A number of private equity tycoons have spoken out again!

On the occasion of the New Year in 2023, China Fund News invited founders, investment directors, chief economists or well-known fund managers of many private equity companies to give their outlook The investment prospects and trends in the new year are for the reference of the general public and stock investors.

Zhang Jun, Co-CEO of Hongshang Asset: Layout around the main line of economic recovery

The ups and downs of 2022 have become a thing of the past. In this year, some unprecedented things happened. , we have also enriched our life experiences and broadened our ways of thinking. Looking around the world, the stock market in 2022 will be lackluster, and the same will be true for the Chinese market. The Shanghai Composite Index is down about 15% for the year, the CSI 300 Index is down 21%, and the ChiNext Index is down 29%. This is the second worst performance in the past ten years.

Now that epidemic control has been relaxed, according to overseas experience, economic data will fall for a period of time after the relaxation, but will grow strongly after that. Basically, 2023 will be a point of recovery, and all that needs to be considered is the strength of the recovery. However, we cannot have too high expectations for the strength of the recovery in 2023 based on the historical situation that the economy affected by the epidemic in 2020 rebounded significantly in 2021. Because the global economic situation is inconsistent with the situation at that time, the Federal Reserve's continuous interest rate hikes will cause a mild or severe recession, which will also affect our external demand. But from an economic perspective, I think recovery is a high probability event.

In addition, we also pay attention to monetary policy, because the stock market looks at economic growth on the one hand, and monetary policy on the other. At present, due to the epidemic, people's willingness to invest and corporate loans is not strong, and the increase in U.S. dollar interest rates has also put greater pressure on the exchange rate. Therefore, the current monetary policy has been relaxed to the greatest extent. As for the later period, we need to see a relatively obvious recovery of the economy, a certain increase in prices and inflation levels, and comprehensively consider the interest rate differential between China and the United States before we need to worry about tightening monetary policy adjustments. Recently, due to the introduction of the Three Arrows of Real Estate and the relaxation of epidemic control, the bond market has experienced a correction, but I still believe that there is no need to worry about the overall liquidity environment.

Due to the economic impact in 2022, the structure of economic recovery in 2023 requires attention to two aspects. On the one hand, there will be a recovery in the consumer sector. The overall income of middle- and low-income people will be greatly affected in 2022, and the consumption scenarios of middle- and high-income people will also be affected to a certain extent. For example, during the National Day holiday, the data on tourism, consumption and catering were very bad, but I think this is a relatively short-term situation. The relaxation of epidemic control is already underway. There will of course be a period of chaos in the future, and people will spontaneously reduce outdoor activities. But according to the pace of liberalization in Europe and the United States, the impact will be around one quarter. After the epidemic passes, residents' income and consumption scenarios will recover again. On the other hand, there will also be a recovery in the investment sector. Our main focus is manufacturing investment. On the one hand, because of the economic cycle, we know that China's inventory cycle occurs every 3-5 years. The peak of the last round of manufacturing investment was June 2021, so it is estimated that it will bottom out around the first quarter of 2023. On the other hand, in the context of improving the quality of economic growth, the need to upgrade manufacturing and the conflict between China and the United States, it means that we have to make up for the shortcomings in the "stuck" areas of various industries including semiconductors, import substitution and independent sustainability. Therefore, we believe that there may be a significant wave of growth in manufacturing investment in the future, which will be an important factor contributing to economic growth in 2023. We will continue to look for opportunities in this field.

In summary, I believe that the economy is bottoming out and is about to recover, and the combination of loose and not tightened monetary policy is a stage that is more conducive to the performance of equity assets. We are more excited by the low valuations of the stock market than by the prospect of economic recovery. The current valuation of the stock market is already at a historical bottom, and the premium relative to the risk-free rate of return has also greatly deviated from the historical average. At this time, Mr. Market not only denied the development of the past three years, but also ignored future growth, and even gave a group of high-quality companies and their low quotations.

Specifically speaking, we focus on the allocation of the stock market. On the one hand, we believe in the power of cycles in the process of economic recovery; on the other hand, we continue to explore outstanding companies to share the benefits of growth. At the same time, we also combine our own research Ability, according to the guidance of the valuation model, to adhere to a moderately diversified and balanced allocation, and strive to obtain stable and good investment returns.

