20160615-中国银河国际证券-A-Share_Monthly_Portfolio_36页_2mb

报告摘要

A-Share Monthly Portfolio Summary - June 2016

Core Content

Portfolio Performance: The portfolio of 10 golden stocks recommended by Galaxy Securities in May 2016 achieved a return of 0.3%, 0.11ppt lower than the CSI300 Index. From January to May 2016, the cumulative return was -2.7%, 12.34ppt higher than the CSI300 Index. Over the period from January 2013 to end-May 2016, the cumulative return reached 331%, 305ppt higher than the CSI300 Index and 196ppt higher than the ChiNext Index.
Market Outlook for June: The market is expected to experience greater fluctuation due to the possibility of the FED raising interest rates and the potential rise in the US dollar index, which could affect the RMB exchange rate. However, domestic factors remain the dominant influence. The economic recovery is weakening, but the policy focus is on reform, particularly supply-side reform, which is expected to boost investor confidence despite short-term economic slowdowns. The central bank will maintain stability and liquidity while monitoring exchange rate fluctuations and credit risks.
Market Sentiment: Prices have been in a narrow range for three weeks, indicating prudent investor sentiment. There is a possibility of market direction change following the sharp decline in 2015, which may lead to fluctuations in the stock index. The investment style should remain moderate and stable, focusing on growth and cyclical factors.

Key Industries in June Portfolio

Machinery and Military Industry: 2 stocks
Petrochemical: 1 stock
Non-ferrous Metal: 1 stock
Electronics: 2 stocks
Computer: 1 stock
Electrical Equipment and New Energy: 1 stock
Light Industrial Manufacturing: 1 stock
Social Service: 1 stock

June Portfolio Companies

Changshan Textile (000158.CH)
Chenming Paper (000488.CH)
DMEGC (002056.CH)
Dinghan Technology (300011.CH)
GTIG (002091.CH)
HBP (002554.CH)
Huajin Chemical (000059.CH)
Tibet Summit (600338.CH)
Tri-Ring Group (300408.CH)
UTS Travel (002707.CH)

Main Points of May Portfolio Review

Return Performance: The portfolio returned 0.3% in May, 0.11ppt lower than the CSI300 Index. The portfolio was influenced by the suspension of Hengshun Zhongsheng and Conant.
Industry and Stock Analysis:
- Positive contributions: DMEGC and ARTS performed well.
- Negative contributions: Geo-Jade Petroleum and Conant were suspended, affecting performance.
Performance Attribution:
- Absolute Return: -74.8% from industry allocation, 174.8% from stock selection.
- Excess Return: Positive from stock selection, negative from industry allocation.
Industry Trends:
- Performing Well: Electronics, computers, food and beverage, household appliances, and finance.
- Declining: Coal, steel, tourism, trading, and retail.
Themes: Sub-new stocks, rare-earth permanent magnets, Tesla, OLED, and sensors performed well, while ST concept, steel structures, oil and gas, gold and jewellery, and online travel were poor performers.

Investment Ideas for June 2016

Market Volatility: Increased volatility is expected in June, but the decline will be limited due to the relatively stable economy.
Fundamentals: The economic recovery trend is weakening, with slowed industrial growth and negative power generation growth. Real estate investment remains stable, but private manufacturing investment continues to fall.
Liquidity: Interest rates are relatively stable, but RMB devaluation pressure is rising. The Shanghai-Hong Kong Stock Connect has seen net inflow for 11 consecutive days, indicating rising expectations for A shares to be included in the MSCI Index.
Policy Focus: Supply-side structural reform is the main priority, focusing on deleveraging, reducing capacity, reducing inventories, cost reduction, and shoring up weaknesses. The central bank is maintaining liquidity stability.
Valuation: A shares are not highly valued, but structural differentiation is significant. The CSI300 Index has a PER of 11.60, while the ChiNext has a PER of 67.68. This suggests undervaluation in some sectors, especially small-cap stocks.

Conclusion

The June 2016 investment strategy emphasizes moderate and stable growth, with a focus on small-cap stocks and cyclical sectors. The portfolio performance in May was mixed, with good stock selection but mediocre industry selection. The market is expected to fluctuate more in June due to external factors like the FED's potential rate hike and internal factors such as economic slowdown and policy reforms. The inclusion of A shares in the MSCI Index and the launch of the Shenzhen-Hong Kong Stock Connect are key market influencing factors. Overall, the investment environment remains uncertain, but reforms and stability are expected to support long-term growth.