On March 9, General Manager of Huiquan Fund Liang Yongqiang was a guest on the online interview column of Toutiao Fund Channel "Fund Micro Interview" to share stock investment strategies. 
Question: Welcome to visit the online interview column of Toutiao Fund Channel "Fund Micro Interview". Looking back on the past 20 years of experience and going through three rounds of bull and bear market transformation, what is your biggest change? What do you think are the core abilities of an excellent fund manager?
Liang Yongqiang: has been in the industry for 20 years and has experienced three rounds of bull and bear. The biggest change may be that I have thought more about the investment management process. In the past, I used to manage products more to consider issues from the perspective of investment, and now I will pay more attention to the customer's feelings and experiences. At the same time, I communicate more with different departments such as quantification. In investment operations, the quantitative department has given me a lot of help. Now I prefer to find a balance between sharpness and stability, avoid excessive concentration, and reduce drawdowns and fluctuations. Individual stocks in each direction will not be overly concentrated. Of course, there will be some phased adjustments in the process according to market changes, especially in the volatile market conditions like this year, and my investment will be closer to the market.
I think that the core abilities that an excellent fund manager needs are to have a deep understanding of social resources such as how to organize human resources, how to match needs, etc. Know what the core demand points that each industry needs to solve and what the supply capacity is. This requires slowly accumulating knowledge from different industries and having experience in the cyclical changes in the market.
Qualified fund managers will extend the fund's consideration cycle, observe which directions have more relative returns, and then match. Some new generation of fund managers tend to grasp short-term market sentiment and frequently adjust positions in order to pursue rankings, which actually lacks depth. If you are not in depth, investment will be like waiting after betting, and you can only rely on probability.
Of course, everyone’s investment habits are different. My habit is to first fully understand the industry and its current life cycle, and then make subsequent arrangements and investments.
Question: After experiencing several cycles of bull and bear conversions, what kind of investment framework have you formed? From what dimensions will we choose industries and individual stocks?
Liang Yongqiang: Whether it is investment or entity, it is actually based on the evolution of the entire era and the development of society, looking for social resources and then matching, including matching of policies, funds, talents, etc. The capital market is also an aspect of the continuous matching process. Investment first requires grasping the development direction of the entire society, then paying attention to the sub-industry that may benefit, and finally finding new companies that are representative and competitive.
My investment logic is to deeply understand the direction of future social evolution, especially the reverse of social resource matching, and the gap between the present and the future. Specifically, it is what industries have given the times unique missions, which industries can match the needs of the times, and which industries can aggregate resources and talents. Including at the basic stock level, we should also look for which companies have room for development in the future and are in the tilted part of social resources.
After seeing one direction, I will choose the company based on some characteristics, including method system, profit model, operation model, team composition, etc. But there is another more important aspect, which is the company's values, long-term pursuits, and social mission, which determines the company's development boundaries and pattern, which requires in-depth research. Because in the shallow sense, the financial statements, data classification market, disclosure quality of each company are constantly improving. The most important thing is to observe whether the company can continue for a long time, how the system is iterative, and how the company responds to changes in the future society. Only through continuous in-depth understanding can we choose a suitable company for investment at each stage.
Question: What are the situations that trigger your position adjustment or stock exchange during your management of funds? How do you control the retracement?
Liang Yongqiang: In the process of fund management, we will continuously track and research the stocks in the stock pool. When it is found that the stock situation has changed greatly from the original expectations and triggered the warning line we set, it is necessary to make timely adjustments.
In long-term investment, every researcher has a rough estimate of the market value, and this data is very accurate. When it is calculated that the company's market value income and risks are not equal, I will make timely adjustments. Each stage needs to be sensitive to risks.
In terms of controlling retracement, the rhythm and method of building positions of the products I manage will mainly revolve around the stability of net value. In the future, we will build more investment portfolios in terms of breadth and diversification. If there is demand or encountering extreme markets, some positions may be reduced, but the range will not be too large.
Question: After the New Year, A-shares continued to adjust, and popular sectors fell one after another. What do you think are the main influencing factors? When is expected to stabilize?
Liang Yongqiang: There are three main influencing factors: first, the track stocks in 2021 have obvious gains, and most of them are too high, so at the beginning of this year, institutions chose to adjust their positions, resulting in a relatively large pullback in track stocks; secondly, the Fed's expectation of interest rate hikes continues to rise until they are implemented, guiding the return of US dollar assets, and A-shares are under pressure to lead the market to generally pullback; and the recent disturbances in the Russian-Ukrainian conflict have led to a decline in most global stock indexes.