Overall, the industry distribution of my portfolio is relatively balanced, and I will continue to optimize it in the process. Specific to the industry, on the one hand, our main positions are to insist on holding some excellent companies for the long term and will not make relatively large adjustments based on short-term macroeconomic conditions. On the other hand, we will also dynamically adjust sector allocation according to market changes. For example, in July, we believed that photovoltaic lithium batteries were overheated, so we reduced allocations; in the third quarter, the valuation level of the computer sector was lower than that of 2018 and fell incomprehensibly, but we believed that the long-term demand for the computer industry was certain, so we increased allocations; recently, we have We are also gradually buying some consumer stocks and track stocks at low prices.

Looking at the main line of economic recovery, I think the following directions are currently more cost-effective:

1) Refining and chemicals in traditional industries. From a traditional logical framework, we look for the assets with the worst performance in 2022, because if they recover later, they may be the most resilient. Currently, we are optimistic about refining in the chemical industry. For most chemical companies, especially refining companies, their upstream is petroleum, so the cost pricing power lies overseas, but the product demand is domestic. Therefore, the situation in 2022 is poor demand and high costs. In the third and fourth quarters of 2022, we will basically suffer losses, and the stock price will basically bottom out. We need to further observe their ability to recover profits and the strength of the economic recovery later.

2) Advanced manufacturing. We believe that there are not only beta opportunities, but also certain alpha opportunities. In 2022, it will be better reflected in special equipment: lithium batteries, photovoltaics, wind energy, etc., which are also the starting points for stimulating the economy. Engineering machinery, general machinery, industrial control, machine tools and other fields are highly relevant to the economy. The alpha opportunity here is that the upper reaches of the industrial chain are dominated by foreign manufacturers, so there is a lot of room for domestic substitution. Domestic products are not unusable, they may just be of slightly poorer brand or accuracy, but they are very cost-effective, which is different from semiconductor products. There is 30%-40% domestic substitution potential in general machinery, and 10% in other fields.

3) Other aspects: Combined with the recovery of valuation levels and consumption scenarios, there are also opportunities in the consumption field. In addition, the opportunity for the export industry chain lies in the reduction of cost-side freight. There are certain structural changes in the upstream and downstream of the photovoltaic lithium battery industry chain, and here we are more optimistic about the downstream industry.

Looking back on 2022, we always regret missed opportunities and lament the mistakes we made. It is of course important to look back at the past, but what is more important is to look forward to the future. Dwelling on the past will not bring us any benefits. Only by raising our heads and looking forward can we find a bright future.

We are full of expectations for the new year. Three years later, we are finally expected to get rid of the shackles of the virus and slowly and orderly plan our lives again. The power of each individual will converge into a big river, which in turn will push individuals to swim forward.

Introduction

Zhang Jun, co-CEO and partner of Hongshang Asset Management, has 22 years of experience in the industry. He holds a BA in Economics from Shanghai Jiao Tong University and a CFA. He once served as executive director of the securities investment headquarters of Guotai Junan Securities, general manager of the investment management department, general manager of the equity and derivatives department, and general manager of the fund investment department of the asset management company. He was the investment manager of products such as Jundexin, Star Value, and Junxiang Hongli. Joined Hongshang Asset in September 2021 as a partner, co-CEO, and investment manager.

Lu Hang, Chairman of Fusheng Investment: Investment in the New Year will "take it to a higher level"

Strengthen the observation and processing of "details"

Things are always With its own unique duality, 2022 will be a test for everyone. In 2022, we experienced the outbreak of the epidemic, major changes in living habits and action trajectories, significant market fluctuations, and the retracement of the net value of the products managed as a private equity manager. When these things happen, on the one hand it is disappointing, frustrating or even annoying, but on the other hand it is also an opportunity to re-examine and reflect on your life, work and investments.

2022 will undoubtedly be extraordinary. We have experienced many unique things in this year. Investment is a process of realizing people's cognitive abilities. Investors' understanding and feelings about the future development of things around them determine their investment logic and attitude. During the lockdown in April 2022, on the one hand, I felt the anxiety and uneasiness of people around me, and at the same time, through the short-term market trends, I also felt everyone’s pessimistic expectations for the subsequent economic growth; but on the other hand, I also observed many Friends still have hope for the future despite difficulties and actively cope with and prepare for it.

2022 is also an ordinary year. Growing up in peaceful times and growing up during the reform and opening up, we have always become accustomed to the rapid development of the domestic economy, the continuous improvement of the quality of life, and the rapid changes in scientific and technological levels. However, the epidemics, wars and other things we have experienced are not unique to this year. In the years to come, there will definitely be no less difficult and new challenges than this year waiting for us to face and solve. The direction of historical progress of human society has always been to advance in twists and turns. There is no need to exaggerate how difficult this year will be. Difficulties and failures may be one of life's constants, but how we face them differentiates us.

