What kind of assets are the safest in the post-epidemic era?

  The once-in-a-century coronavirus not only brought an unprecedented impact on global epidemic prevention, but also brought a huge shadow to the global economy. This article gives a brief analysis of five issues that readers are concerned about.
  Question 1: What impact will the epidemic have on the macro economy, especially the industry? Is it continuous or short-lived?
  From a macro perspective, the impact of the epidemic on the global economy is short-term, mainly reflected in demand contraction and macroeconomic slowdown. As the spread of the virus decays, it should enter a relatively normal operating state in the third quarter. As for the impact of the epidemic on the economy, the data in March can be used for reference.
  According to data released by the Ministry of Finance on April 20, in March 2020, the national general public budget revenue fell by 26.1% year-on-year, of which tax revenue fell by 32.2%. Among them, value-added tax, corporate income tax, and consumption tax fell by 36.4%, 41.6%, and 32.3% respectively year-on-year, and personal income tax fell by 25.4%, which may indicate that residents’ income is not good. Many low-income groups are not taxpayers in the first place, and the decline in the income of actual residents may be slightly greater than the decline in tax. I personally estimate that it is about 30%. With the effective control of the epidemic and the resumption of work in various places, it should basically return to normal starting from the second quarter.
  As for the industry level, for some industries, the impact may be lasting. Because the virus will change the way people work and lifestyle to a certain extent, including the way people communicate, communicate and entertain. For example, in the training industry, the impact of the popularization of online courses on phenomenon training may be to change the industry pattern; as well as in the retail industry, online shopping has changed the way many people shop, and networked daily purchasing will become the norm. The challenge to the offline retail industry may be long-lasting; as well as the catering industry, dancing with the epidemic will lead to fundamental changes in catering consumption patterns and consumption scales. All in all, the epidemic has catalyzed the further shift of the life service industry from offline to online.
  Question 2: In a turbulent period when the epidemic is difficult to predict and market psychology is relatively fragile, how should we choose assets when making investments?
  Safety first. The security of assets can usually be considered from two dimensions. The first is to buy cheap assets, and the second is to buy assets that are highly profitable and liquid.
  Let me talk about “cheap” first. The simplest rule of investment profit is to buy low and sell high. There are two situations of buying low. From the perspective of trend investment or value investment, “buy low” means buying at a very low price and its own value. Here is a hard indicator (PB). In addition, the profitability of an enterprise (that is, the rate of return on assets) is also an important factor in considering the value of assets. The stock market is usually measured by the price-to-earnings ratio (PE). Under the same level of profitability, the lower the valuation level, the cheaper the assets and the greater the investment value. At present, global assets are at historically low levels, and valuations tend to stabilize after the impact of the epidemic.
  Regarding growth, it can be measured by the growth rate of operating income and the growth rate of net profit. High-growth markets have the ability to digest high valuations and bring more ideal returns to investors.
  Question 3: From the current valuation, which type of asset is cheaper?
  From a horizontal perspective, Nasdaq, the Indian market, and the S&P market have relatively high levels of profitability and valuation. The dual-factor drive makes their annualized yields the highest in all markets in the world; the Japanese market’s valuation center is stable and high , Mainly rely on profit to bring returns. The UK, France, and Germany market valuations are in the middle level, and the level of profit and price-to-earnings ratio varies, making their returns not high; from the average price-earnings ratio and price-to-book ratio, the cheapest are Hong Kong stocks and A-shares, which are generally high profits Level and low valuation are the value depressions in global assets. Considering that the financial and real estate industries of Hong Kong stocks are relatively large, after structural adjustments, the A-share stock market is the cheapest asset. (Figure 1)
  From the vertical dimension, the current valuation level of the stock market is at the historical median level except for the Nasdaq and German markets. In other words, the current valuations of most capital markets are relatively low.
  Question 4: In addition to cheap assets, what other assets can be considered for investment? For example, it is not cheap, but it also meets the principle of safety?
  Good growth assets can be “not cheap.” Through the comparison chart of operating income growth, it can be seen that the Nasdaq market has the fastest growth rate, which is related to the relatively high proportion of high-tech companies, while the growth of companies in Britain, France, and Germany is relatively slow. It also corresponds to it. The growth of listed companies on the A stock market in Japan and China is in the middle. Therefore, from the perspective of market characteristics, the Nasdaq market is a growing asset in the global stock market. After considering the dual factors of growth and valuation, the investment value of the A-share market should be higher.
  From an industry perspective, industries that will grow rapidly in the future, such as technology, health, and other industries that represent the direction of human life style and demand growth, are all industries with good “growth”.
  Secondly, assets with stable profits and high cash returns can also be considered. For example, some stocks with stable main business profits and high dividends are generally blue chip stocks.
  We know that there are two profit channels for purchasing assets: one is the cash flow income generated by the asset during the operation process, and the other is the capital premium income brought about by the rise in the market price of the asset. In any case, the latter has risks of periodicity and market fluctuations. Therefore, if the former is more secure, it can be used as a safe asset for long-term allocation.
  Question 5: Can people with different risk appetites choose different types of assets or different asset combinations?
  Is such that. For those who prefer high returns, first consider equity assets. Judging from the average annual return on assets in the last ten years, equity assets are the highest. Among equity assets, high-growth yields are particularly high. Of course, the volatility is correspondingly large.
  Those who prefer cash flow income and stability can choose blue chip stocks or real estate with low valuation and high rental yield. In general, in addition to liquidity, other aspects of fixed assets are similar to blue-chip stocks. Oriental nations have a special complex for real estate. Therefore, considering long-term inflation, real estate with high rental yields is also a configurable asset.
  From the current point of view, not only China, but the global economy will undergo a major adjustment in the industrial structure after the epidemic. The changes after the adjustment show which industries may face shrinkage, recession or even crisis in the future, and which industries may have more room for growth. Before all this is clear, asset allocation should be based on the principle of security. Assets should be selected. The first is security, the second is security, and the third is security.
  Therefore, assets with stable profitability and assets with good liquidity are our priority assets.

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