Guangda strategic industry comparative study: Industry investment style under the "style investment clock"

Guangda Strategy released a research report that in industry comparisons, it is difficult to win in the long term based on a single factor, and a comprehensive judgment is needed by combining multiple factors. The purpose of writing a framework report on industry comparisons is to systematically analyze the factors that affect industry stock performance, in order to lay a foundation for future industry comparison analysis. This report mainly starts with the style investment clock, and sorts out the suitable investment styles for various primary and secondary industries. The main points of Guangda Strategy are as follows: "The Style Investment Clock of Reality and Emotion" The style investment clock consists of two variables, "reality" and "emotion". Changes in "economic reality" determine whether cyclical sectors can perform better. When reality strengthens, cyclical sectors will receive more attention from investors, whereas when reality weakens, the market will pay more attention to non-cyclical sectors. "Emotion" mainly reflects the mindset of investors. When emotions are high, investors focus more on future growth potential, whereas when emotions are subdued, they seek certainty. By combining "reality" and "emotion", the market can be divided into four different styles. During "strong reality, strong emotion", industries show a general rise, and the market style is relatively balanced; during "strong reality, weak emotion", investors focus more on certainty, and as cyclical sectors perform well, their performance is also better; during "weak reality, weak emotion", the market seeks certainty, but most industries are weakening, leading to a more defensive market style; during "weak reality, strong emotion", investors focus on sectors with large growth potential, and independent prosperity and thematic growth often perform better. Determining the suitable investment style for an industry mainly depends on the industry's timing performance and its own logic under different styles. During the process of determining the suitable investment style for an industry, historical performance under different scenarios is backtested first, and then the scenario with the highest annualized Sharpe ratio is identified. If the style attribute corresponding to this scenario does not conflict significantly with the characteristics of the industry itself, this style can be considered the industry's style attribute. Of course, the same industry may not only correspond to one style, but may perform well under multiple styles. Suitable investment styles for primary and secondary industries Industries suitable for balanced style investments mainly involve growth, cyclical, financial, and real estate. Under a balanced style, industries worth investor attention can be divided into emotion-biased and economy-biased categories. Emotion-biased industries mainly involve growth and some cyclical sectors, including computers, communications, electronics, non-banking financials, and power equipment. Economy-biased industries mainly involve financial real estate and consumption, such as real estate, building materials, food and beverages, petroleum, trade, retail, and transportation. Industries suitable for thematic growth and independent prosperity style investments mainly involve TMT and cyclical sectors. Under thematic growth and independent prosperity styles, industries worth investor attention can be logically divided into two categories. Thematic growth industries mainly involve TMT, new energy, and military industries. Independent prosperity industries are mainly related to cyclical sectors, with industries related to demand and macroeconomics, but may be affected by complex supply-side factors, leading to stock performance not necessarily being consistent with macroeconomics, such as automobiles, non-ferrous metals, and machinery. Defensive style industries mainly consist of stable and high dividend industries. Under a defensive style, industries performing well can be divided into two types. One type includes industries with very stable operations or even countercyclical properties. Primary industries include utilities, while secondary industries include electricity, railways, roads, and gas. The other type includes industries with a noticeable high dividend property, such as coal in primary industries, and coal mining and white goods in secondary industries. Industries suitable for cyclical style investments mainly focus on consumption and banks. Industries suitable for cyclical style investments mainly concentrate on consumption, including banks. The consumption sector is generally stable on the supply side and is influenced by macroeconomic factors on the demand side, thus typically having obvious cyclical properties. In addition, the characteristics of banks are similar to those of the consumption sector. Risk analysis: The style model may become obsolete in the future; Industry style attributes may change; Errors in market style judgment.