Looking forward to 2023, on the one hand, as a fund manager, I need to "go to a higher level" in investment and strive to achieve ideal investment returns for clients. On the other hand, as a corporate manager, It is also necessary to continue to improve all aspects of asset management companies. In 2023, our core task is to strengthen the observation and processing of "details".

In terms of investment, the big challenges that I will face in 2022 mainly come from two points: First, Fusheng Asset has always adhered to the "performance-driven investment" and bottom-up investment methodology. In 2022, our research methods will more often rely on telephone or online meetings, which still has some discounts on the acquisition of information.

This difference in details of investment depth more or less affects the entire team’s judgment on investment choices. The second is that the market will be affected by too many external uncertainties in 2022, causing the swings of short-term expectations to become polarized, which will bring greater trading losses to the investment portfolio. With the full liberalization in 2023, the entire investment team’s research work has begun in an orderly manner. We believe that as we continue to turn over stones to find targets, we will surely discover new investment opportunities. The only thing that competes in investment is diligence. Only by being more diligent can we have the possibility of creating more excess returns. At the same time, in terms of investment portfolio management, we will continue to strengthen "detailed management" and perform "health checks" on the investment portfolio in multiple dimensions.

At the same time, in 2023 we will further strengthen team building at the company level. Investment decisions may be a personal matter for the fund manager, but asset management must be a team matter. Looking back on 2022, I am very fortunate that Fusheng Asset has a group of friends who love investing. Although they are locked down at home, both the other two partners and other partners in the investment research team ensure that they focus 100% on investment. Everyone is constantly brainstorming and discussing the investment value of individual stocks in WeChat meetings. . At the same time, colleagues responsible for trading and product operations also worked against all odds to ensure the normal operation of asset management products. Love is the greatest productivity. We hope to attract more friends who love investment and asset management to the Fusheng Asset platform in 2023.

Looking to the future, we will continue to treat the investment business with a rigorous, pragmatic and objective attitude, and continue to work hard to build Fusheng Assets into one of the most professional asset management companies in China.

Guan Huayu, general manager of Heyuan Fund: A-shares are expected to break out of the gloom and restart their upward journey

Looking forward to 2023, we believe that the factors restricting the market will undergo major changes. The stock is expected to break out of the gloom and restart its upward journey.

First of all, the 23-year epidemic restrictions will subside. As the virulence of the virus continues to weaken, the management has optimized and adjusted control policies in a timely manner, and there is a high probability that production and life will gradually return to normal after the Spring Festival.

Secondly, driven by effective policies, the economy is expected to bottom out and rebound. The current real estate policy has turned comprehensively, and the "three arrows" have been implemented one after another to meet the reasonable financing needs of the industry in terms of credit, bonds and equity; ensuring the delivery of buildings and protecting people's livelihood are steadily advancing; the Central Economic Work Conference has set the tone to support rigid and improved housing needs , the real estate demand-side support policy in 2023 is worth looking forward to. At the same time, the Central Economic Work Conference clearly stated that restoring and expanding consumption should be given priority, including housing improvement, new energy vehicles, elderly care services, etc., and consumption support policies are about to be announced. From January to October 2022, residents’ savings increased by more than 4 trillion yuan, and the reservoir reserves are sufficient. After the epidemic subsides, the gradual recovery of consumption scenes and policy support are expected to lead to the stabilization and recovery of real estate and consumption, effectively driving economic recovery.

Once again, interest rate hikes in Europe and the United States are coming to an end. European and American central banks have continued to raise interest rates significantly in 2022. Currently, the European and American sentiment index and U.S. core inflation continue to fall. There is a high probability that the European and American economies will enter recession in the first half of 2023, and the interest rate hike process is expected to end accordingly. By then, external liquidity and exchange rate constraints will be eliminated, domestic macro-policy autonomy will be enhanced, and the space for development will be further expanded.

Finally, the current market valuation levels are very attractive in the medium term. Stocks in traditional industries have rebounded, but their operating prosperity will pick up along with the economic recovery, and their valuations are still very attractive. The stock valuations of emerging industries have fallen significantly. Although the industry's growth rate will slow down in the future after the penetration rate increases, it is still in a high growth range, and technological breakthroughs and process innovations are also emerging. Industries such as technological innovation, safety and controllability, and green development have always been the focus of unswerving support from structural policies. The global competitiveness of relevant leading companies has become increasingly prominent. The current stock price provides a good mid-term layout opportunity.

