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China Fund News reporter Cao Wenjing

The Science and Technology Innovation Board has always been regarded as a "test field" for capital market reform. Among all sectors of the A-share market, companies listed on the Science and Technology Innovation Board have attracted much attention from the market because of their stronger R&D investment and stronger performance growth. At the same time, public funds continue to overweight the Science and Technology Innovation Board.

Many industry insiders said that the long-term investment value of the Science and Technology Innovation Board lies in its ability to incubate a group of high-growth hard technology companies. If the overall market recovers in the future, the medium- and long-term investment value of the Science and Technology Innovation Board will be highlighted, especially for leading companies with strong scientific and technological innovation attributes.

Publicly offered funds continue to overweight the Science and Technology Innovation Board

The Science and Technology Innovation Board has become an important battlefield for public funds to allocate assets.

A research report by Industrial Securities shows that as of the end of the second quarter of this year, the allocation ratio of active equity funds (including ordinary stock funds, equity mixed funds, and flexible allocation funds) to the Science and Technology Innovation Board was 9.76%, a decrease of 0.11 percentage points from the first quarter of this year, but the over-allocation ratio of the Science and Technology Innovation Board increased from 3.20% to 3.39%.

Data from Tianxiang Investment Consulting shows that as of the end of the second quarter of this year, among all holdings of public funds (including Hong Kong-listed companies), CATL once again replaced Kweichow Moutai as the largest holding of public funds. Tencent Holdings, Luxshare Precision and others were also among the top ten holdings of public funds. Luzhou Laojiao, Shanxi Fenjiu and others withdrew from the top ten holdings, while Zhongji Xuchuan and others newly entered the top ten holdings of public funds.

According to the second quarter report, the ten companies with the largest increase in market value by public funds are Luxshare Precision, Tencent Holdings, BYD, NewEos, Foxconn Industrial Internet, Innolight, Pengpeng Holdings, GigaDevice, Shanghai Electric, and Meituan. Many of these companies belong to the information technology industry.

Wind data shows that as of the end of the second quarter of this year, the total scale of the Science and Technology Innovation Board theme funds exceeded 220 billion yuan. In addition, unlike the overall net redemption in the first quarter of 2024, during the second quarter, 126 Science and Technology Innovation Board theme funds received net subscription shares of more than 13 billion shares.

Huang Jichen, assistant general manager of the industry research department of Bosera Asset Management and fund manager, said that the industries to which the targets of the Science and Technology Innovation Board belong are concentrated in the fields of chips, biomedicine and high-end equipment, which are the core directions of my country's industrial upgrading. Therefore, we have always attached great importance to the investment and research of high-quality companies on the Science and Technology Innovation Board. As the overall valuation of the Science and Technology Innovation Board has been digested to a reasonable level in the past two years, we believe that its investment attractiveness is significantly increasing.

Lu Yang, fund manager of Debon Fund, also pointed out that the Science and Technology Innovation Board has always been a market sector that we pay close attention to. The establishment of the Science and Technology Innovation Board has played a very important role in promoting independent innovation and sustainable development in my country's high-tech field. The development of companies on the Science and Technology Innovation Board also reflects the latest trends in China's economic transformation and domestic technological innovation. We hope to seize the growth investment opportunities behind these trends by screening high-quality companies. Overall, the Science and Technology Innovation Board has cultivated very good soil for science and technology innovation funds.

The mid- to long-term investment value of the Science and Technology Innovation Board is highlighted

Focus on AI, high-end manufacturing, innovative drugs, etc.

Many industry insiders said that the industries in which the mainstream targets of the Science and Technology Innovation Board are located represent the core direction of my country's industrial upgrading, and their long-term growth and investment value are outstanding. They can focus on AI computing chips, high-end equipment manufacturing, innovative drugs, etc. At the same time, we need to be vigilant against risks such as overcapacity and high volatility.

Lu Yang believes that at present, the Science and Technology Innovation Board has formed a cluster of listed companies with semiconductors, new energy, high-end equipment manufacturing, biomedicine, etc. as the core. And from the increasing demand for independent control in China, we believe that the pan-technology sector dominated by semiconductors has more flexible growth potential. In addition, judging from the recent outlook of the global semiconductor market leader for the future, after experiencing a downward cycle of nearly 3 years, the industry has re-entered the upward development track. With the support of fundamentals, the stock price performance is more certain and sustainable.

Tang Neng, manager of Yinhua Science and Technology Innovation Theme Fund, believes that the second half of the year is expected to usher in a better recovery market, and the market will gradually shift from stock game to incremental market, and is optimistic about the long-term trend opportunities of technological innovation. Overseas large models are rapidly iterating, multimodality is becoming more mature, and applications are gradually entering a state of explosion. Domestic large models have also entered the stage of attack, and model capabilities are gradually approaching international standards. The explosion of applications is just around the corner, and we are optimistic about the investment opportunities of artificial intelligence in 2024.

Huang Jichen also reminded that there are two points that need to be carefully identified: first, whether the industry in which the enterprise is located faces long-term overcapacity risks due to previous excessive financing; second, whether the current R&D direction of the enterprise has the potential to obtain good returns in the next 3-5 years, and whether customers are willing to pay for it. If a direction can be found that does not have the hidden danger of overcapacity and can meet the new needs of downstream customers, then this type of target will reflect good long-term investment value and growth potential. This may appear in the following sub-industries, including high-performance AI computing chips, advanced process semiconductor equipment, and some innovative drugs.

In addition to risks such as overcapacity, high volatility is a notable feature of the Science and Technology Innovation Board stocks. "The high volatility of the Science and Technology Innovation Board is mainly due to the high volatility of earnings, the continuous reduction of holdings by small non-shareholders, and the fluctuation of market risk preferences." Huang Jichen said that in the actual operation, we mainly select the sub-industry direction based on the industry trend in the next 4-6 quarters, and decide the buying time based on the matching degree of valuation and growth rate. At the same time, avoid investing in Science and Technology Innovation Board targets where small non-shareholders or controlling shareholders continue to reduce their holdings to control the risk of retracement.

Editor: Captain

Audit: Wooden Fish

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