The short-term market is indeed bumpy, but the advantage is that it is in the upward period of the emotional cycle, and the market is currently confronting external negatives and bottoming out with weak negatives. It is expected that the national "Two Sessions" will gradually stabilize from the end of the first quarter to the second quarter. The national "Two Sessions" will be held in early March. The tone will remain stable, monetary and fiscal cooperation will work hard, and the main tone will continue the spirit of the Central Economic Work Conference. Under the word "stability is the first", it is expected that the annual GDP growth rate will reach the target of about 5.5%, to prevent the economic growth rate from stalling and declining. This year, the policy efforts to maintain the economy will not be small, which is a relatively favorable factor to the capital market.
Question: As a fund manager who actively selects stocks, what do you think about timing? Do you think it is a good time to enter the market now?
Liang Yongqiang: For stock selection and timing selection, I think shorter stock selection is actually timing selection, and longer timing selection is stock selection. Because in fact, they are all looking for a trend, and the length of the trend determines the holding period.
stock selection is more of a directional choice, and timing is a process of constantly correcting the direction, so I think these two need to be combined with both parties.
For example, after the direction is selected, we must constantly look at the market's pricing of the selected direction and whether it is following the direction you imagine. At this time, we need to make corresponding observations on short-term pricing, and then in turn, we will continue to verify the effectiveness of long-term stock selection. This is a process that requires continuous coordination and upward trend.
From past experience, I think timing and stock selection need to be balanced. Different investment styles are actually related to the return characteristics of the assets under management. If it is a long-term asset, in fact, timing or stock selection is basically not necessary to consider timing or stock selection in the short term. It is more just to make corrections based on short-term corrections.
For public offerings, the existence cycle of a single product may be very long, but for holders, it may only hold for a period of time. Therefore, in this process, a certain balance is needed between timing and stock selection. Use stock selection to select the long-term direction. In the short term, it is more about cost-effectiveness. How to hold in a better time range. If you exceed this range, you may experience a longer wait. In fact, a certain balance can be made through cost-effectiveness, which will be relatively better for the holder's experience.
Question: Looking ahead to 2022, how do you think the market will perform this year?
Liang Yongqiang:
1. Macroeconomic situation judgment: economy seeks the bottom, policy stability maintenance
Looking forward to 2022, it is expected that the economy will continue to find the bottom in the first half of the year, and it is expected that the policy stability maintenance hedging is not small. After the recovery after the impact of the epidemic, China's economy has re-entered its long-term L-shaped trend. The GDP growth rate peaked in mid-2021, and the current inventory cycle is still on a downward trend.
According to the inventory cycle law, it is expected that the GDP growth rate will continue to bottom in the first half of 2022. As for when we need to track and observe the data, we should also pay attention to the impact of changes in macro variables on market trends and style switching. In terms of credit, with the efforts of finance and credit, it is expected that M1 and social financing will rise again after bottoming out in 21Q4. According to the new proposal of "economic construction-centered" of the Central Economic Work Conference in December 2021, we believe that the efforts to maintain the economy may not be small, which is a relatively favorable factor for the capital market.
In terms of inflation, it is expected that PPI will fall after the second top, and CPI will slowly rebound, which will help the profit recovery of midstream manufacturing. Due to the cardinal effect and the Federal Reserve's tightening of the currency and inventory cycle, it is expected that PPI will gradually decline after the second top this year, which is relatively conducive to the recovery of the midstream manufacturing industry; the bottom of the CPI rebounds, and as residents' consumption may gradually recover from the impact of the epidemic, the transmission mechanism of PPI to CPI is gradually unobstructed, and the CPI trend is expected to slowly rebound from 21Q4. However, as the pig cycle is still consolidating at the bottom, the CPI is expected to recover moderately in 22 years.
Overseas, the Federal Reserve has gradually raised interest rates starting in 2022, and it is expected that there will be disturbances in stages. According to historical experience, during the Taper period, bond interest rates rose first and then fell, US stocks were the strongest, A/Hong Kong stocks were differentiated, bulk was weak, US dollar index became stronger, and the initial impact of reducing panic was large. However, since the interest rate spread between China and the United States still has enough safety cushions, the central bank is expected to allow the exchange rate to depreciate moderately, maintain a neutral and loose monetary policy, with employment and economic stability as its primary goal. Therefore, the Federal Reserve Taper will not constitute a constraint on the central bank's monetary policy, but referring to historical experience, it is expected that its changes will cause temporary disturbances to A-shares.