Overall, the background for A-shares in 2023 is economic recovery. At the same time, the pressure on exchange rates, freight rates, and commodities has also significantly eased, driving a recovery in corporate profitability. Therefore, investment opportunities in 2023 will be significantly expanded. and rich. Our focus is on large-scale consumption and the real estate industry chain related to post-epidemic recovery, as well as green economy, advanced manufacturing, domestic substitution and safe development-related industries with strong medium-term growth momentum. From a global perspective, due to the asynchrony of economic cycles and policy cycles, China's economy is likely to show a clear advantage among major powers in 2023, and Chinese assets are expected to be favored and supported by international funds.

The market has encountered constant black swans in recent years. The main domestic risk we are concerned about in 2023 is still the new crown epidemic. If the epidemic repeatedly impacts the economic recovery process, it will undoubtedly have a negative impact on the market. Looking overseas, the rapid rate hikes and balance sheet reductions in Europe and the United States may bring unexpected risks to the stability of U.S. debt, Japanese yen carry trades, and European sovereign debt, affecting global financial markets and the real economy. Throughout history, the trend of A-shares has been mainly driven by the domestic economy and policies. If the virus does not undergo sudden negative mutations and domestic policies respond appropriately to possible overseas shocks, we believe that the recovery trend of A-shares will not be greatly affected.

2022 is an extremely unforgettable year.

In this extraordinary year, Shanghai Heyuan has successfully set sail with the full support of its shareholders and cooperative institutions. On the occasion of the New Year, on behalf of all employees of Shanghai Heyuan, I would like to express my sincere gratitude to everyone for your continued trust and support! I wish everyone good health, smooth investment, and all the best in the new year! After the harsh winter, all the spring buds have bloomed. After the impact and baptism of many heavy hammers, A-shares are currently at a historical low, which is also an area where mid-term opportunities appear. In 2023, we will continue to work hard to seize investment opportunities and strive to provide holders with a good performance curve!

About the author

Guan Huayu

Founding partner, executive director, general manager and fund manager of Shanghai Heyuan Private Equity Fund

21 years of experience in the securities industry, with successful experience in public and private placements. He once served as equity investment director and research director of Bank of Communications Schroder Fund. In 2020, he led the team to enter the tens of billions of private placements and maintain outstanding performance. He has excellent macro judgment, industry allocation and stock selection capabilities. During his 21 years in the industry, he has covered finance, machinery, public utilities, power equipment, large consumer goods, medicine, technology and electricity TMT, new energy, new energy vehicles, chemicals, and new materials. and many other industry directions, constantly expanding and deepening the circle of competence.

Zhen Xinzhong, General Manager of Kuanyuan Assets: Actively seize opportunities with relative certainty

On the occasion of the New Year, we are about to bid farewell to the Year of Renyin and welcome the Year of Guimao. In traditional Chinese culture, Renshui is the water of the surging river, and Yin is the tiger in the Chinese zodiac. Therefore, Renyin was also called the tiger leaping over the Tianhe River in ancient times, which represents overcoming natural dangers and overcoming difficulties. Therefore, the past year has been characterized by encountering various difficulties and challenges. From the perspective of the origin of Chinese characters, Ren represents gestation and Yin represents growth. The combination of Ren and Yin is at a stage when the old cycle is passing and a new cycle is about to begin, indicating that the future is full of vitality and hope.

In the past year, we have witnessed major changes that have not been seen in many years. The Federal Reserve launched the largest interest rate hike in more than 20 years. The outbreak of the Russia-Ukraine war disrupted the world situation and the energy lifeline. The raging domestic epidemic brought economic activities to a standstill. Global capital markets also suffered heavy losses, with Bitcoin falling 63% for the year, Nasdaq falling 33% for the year, and the S&P 500 index falling 19% for the year. Among Chinese assets, the CSI 300 fell 21% throughout the year, and the Hang Seng Index fell 15% throughout the year.

In this year of facing internal and external situations, we have seen that the central government has taken effective adjustment measures in the face of changes and challenges. Since the 20th National Congress of the Communist Party of China, we have adopted a pragmatic strategy in diplomacy, meeting with dignitaries from various countries and easing international relations; making timely adjustments to domestic policies in various industries including real estate, the Internet, etc.; affirming and expressing our stance on the private economy; despite the significant improvement in the ability to spread the epidemic. After the virulence is significantly reduced, prevention and control measures should be adjusted in a timely manner to support the economy, etc. We believe that this is just the beginning. In the coming year, we may see further policy space to deal with possible problems in international, economic, social and other aspects. After experiencing the pain of last year, China's economic growth will recover in the coming year.

