Red Weekly Special Agent | Chen Da
Due to their special geographical relationship, the Chinese securities market is like a pressure relief ball. In the context of the game between China and the US, whoever needs to work hard will take a few steps.
Over the past year, there has been a sharp correction in China Securities. In particular, Chinese securities listed in the US. Compared to the S&P 500 Index, which has repeatedly reached new highs, the S&P US China Securities 50 Index fell by more than 40%. However, in reality, the reduction in the valuation of China Securities is not only due to policy adjustments, but also because the number of Chinese shareholders is close to its peak, and customer acquisition costs remain high, making Chinese Internet companies more and more like “utility” companies, and the valuation level cannot go back to 10 years ago. However, as far as the present is concerned, the author believes that China Internet has opportunities for reverse investment, but “digging the bottom” is skilled; otherwise, it will fall into a “value trap.”
There are many factors that kill valuation
Stalling growth is the biggest crime
In terms of valuation, the MSCI China Index, which fell 21.64% in 2021 (mainly including large Chinese companies listed on US and Hong Kong stocks), the price-earnings ratio in the last 12 months was only 6.2 times, which is an absolute low in history. The dynamic price-earnings ratio of the Hang Seng Technology Index is 31 times, and it is also in a historically low range since the index was established.
The main reasons for the decline in stock estimates and weak valuations over the past year are as follows.
First, the current inflation problem in the US is getting worse. The US CPI is calculated based on annual growth. From a gradual increase of 2.6% in March 2021 to a high of 7% in December 2021, it reached 1...