20160310-中国银河国际证券-A-Share_Monthly_Portfolio_33页_2mb

A-Share Monthly Portfolio Summary - March 2016

Core Content

The March 2016 A-Share Monthly Portfolio report highlights the performance of the portfolio and outlines the investment strategy for the month. It emphasizes the volatile market conditions and the importance of focusing on defensive stocks. The portfolio's performance in February 2016 was strong, outperforming major indices like the CSI300 and ChiNext, driven primarily by effective stock selection. The report also provides insights into macroeconomic fundamentals, liquidity conditions, and policy expectations that may influence the market in March.

Main Points and Key Information

1. Portfolio Performance (February 2016)

• Rate of Return (RoR): The portfolio achieved a RoR of 7.64%, significantly outperforming the CSI300 Index by 9.97ppt.

• Cumulative RoR (Jan–Feb 2016): The cumulative RoR was -20.99%, with a cumulative excess return of 1.89ppt over the CSI300 Index.

• Total RoR (Jan 2013–Feb 2016): The cumulative RoR from January 2013 to February 2016 was 250%, outperforming the ChiNext Index by 163% and the CSI300 Index by 236ppt.

• Top Performing Stocks in February:

  • Tongkun Group (601233.SH): 24.78%
  • Hengyi Petrochemical (000703.SZ): 34.82%
  • Minhe (002234.SZ): 37.48%
  • NHU (002001.SZ): 35.62%
  • JHD (002741.SZ): 35.79%
  • SD Gold Group (600798.SH): 36.84%
  • Ideal Group (000626.SZ): 37.66%
  • C&S (002511.SZ): 38.42%
  • Shandong Xiantan (002746.SZ): 39.78%
  • NHU (002001.SZ): 35.62%

• Poor Performing Stocks in February:

  • Songcheng Performance (300144.SZ): -3.46%
  • Hualan Biological (002007.SZ): -7.61%
  • Shunxin Agriculture (000860.SZ): -8.73%
  • Tianrun Dairy (600419.SH): -3.27%
  • Semir Garment (002563.SZ): -2.42%
  • Yonggui Electric Equipment (300351.SZ): -33.67%
  • Yechiu Resources (601388.SH): -32.75%
  • Nanjing Port Group (000035.SZ): -28.79%
  • Bengang Steel Plates (000761.SZ): -27.38%
  • Forever Technology (300365.SZ): -27.30%

• Performance Attribution:

  • Sector Allocation: -18.5%
  • Stock Selection: +118.5%
  • Excess Return: 9.2% from stock selection, 0.91% from sector allocation.

• Top Performing Sectors in February:

  • Gold and jewelry (+6.86%)
  • Horse racing (+4.32%)
  • Network lottery (+3.40%)
  • Bio-breeding (+3.16%)
  • Shanghai FTA (+2.98%)

• Underperforming Sectors in February:

  • Genetic testing (-9.30%)
  • De-IOE (-8.93%)
  • Smarter healthcare (-8.63%)
  • Big data (-8.60%)
  • Satellite navigation (-8.18%)

Investment Strategy for March 2016

1. Market Outlook

• International Environment:

  • Fed rate hike expectations are re-emerging.
  • Geopolitical risks in East Asia are increasing.

• Domestic Economy:

  • January import and export data suggests weak performance.
  • Market sentiment is likely to shift from optimism to confusion.
  • Monetary policy is partially loose but steady.
  • Fiscal policy has some space but is not unlimited.
  • Reforms may not yield significant progress.
  • Liquidity may face marginal tightening.

• Market Volatility:

  • High volatility is expected in March.
  • The market may continue to adjust weakly and search for support.

2. Fundamentals

• Macroeconomic Indicators:

  • January CPI was in line with expectations, but core CPI rose unexpectedly.
  • RMB loans surged in January, far exceeding expectations, and showed significant monetary growth.
  • The trade surplus expanded by 12.2%, indicating some short-term support for the RMB.
  • Exports declined by 6.6%, while imports fell by 14.4%, showing weak external demand.

• Monetary Growth:

  • M0, M1, and M2 grew by 15.1%, 18.6%, and 14.0%, respectively.
  • The surge in M0 was due to seasonal factors and increased credit supply.
  • The central bank is likely to moderate the monetary supply in response to the pressure from RMB outflows.

3. Liquidity Conditions

• Credit Supply:

  • Credit growth in January was RMB 2.51trn, a record high.
  • However, credit growth in February is expected to decline due to fading short-term factors.
  • Overall credit supply in the first quarter is expected to expand, but with a shift from easing to tightening.

• Market Sentiment:

  • Investor sentiment remains cautious.
  • Margin trading balances continued to decline, reaching RMB 870bn.

4. Policy Expectations

• Monetary Policy:

  • The central bank may implement moderate tightening to manage liquidity and stabilize the RMB.
  • The RRR cut in late February was aimed at hedging the decline in the monetary base.

• Reforms:

  • Supply-side reforms are expected to continue, with efforts to reduce real estate taxes and improve market confidence.
  • The market may experience a shift in expectations for reforms, affecting investor sentiment.

• Policy Window:

  • March is an important period for observing policy changes, particularly regarding the RMB exchange rate and reform progress.

Portfolio Composition for March 2016

The portfolio includes the following stocks (in random order):

• Banking: ICBC (601398.CH), China CITIC Bank (601998.CH)
• Medicine: Kingdomway (002626.CH), Hualan Biological (002007.CH)
• Food and Beverage: Shunxin Agriculture (000860.CH), Tianrun Dairy (600419.CH)
• Leisure Services: Weihai Guangtai (002111.CH)
• Machinery: Songcheng Performance (300144.CH)
• Military: Hailide (002206.CH)
• Light Manufacturing: Sun Paper (002078.CH)
• Petroleum and Petrochemicals: Hailide (002206.CH)

Conclusion

• The portfolio outperformed in February due to strong stock selection, particularly in sectors like consumer goods, supply-side reforms, and gold and jewelry.
• March is expected to be a volatile and uncertain period with weak market sentiment and potential liquidity tightening.
• Investment caution is advised, with a focus on defensive sectors.
• The central bank is likely to implement moderate tightening to manage the economy and stabilize the RMB.
• Policy changes, especially in reforms and monetary policy, will be key in shaping market behavior.