The changes and opportunities we face include: the complete liberalization of epidemic prevention policies will bring mid- to long-term benefits to the economy; the easing of the international environment is conducive to restarting my country's economic growth; policy support for various industries and the private economy It is conducive to resolving risks and enhancing the confidence of market entities. These may simultaneously bring about the stability of the stock market and the performance growth of some industries and companies.

Of course, we are still facing recurring epidemics, the global economy is facing high inflation and economic recession pressures, geopolitical black swan risks, potential operating and management risks of certain industries and individual companies in the economic downturn cycle, etc. . Therefore, while we maintain our expectations for recovery and growth, we need to be fully calm and follow closely, and always maintain a cautious and optimistic attitude to deal with the market in the coming year. As long as the future market is relatively stable and we actively seize relatively certain opportunities, we will have full confidence to obtain excess returns.

The stabilization and recovery of the economy will surely bring stability and opportunities to the capital market, and the asset management industry will also benefit from the development of the capital market. In the past few years, in the face of changes in the capital market and the trust and trust of investors, we have always been modest and cautious and walked on thin ice. In the future, we will always adhere to the concept of value investing, conscientiously conduct research and investment, conduct in-depth research on changes and developments in the economy, society, markets, and industries, integrate them into our core investment concepts, and continue to strive to create long-term benefits for investors. Continued growth in investment performance.

Outlook for 2023

Looking forward to 2023, the changes and opportunities we face are mainly:

First, the complete relaxation of epidemic prevention will be an important turning point . With the exponential outbreak of the epidemic after liberalization, the situation may become more chaotic in the future, and the economic status may be difficult to predict. These chaos may bring some pessimism. But the chaos will eventually pass, life will eventually return to normal, and the economy will return to normal growth.

When investing, we believe that the best thing to do is just like the famous ice hockey player Gretzky said: "Don't go where the ice hockey is, go where the ice hockey will be." We keep an eye on changes in various industries and wait for the "ball" to come in the next six months. A place reached in one year.

Second, real estate support policies are frequently issued, and whether real estate has a soft landing is still very important. Real estate is the super elephant of the economy. It is not only huge in size, but also has huge upstream and downstream related industries. It is also deeply embedded in the financial system and is closely related to the financial health of real estate. A considerable number of policies to support real estate have been introduced in recent months, including policies to support financing of real estate companies and encourage normal housing demand. Demand in first- and second-tier cities and strong third-tier cities is expected to restart, allowing the industry to achieve a soft landing. The stability of the real estate industry is very important for the economy to return to growth, and we will keep a close eye on this.

The third is whether the confidence of market entities can be gradually restored. In the past three years, due to insufficient demand caused by the epidemic, some industries have introduced policies. The private economy is the main body of China's economy, and entrepreneurs are the core force in organizing production. With the adjustment of industry policies, especially Internet policies, if more security guarantees can be provided from the legal system in the future, the restoration of the confidence of market entities will also help the economy return to the normal growth track.

Fourth, Sino-foreign relations, especially Sino-US relations, are showing signs of improvement. After the G20 meeting, we saw that China and the United States have adopted a more pragmatic attitude to deal with problems, manage competition and differences, and avoid conflicts. Relations between China and other economies have also been repaired or become closer (such as Germany, Australia, the Middle East, etc.). For China, restarting economic growth requires a friendly overseas environment, and diplomatic methods may be softer and more pragmatic. While overseas economies are generally facing economic growth and high inflationary pressures, China, as the most important market and the most efficient and cheap supply chain, also has a huge foundation for cooperation. For China and the United States, long-term competition and conflict are inevitable, but highly complementary economies and deep integration are also inseparable. Since the trade war began in 2018, Sino-US trade volume has declined in 2019, but has reached a record high in the past two years, far exceeding the level before the trade war.

But we still face some risks that require our close attention: First, the epidemic is still developing. If a more deadly strain emerges, it will force the world and China to carry out some degree of epidemic prevention and control. Any further lockdown will interrupt China's economic recovery. Second, the global economy is facing the pressure of high inflation and economic recession, especially Europe, which is facing high energy prices and may fall into recession. On the one hand, the recession of the global economy will affect China's exports. On the other hand, interest rate increases in developed economies will also lead to the return of capital, putting emerging economies under pressure from capital outflows. Third, geopolitical risks have not been completely eliminated. The Russo-Ukrainian war has not yet been properly resolved. Fourth, when the economy is in a downward cycle, policy risks in certain industries and operational, financial, and management risks of individual companies will increase sharply. We will also maintain our consistent prudent investment style to deal with various risks.

