20151109-中国银河国际证券-A-Share_Monthly_Portfolio_37页_2mb

A-Share Monthly Portfolio Summary - November 2015

Core Content

The document presents the investment portfolio performance for October 2015 and outlines the investment strategy for November 2015, focusing on market rebound and fluctuation. It provides insights into economic trends, liquidity changes, and policy impacts, along with a detailed analysis of stock returns and sector performance.

Key Performance Highlights (October 2015)

• Overall Portfolio Return: 27% for the month, significantly higher than the CSI300 Index (10.34%) by 16.67ppt.
• Cumulative Return (Jan-Oct 2015): 59.94%, with cumulative excess return of 59.93ppt over the CSI300 Index.
• Cumulative Return (Jan 2013-Oct 2015): 293.65%, much higher than the ChiNext Index (239.5%) and substantially surpassing the CSI300 Index by 253.54ppt.
• Sectoral Performance:
  • Leading sectors: Machinery & military industry, computer, national defense, electrical equipment, textile and garment, communication, and light manufacturing.
  • Laggard sectors: Banking, steel, coal, petroleum and petrochemical, and food and beverage.
• Top Performing Stocks:
  • Sleemon, Chenming Paper, Hytera, and others witnessed returns over 40%.
  • Many stocks showed strong performance, while only 15 stocks declined over 30%.

Investment Strategy for November 2015

Market Outlook

• The market is expected to experience increased volatility following a rebound.
• The range of fluctuation may be wider, but the medium-term impact of the economy, liquidity, and policy is partially positive.
• Small-cap stocks (especially ChiNext) continue to generate substantial excess returns.
• Mid-cap and small-cap stocks with strong fundamentals that have only moderately rebounded offer good opportunities.
• Super blue chips are stable but offer limited upside.

Economic Trends

• The Chinese economy is stabilizing amid a slowdown, with GDP growth at 6.9% YoY in Q3 2015.
• Tertiary industry growth is improving, contributing 58.9% to GDP, while secondary industry growth continues to slow.
• Consumer goods retail remains stable, with a slight increase in consumption.
• Investment in fixed assets continues to decline, indicating a focus on maintaining growth.

Liquidity Analysis

• Global liquidity is influenced by the European Central Bank’s QE policy and the Federal Reserve’s interest rate decisions.
• Domestic liquidity remains moderate after the "double reduction" policy, but the restructuring of the interest rate transmission mechanism is still under observation.
• The resumption of IPOs could affect short-term market volatility.
• The margin financing balance slightly increased, suggesting a moderate liquidity environment.

Policy Impacts

• Reform and opening-up policies continue to advance, with a focus on economic growth and structural reforms.
• The Fifth Plenary Session of the 18th Central Committee of the CPC emphasized the 13th Five-Year Plan, highlighting the five major philosophies: innovation, coordination, green, opening-up, and sharing.
• Regulatory measures are being reinforced, which is beneficial for long-term market construction but may affect short-term performance.

Valuation Insights

• Blue chip stocks (e.g., CSI300 Index) are relatively undervalued, trading at 13x PER.
• ChiNext Index shows a high valuation at 92x PER, but it is still considered acceptable compared to Russell 2000 Index.
• Growth stocks still have good long-term value despite higher valuations.

Key Information

• Stock Portfolio for November 2015: Includes two machinery & military industry stocks, one each in petroleum & petrochemical, traffic & transportation, real estate, construction, electronics, media, pharmaceutical, and electrical equipment.
• Stocks Selected: Brilliant Elevator (002689), Weihai Guangtai (002111), Sinochem International (600500), Aucksun (002245), Jianghai Capacitor (002484), LeTV (300104), Chase Sun Pharmaceutical (300026), Lvjing Holding (000502), Das Intellitech (002421), and Dongfang Energy (000958).
• Factors Influencing Market: Economic growth, liquidity, and policy reforms.
• Uncertainties: RMB inclusion in SDR, timing of IPO resumption, and global liquidity factors such as ECB QE and US interest rate decisions.

Summary of Portfolio Performance

• Sector Allocation Contribution: 77% of the return.
• Stock Selection Contribution: 23% of the return.
• Excess Return Contribution: 62.7% from sector allocation and 37.3% from stock selection.
• Key Themes: UAV, civil-military integration, general aviation, Internet + Chinese medicinal granula, and others.

Analysts

• Yang Huachao – Chief Analyst of Small-and Mid-cap Stocks
• Sun Jianbo – Doctor, Chief Strategy Analyst
• Qin Xiaobin – Strategy Analyst Director
• Wong Chi Man – Head of Research

Conclusion

The November 2015 portfolio is structured around small- and mid-cap stocks with strong fundamentals and thematic opportunities. The market is expected to remain volatile, driven by liquidity changes and policy impacts, with a focus on sectors that benefit from structural reforms and economic stabilization.