2. Policy interpretation: Focusing on economic construction, dual carbon weakening, state-owned enterprise reform concluded
Based on our experience, the Central Economic Work Conference plays a very important guiding role in setting the tone of one year of investment. We have summarized the market in 2021 before and found that the newly mentioned "carbon neutrality" and "anti-monopoly" among the eight major work tasks are one of the positive main lines and the other is the negative main lines. Therefore, we spent a lot of time interpreting the Central Economic Work Conference held in December 2021 and finding areas that are inspiring for investment in 2022.
First of all, the most important change is to emphasize the emphasis on "economic construction as the center". Under this tone, we expect that subsequent policies will maintain stability will be relatively strong. Secondly, related to investment. Highlighting 2022 is the year when the three-year state-owned enterprise reform is concluded. The dual-carbon policy has not yet been mentioned as a major change, or it may give way to growth in stages. The core of new energy construction is smart grids and green electricity. New energy vehicles have not been emphasized, and the policy intensity in 2022 is likely to be lower than in 2021. Maintain primary product supply, lithium ore, coal, etc. are all in the category of early products, and the opportunities for lithium extraction in domestic lithium ore and salt lakes are worthy of attention. In terms of real estate, it is expected to relax partially, but it is difficult to prosper again.
Question: You are optimistic about the five major directions of new technology, new energy, new consumption, big manufacturing, and big finance in the long run. So from the medium term, what opportunities do you think are optimistic about?
Liang Yongqiang: I think grasping the structure is still the core of investment in 2022, so industry allocation and stock selection are also top priority, and we will expand along three clues:
The first clue is a new economy related to carbon neutrality, avoiding the overheating of consensus track in the new energy field, and laying out non-consensus branches. The most consensus tracks such as new energy vehicles and lithium batteries are relatively crowded. We mainly look at other branches, smart distribution network, green power, nuclear power and environmental protection.New energy vehicles have been downplayed in the Central Economic Work Conference, and we are more concerned about smart spare parts and mid-to-high-end semiconductor opportunities that conform to the direction of automotive intelligence.
The second clue is the main line of asset management, focusing on optimism with securities companies. Big finance has benefited significantly under the ease of credit. The wealth management and securities sectors have benefited from the transfer of wealth to the capital market for a long time and the advancement of the comprehensive registration system.
The third clue is the upgrading of manufacturing industry and technological progress, including technology, information and electronic consumption. Against the backdrop of the Sino-US game, food security and national security demand are on an upward trend in the medium and long term, so we are still optimistic about seeds and military industry. Against the backdrop of the gradual decline in Internet traffic dividends, Internet giants represented by Apple, Microsoft and Meta (Facebook) are constantly developing new Internet applications and investing hundreds of billions of dollars. Cook calls VR one of his three major product strategies before retirement. The acceleration of state-owned enterprise reform is a highlight of the Central Economic Work Conference. Revitalizing state-owned enterprise assets to boost the economy during the economic downturn is an investment opportunity worth exploring.
Question: The market has recently been pulled back, and fund issuance has been cold. In this case, do you think it will be a good time to invest?
Liang Yongqiang:
The recent fund issuance is indeed not ideal. The main reason is the continuous pullbacks since the beginning of the year. The reasons for the continuous pullbacks have been mentioned before, but after the pullback, some sectors we are optimistic about, such as the power grid transformation and photovoltaic power station construction in the new energy field, which we are optimistic about, are currently relatively low in valuations. After adjustments, the military industry sector is basically back to a valuation of about 40 times. The growth rate of the military industry sector in the next few years is basically certain, so this is a good opportunity we deserve to seize.
In fact, investment can be regarded as a river, and the river has two fluctuations and changes. One is a bend. When flowing through mountains, the river has to bypass the bend, and it requires waiting and accumulation to encounter such large-scale environmental changes. Another type is waves, the river fluctuates every day, and such ups and downs must be endured. Investors also need to consider and judge when encountering fluctuations and retracements. At what level does fluctuations occur? We must adjust or stick to our investment direction based on our own judgment.
Funds are risky, so you need to be cautious when investing. The above is a transcript of the guest interview Q&A, which only represents the personal opinions of the interviewees and does not represent the views of today's headlines.