Looking at the world, the Chinese market is still quite attractive. In 2023, China will be a market with moderate growth, low inflation, and relatively attractive valuations. If some long-term concerns about China are alleviated, the attractiveness of the Chinese market to global funds will be reflected.

Although China’s economy has many deep-seated problems, it also has huge advantages that are difficult to replicate:

(1) China is one of the largest single markets in the world. It is already the world's largest market in many fields, such as automobiles, new energy, semiconductors, etc. The huge single market advantage is difficult for other emerging countries to copy. A huge single market means there are opportunities for the birth of world-class local companies.

(2) China is also the only country in the world that has all industrial categories, with leading cost advantages and efficient manufacturing capabilities. China's share of global manufacturing added value has been increasing over the past 20 years. Before joining the WTO in 2001, China's share of global manufacturing added value was less than 8%. Although it encountered a trade war in 2018, it continued to rise, reaching a record high in 2021. 29.8% of the record. In many emerging industries, China is in a leading position in the world, such as photovoltaics, new energy vehicles, etc., which are in global monopoly positions. Also from micro research, we found that Chinese companies in many industries are constantly making breakthroughs and realizing import substitution in higher-end fields, and their global industry rankings are constantly rising.

(3) The core driving force for China’s economic development comes from the diligence and wisdom of the Chinese people. The continuous pursuit of a better life is the deepest driving force behind the endless growth of China’s economy. As long as there are not too many restrictions, this power will continue to emerge.

Overall, we remain cautiously optimistic about the Chinese market in the next year. The market may rise amid shocks, and investment opportunities will be significantly better than in 2022. We will actively seize deterministic opportunities. But we will also pay close attention to risks and promptly adjust positions to realize profits when the market is too optimistic.

The main industries and opportunities we focus on include:

(1) Opportunities in the energy sector. Including not only traditional energy, but also new energy.

Capital expenditures on traditional energy sources are relatively insufficient. The recovery of energy demand brought about by economic recovery will further amplify the problem of oversupply, and industry prosperity will remain at a high level. New energy has experienced a substantial adjustment last year, and its valuation has returned to a relatively reasonable level. The penetration rate of new energy is still very large. We pay close attention to the few companies that can establish excess advantages and barriers.

(2) The pharmaceutical industry has been affected by the new crown epidemic in the past few years, and many normal demands have not been fully released. We focus on pharmaceutical companies that exclude COVID-19 business profits, which may benefit from the recovery of normal medical demand in the next year.

(3) Companies in the consumer industry, such as home appliances, liquor, etc., have been affected by real estate and the epidemic in the past two years. With the soft landing of real estate and the recovery of consumption brought about by the relaxation of the epidemic, demand is expected to recover , there are staged opportunities.

(4) Opportunities in the Internet industry. In the past two years, the Internet has been negatively affected by policies and macro pressure, and its performance has stagnated. As cost reductions and efficiency increases gradually come into play, the bottom line of performance growth has passed. Afterwards, as the macro economy stabilizes and rebounds, performance will return to growth. At the same time, industry policies have become friendly, and the central government has clearly emphasized the need to vigorously develop the digital economy, and supervision has become normalized to support the positive role of platform companies in leading development and creating jobs. Valuation suppression factors will also gradually disappear.

In terms of selecting specific companies, we value both security and offense. We prefer companies with excellent business models, competitive advantages far beyond their peers, high enough barriers, low debt ratios, abundant cash flow, sustained performance growth, and reasonable valuations.

We would like to end with a quote from Yuval Harari: Yes, the storm will pass, humanity will continue to exist, most of us will still be alive, but in another world . We are looking for companies whose business models and competitive advantages remain rock solid in the new world.

About the author:

Mr. Zhen Xinzhong

MBA from Harbin Institute of Technology, currently the general manager of Shanghai Kuanyuan Asset Management Co., Ltd. He has successively served as business director of the Investment Banking Department of Industrial Securities, managing director and sponsor representative of the Investment Banking Department of Pacific Securities, and general manager and sponsor representative of the Fourth Department of Soochow Securities Investment Bank. He has participated in or presided over many company IPOs, listed company refinancing, restructuring and mergers and acquisitions projects, and has rich experience in capital market operations.