded after the Chinese New Year, but the overall valuation is still at a historical low, making growth stocks appealing. We will focus on the meso-level, i.e., industries, in particular those related to energy transition and “domestic replacement,” with an active effort to identify new sectors that can generate significant productivity breakthroughs.

Currently, we are optimistic about the energy transition. As consistently highlighted in our previous views, energy transition is an ongoing process that will span several decades. During this process, the scale and sustainability of industry opportunities emerged in this sector will not be affected by short-term stock price fluctuations. In terms of investment strategy, we prefer to concentrate our positions on leading companies that have a substantial control over the supply side. These stocks are seeing recovering profitability while their valuations have reached to historical lows in line with the overall sector.

We will also focus on industries with high technological barriers and lower external dependency, such as sectors like semiconductor and industrial software. At the same time, we will keep close track on productivity breakthrough sectors such as AI and robotics.

He Chongkai

In 2024, the economy is set to slowly recover and structural transformation continues. Although the real estate market is still in a moving down, the total floor area sales in 2024, projected from the current sales, would fall below the normal housing replacement rate, suggesting at a future bounce back to the trendline. The real estate sector will then probably be less of a drag on the economy starting from next year. Meanwhile, China’s high-end manufacturing sectors—renewable energy, automotive, advanced equipment, and home appliance—continue to win global market shares. Therefore, we believe China’s capital market will present more structural investment opportunities in the next five years.

Ming Lang

China’s economy overall is facing headwinds amid a gradual recovery. On one hand, the economic momentum shifting takes time, and property sales are still in the process of stabilizing. Furthermore, complex geopolitical environment and escalating global competition will disrupt the export-oriented industries to certain extent.

We believe that the low valuation of the A-share market reflects concerns about the market fluctuations during China’s economic transition. From a bottom-up perspective, there are many companies with good performance but low valuation. In regard to consumption, travel data from the Chinese New Year holiday highlight a general desire for a better life. Therefore, we seek exposure to undervalued consumer sector companies with proven business models and robust growth in cash flow. In the advanced manufacturing sector, niche market leaders have gained comparative advantages in global competition and broader growth prospects through persistent R&D investment. Through a quantitative approach, we will closely monitor assets with strong fundamentals and attractive performance-to-price ratios.