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Securities Times reporter An Zhongwen and Wu Qi

The plunge in share prices of US stock giants such as Intel has "scared" many funds that hold a large amount of US stocks. This may become another trigger for QDII funds to reduce their US stock positions.

Securities Times reporter noted that Intel, which plummeted last Friday, has not been included in the mainstream holdings of QDII funds for many years, which has saved many QDII funds. However, the recent continuous explosion of US stocks has caused important changes in the holding strategies of US stock funds. Many funds have begun to abandon the strategy of solely allocating US stocks, and while reducing US stock positions, they have begun to increase their allocations to A shares and Hong Kong stocks.

Sell ​​Intel before the crash

If you have QDII funds, avoid pitfalls in time

On August 2, local time, the three major U.S. stock indexes fell collectively, with the Nasdaq and S&P 500 falling for three consecutive weeks. Intel, abandoned by fund managers, became the eye of the storm of the U.S. stock market crash that day, closing down 26%, the largest drop since 1982. This plunge caused Intel to fall out of the $100 billion market value club.

Intel's second quarter financial report just released this year shows that the company's revenue was $12.83 billion, a year-on-year decrease of 1%; the net profit loss was $1.61 billion, significantly lower than market expectations. After the financial report was released, many institutions lowered their stock target prices. Among them, Morgan Stanley and TD Cowen lowered Intel's target price to $25 per share; Deutsche Bank lowered Intel's target price to $27 per share; Jefferies lowered Intel's target price to $28 per share. In addition, S&P put Intel's rating on the negative credit watch list.

Although Intel's stock price plunge also dragged down QDII funds, it is worth mentioning that most QDII funds do not hold a large position in Intel. Securities Times reporters noticed that Intel's appeal among global technology stocks began to decline several years ago, which is clearly reflected in the holdings of QDII funds. In the past three years, Intel has not been included in the list of mainstream holdings of funds. In contrast, a group of stocks that are not as well-known in China as Intel, including Lam Research, ON Semiconductor, Broadcom, Salesforce, and AMD, have frequently become the group stocks of QDII funds.

A few QDII funds that have included Intel in the top ten holdings actually have a relatively conservative holding ratio and a short holding period. For example, the holdings information disclosed by China Asset Management Global Technology Pioneer Fund shows that the fund included Intel in the fund's holdings list for the first time at the end of the fourth quarter of last year, but the position ratio was only 3.66%, making it the ninth largest holding. Considering that the fund had 7 holdings with a position ratio of more than 8% at the time, Intel's 3.66% position was more like a test.

The fund manager of the above-mentioned Hua Xia QDII Fund observed for three months, and the position information at the end of March this year showed that Intel had been sold. This operation enabled Hua Xia Global Technology Pioneer Fund to avoid Intel's decline of up to 51.23% since the second quarter.

Reduce U.S. stock positions and start increasing A-shares

A subtle change is that managers of public U.S. stock QDII funds are increasing their holdings of A-shares and Hong Kong stocks and reducing their U.S. stock positions.

Recently, public funds and institutional investors have lost interest in U.S. stocks. Specifically, whether it is the U.S. stock QDII fund managers' secretive investment in heavy stocks, or the domestic QDII Nasdaq 100 Index has retreated 10.87% from its historical peak on July 10.

The second quarterly report data disclosed by public QDII funds show that many fund managers who hold a large position in US stocks have begun to diversify their allocation from a single US stock allocation to global assets. For a long time, the top allocation strategy of concentrated investment in US stocks was considered an offensive approach to obtain high returns. Now, the US stock positions of QDII funds are being cut, and Intel's 26% one-day plunge may become a major trigger to aggravate this trend.

According to the holdings disclosed by a QDII fund under a large public offering in the north that ranks first in performance, the fund significantly increased its A-share holdings while reducing its U.S. stock holdings at the end of June this year. This is the first time in two years that an A-share listed company has entered the fund's top ten holdings. Compared with the increase in A-shares, the QDII fund has increased its holdings of Hong Kong stocks more aggressively. The proportion of Hong Kong stock holdings at the end of June has jumped sharply to 27.74%, a significant increase from the 12.4% of Hong Kong stock holdings at the end of March. At the same time, the fund's U.S. stock holdings have dropped below 40%.

