Guotai Junan: The proportion of active public offering investments in the 4th quarter of 2024 continued to decline, favoring technology and Hong Kong stocks.

Guotai Junan's analysis of the configuration of public actively managed equity funds in the fourth quarter of 2024 shows a slight decrease of 0.03% in equity positions, with the market value and number of shares continuing to decline. In addition, the allocation of Hong Kong stocks by actively managed equity funds in Q4 2024 further increased to 14.27%, an increase of 2.03% from the previous quarter, reaching a historical high. The funds increased their allocation to technology and manufacturing, while decreasing holdings in upstream cyclical sectors, pharmaceuticals, and consumer goods. The allocation percentages for technology, manufacturing, upstream sectors, and pharmaceuticals increased by 2.83%, 1.42%, -2.44%, and 1.15% respectively. Key points from Guotai Junan include: - Equity positions decreased by 0.03%, with the market value and number of shares continuing to decline. - Market value of funds in Q4 2024 was around 3.4 trillion RMB, a decrease of 350 billion RMB compared to the previous quarter, with the number of shares decreasing by approximately 210 billion. - The proportion of actively managed equity fund holdings in the total A-share market value decreased by 0.44% to around 3.40%. - Concentration decreased for individual stocks but increased for industries, with the top 10 stocks having a concentration of 19.09% and the top three industries having a concentration of 55.53%. The fund increased its holdings in index constituents, with allocation to Hong Kong stocks reaching a new high. The allocation percentages for constituent stocks of the Shanghai and Shenzhen 300 Index, the CSI 500 Index, and the CSI 1000 Index increased by 2.85%, 2.06%, and 2.38% respectively. The fund reduced its allocation to the Growth Enterprise Market and increased holdings in constituent stocks of the ChiNext 50 Index. Growth style investments remained favored, with an increase in the allocation percentages for value and dividend assets by 1.00% and 1.46% respectively. The allocation to Hong Kong stocks further increased to 14.27%, an increase of 2.03% from the previous quarter, reaching a historical high. The fund increased its allocations to technology and manufacturing, over-weighting semiconductors, electronics, and consumer electronics. In terms of industry allocation, electronics remained the top sector, with an increased allocation to banks. Compared to the Shanghai and Shenzhen 300 Index and the CSI 500 Index, over-allocations were made to electronics, power equipment, pharmaceuticals, biotechnology, food and beverage, and automobile sectors. Within sub-industries, semiconductors, batteries, and consumer electronics were heavily over-weighted. Key points from the fund manager quarterly report for Q4 2024 include: 1) Cyclical sectors may perform well with valuation recovery and improved performance, with a focus on low valuation high dividend cyclicals. 2) Infrastructure and real estate sectors offer opportunities with policy implementation and potential turnaround of leading companies. 3) Consumer sectors are expected to recover in 2025, with potential for consumption growth and opportunities in emerging consumer industries. 4) In the technology sector, focus on areas related to products from companies like Nvidia, as well as domestic AI chip and edge AI development. 5) Financials are expected to benefit from real estate risk mitigation and dividends, with quality banking stocks leading the way. 6) New energy and manufacturing sectors offer opportunities in companies with improved competition and overseas expansion, such as new energy vehicles, automotive components, and intelligent driving technologies. 7) Defense sectors offer opportunities in new military equipment, naval equipment, low-altitude economy, and military informatization. 8) Pharmaceuticals offer excess return opportunities relative to the overall market, with focus on innovative drugs and traditional Chinese medicine supported by policies.