After a significant surge in the A-share market, it has shown a trend of fluctuation and adjustment. In response to the outlook for the market, China Securities Journal reporters, through third-party surveys and interviews with first-line private equity firms, have learned that about 60% of private equity firms still hold a positive outlook for the long-term trend of the A-share market. At the same time, the blue-chip stocks and high dividend varieties in the technology growth and consumption sectors are currently the most favored investment directions in the industry.

Majority of Private Equity Firms Still Optimistic About Medium and Long-Term Trends

The results of a private equity survey conducted by a third-party institution show that despite a noticeable adjustment in the market recently, looking at the overall trend of the A-share market, 58.62% of private equity firms still believe that the trend of the A-share market has reversed and is expected to further fluctuate and rise. In addition, 32.18% of private equity firms believe that the A-share market is expected to start a medium-term rebound cycle of a longer period; 9.20% of private equity firms are more cautious in their expectations, believing that the market may still adjust further.

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Yuan Shi Investment Fund Manager Li Yifeng said in an interview with China Securities Journal reporters that the catalyst for this round of the market is a series of policies introduced by multiple departments and the high-level meeting in September, which shows the determination of policy shifts; the capital side has already driven the market to a strong universal rise. At this stage, macroeconomic growth and market performance may be affected by geopolitical factors, but at the same time, there is strong support from infrastructure investment, exports, and the manufacturing industry. Overall, in the early stage of a new round of economic recovery, market fluctuations will continue to exist, and investors are advised to participate in structural games in the market's fluctuating trend.

"After a sharp rise, there must be an adjustment," Li Yifeng said, "Only after several such repetitions will it truly enter the next phase of the market, and this time cycle may still need one to two months."

Zi Ge Investment General Manager and Investment Director Xu Shuang said that the relationship between the market and the macroeconomy is often "compared to the owner walking the dog." In the early stage, there was an important adjustment in macro policy, and the direction of the "owner" was determined, and the stock market responded quickly and positively. However, it is also reasonable for the "dog" to "return to the owner's side" after running too far. Xu Shuang said: "Subsequently, as the volatility returns to a normal level, it is expected that the market will enter a structural differentiation phase of fluctuation and consolidation."

He Yu Fund founder and fund manager Da Fei said that the market is expected to fluctuate and stabilize, and the universal rise trend is not sustainable, and individual stocks will face differentiation. At the same time, even without considering policy factors and economic fundamentals, the global competitiveness of China's manufacturing industry is still worth looking forward to.

Overall Strategy Tends to "Offense"

In terms of response strategies, the survey results further show that currently, 68.97% of private equity firms tend to maintain a higher position or add positions when the market is low, adopting an "offensive" strategy in terms of position level, portfolio flexibility, and transactional opportunities; 22.99% of private equity firms tend to maintain a neutral position, pursuing a "balance of attack and defense" in terms of position, portfolio, and transactions; 8.04% of private equity firms prefer to appropriately reduce their positions and adopt a "defensive" strategy in terms of position, portfolio, and transactions.

Rongzhi Investment Fund Manager Xia Fengguang said that the current market may be in the "early stage of a long-term upward trend," and fiscal policy efforts are expected to improve the performance of listed companies. While the market has a clear long-term direction, "the pace may be fast or slow" is normal. In terms of operational strategy, Xia Fengguang believes that it is not necessary to pay too much attention to details, but the following important time windows can be noted: first, the dynamics of debt policy at the end of October, second, the Federal Reserve's interest rate decision in November, and third, whether there will be further policy introductions at the end of the year."Based on a positive assessment of the market, we would tend to be proactive in our operations, maintaining a necessary position during the process of going long. At the same time, there may be significant divergence and volatility in the early stages of the market's rise, so the position can be moderately flexible, but the overall strategy is to choose opportunities to go long," said Feng Hao, Investment Director of Ju Zhi Capital. He indicated that changes in the current policy have led to a substantial inflection point in the market. Despite some external uncertainties, considering the perspective of "taking myself as the main focus," the continuous expectation of policy may be the dominant force in the market's operation.

From the perspective of position management, Da Fei further stated: "Before this round of rebound, our position was moderately high; in the short to medium term, we will continue to be optimistic about the varieties we hold and will make more active position allocations to the original varieties."

The direction of technology growth is favored.

"We believe that the most certain thing is still the main line of technology. Under the logic of high-quality development, the medium and long-term certainty of the technology growth sector is relatively high," said Feng Hao.

The results of related questionnaire surveys show that the private equity industry currently has a high recognition of the direction of technology growth. Specifically, 32.89% of private equity firms are optimistic about the direction of technology growth; 25.00% of private equity firms are optimistic about white-horse stocks in sectors such as big consumption, new energy, and pharmaceuticals; 19.74% of private equity firms are optimistic about high dividend and other large-cap blue-chip sectors; 13.16% of private equity firms are optimistic about the real estate industry chain and cyclical sectors such as nonferrous metals and coal; 9.21% of private equity firms are optimistic about thematic opportunities such as "debt reduction," state-owned enterprise reform, and mergers and acquisitions.

Li Yifeng said that attention can be focused on long-term technological innovation trends such as artificial intelligence and opportunities in the mergers and acquisitions of central and state-owned enterprises. Other industrial directions that are optimistic include semiconductors, biopharmaceuticals, and military industry.

Xia Fengguang further analyzed that the stability and activity of the capital market are conducive to technological innovation and industrial upgrading. Against this backdrop, the growth varieties in the field of technology conform to the laws of the operation of the economic cycle, and some excellent varieties should not be limited by traditional valuation methods and may have better flexibility in the future.

In addition, some private equity professionals have also pointed out investment opportunities in the real estate industry chain and big consumption sectors in the recent stage. Xu Shuang said that current investors need to keep up with policy trends, enhance the recognition of the importance of the real estate industry chain and consumer promotion, and pay attention to the opportunities for increased beta factors in related aspects.