Wan Qiong, deputy director of investment and fund manager of the Index and Quantitative Investment Department of Boshi Fund, analyzed that the recent sharp fluctuations in the US stock market were mainly affected by two factors: First, the market's concerns about the future profitability of technology giants. For example, the financial reports of Tesla and Google disclosed on July 24 were lower than expected, and the revenue of the intelligent cloud computing business in Microsoft's financial report on July 31 was lower than expected, which caused the market to worry about the continued profitability of US stock giants. After the market closed on August 1, local time, Intel and Amazon disclosed their financial reports. Intel's financial report was far below market expectations. The company announced that it would suspend dividends and lay off employees, and Amazon's third-quarter performance guidance also disappointed investors. Second, some economic data showed that the US economic growth slowed down. For example, the S&P PMI manufacturing data released on the evening of July 24 fell below the boom-bust line. The slowdown in economic data deepened the Fed's expectations of starting to cut interest rates in September.

Yang Delong, chief economist of Qianhai Kaiyuan Fund, pointed out that the US stock market has shown many signs of peaking recently, and the US non-farm payrolls data was far below expectations, which became an important catalyst for the explosion of the US stock market. He believes that the US non-farm payrolls data in July fell sharply, the number of new jobs hit the lowest record in three and a half years, and the unemployment rate rose to the highest level in three years. This shows that the risk of the US economic growth slowing down or even falling into recession is increasing, which will inevitably trigger panic in the market.

Divergence in U.S. equity fund strategies grows

Regarding the current phenomenon of the US technology stock market correction caused by Intel's plunge, many fund managers responded to the incident and believed that market expectations have begun to shift to the US economy will quickly go into recession, so selling risky assets may be an operating method, but the probability of a sharp correction in the US stock market as a whole is not high.

A QDII fund manager of a leading public offering in South China was interviewed by a Securities Times reporter and believed that the correction of the semiconductor sector in the US stock market was mainly due to negative factors of companies such as Intel and Nvidia. At the same time, the US non-farm payrolls data was seriously lower than expected, the unemployment rate increased, and there were certain signs of recession. It is necessary to observe the US interest rate cut policy and fiscal efforts in the future to avoid economic recession. The US non-farm payrolls data was too bad, and market expectations began to shift to the US economy will quickly go into recession, so risky assets were sold. In addition, at the trading level, technology stocks have continued to rise in the past few years, and market hotspots are increasingly concentrated in a few popular stocks, and volatility is also declining. Therefore, once there is an expectation shift, volatility will be amplified. Intel's own performance problems have caused dissatisfaction among institutional investors, and two consecutive quarters of losses have become the fuse for investors to sell stocks.

Yang Delong also believes that there is no market that only rises and never falls, and there is no market that only falls and never rises. After a round of recovery, the US economy has begun to show signs of fatigue, which may mean that the risk of the US stock market peaking has further increased. If the Federal Reserve does not cut interest rates as soon as possible, it may push the economy into recession, and recession poses the greatest risk to the US stock market, because as a barometer of the economy, the trend of the US stock market is closely related to the US economy.

Looking ahead to the U.S. stock market, U.S. stock funds have quite different strategies for U.S. stocks. Some fund people emphasized that for the S&P 500 index components in the second quarter of the U.S. stock market, the market unanimously expects EPS (earnings per share) to grow by 9% year-on-year, and the information technology and communications services industry is also expected to achieve the fastest EPS growth at the industry level. At the same time, interest rate cuts may also be implemented in September, but interest rate cut transactions need to pay attention to the current U.S. stock valuations have already taken into account a lot of interest rate cut expectations, and be wary of callback risks in the short term. In the long run, short-term economic fluctuations will not excessively affect medium-term industrial trends and long-term technological revolutions, and U.S. stocks still have allocation value.

Zhao Qiyuan, fund manager of Huabao Fund, said that there are not many opportunities for a sharp correction in the US stock market. The Nasdaq index has rarely experienced a correction of more than 10% in the past two years. In September and October last year, when interest rates suddenly rose, it was a good opportunity to increase positions. If the Nasdaq index falls by about 15%-20% and the price-earnings ratio drops to about 25 times, there may be a better risk-return level.