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"With the current favorable policies, some structural opportunities will emerge in the capital market. We believe this is a high-probability event." Recently, Zheng Ke, chief asset allocation officer and general manager of the asset allocation and fund investment department of Penghua Fund, said in an interview with The Paper's "Chief Connection" 2024 mid-year outlook program that the second half of 2024 is still a transitional period of switching between the old and new economic growth "engines", and defensive strategic investment will still be the main line.

Looking back at the asset allocation logic in the first half of the year, Zheng Ke said that he mainly seized three opportunities. The first was the decline of micro-cap stocks. He analyzed, "Previously, the excess returns of micro-cap stocks that exceeded the bull-bear cycle have completely returned to zero. Based on this, we need to put its excess returns into a longer cycle. And those strategic industries and sectors related to the national economy and people's livelihood are the investment focus, such as public utilities, oil and energy, shipping, operators, banks, etc."

Second, it participated in the "main uptrend" of gold. Zheng Ke said that since last year, with the expansion of the Federal Reserve's debt scale, the scale of US national debt has been approaching the debt repayment limit. During this period, gold has presented an allocation opportunity.

Is it still a good time to invest in gold assets? Zheng Ke answered, "From a short-term perspective, gold has seen a major uptrend in the first half of this year, and may face a period of adjustment later; but if you aim for the long term, gold is still a very good asset for investment."

Third, it has made strategic investments in Hong Kong stocks. Zheng Ke analyzed, "After four or five years of decline, Hong Kong stocks are already at a low valuation. In addition, compared with A-shares, stocks with larger market capitalizations in Hong Kong stocks will rebound more violently, and the beta generated will also be stronger than A-shares."

When asked whether the logic of asset allocation will change in the second half of the year, Zheng Ke believes that "the overall change in the subsequent asset allocation pattern mainly comes from the fluctuations in overseas markets." He further said that although Hong Kong stocks react more obviously to fluctuations in overseas markets, the emergence of risks is just the right time for allocation, and Hong Kong stocks still have investment value in the second half of the year.

Focusing on the dividend and high dividend track, Zheng Ke said frankly, "At present, we are more concerned about the risk of dividends, rather than the excess returns of dividends." He believes that the excess returns of coal sector investments under the dividend concept have ended, "whether from the fundamentals or the relative risk premium, the attractiveness of coal has declined significantly compared with the past." On the other hand, Zheng Ke further pointed out that banks among dividend assets may still have relatively obvious relative returns, especially Hong Kong stocks.

It is worth mentioning that Zheng Ke wrote in the product's latest second quarter report, "The economic structure is undergoing a difficult transformation from the financial real estate chain to new quality productivity. All this is inevitable. This process is bound to be accompanied by a continuous increase in the valuation of strategic resource targets."

In this regard, Zheng Ke explained in an interview that the investment path of new productivity is different from that of old productivity. In the process of economic structural transformation, economic growth may be slow. For some structural opportunities that arise during the transformation process, he tends to seize them along a longer investment logic.

"Defensive strategic investment will continue throughout the second half of the year." Zheng Ke cited the example that some companies in the advanced manufacturing industry with monopoly advantages and extremely low valuations may have strategic investment value in the era of artificial intelligence. In addition, he is also optimistic about the development of the financial industry. "In the first 20 years, the real estate industry chain supported our economy, and in the next 20 years, finance is likely to embrace new quality productivity."

In the bond market, Zheng Ke believes that the bull market in bonds will continue in the first half of the year. "The new productivity has not yet arrived, and interest rates may continue to decline. Although the downward space for interest rates is very limited, the direction will not change, so the allocation value of bond assets will still be prominent."

In addition, in the first half of 2024, benefiting from the continued improvement of the external market, the performance of QDII funds is still relatively impressive, occupying the "C position" among all types of funds. According to Wind data statistics, more than 70% of QDII funds achieved "positive" returns in the first half of the year. In this regard, Zheng Ke warned, "Often when a type of fund is extremely popular, it (outstanding performance) has entered its end, and we should pay attention to the potential risks."

The volatility in overseas markets in early August also once again demonstrated the immutable law of the capital market: "long-term mean reversion and prices moving closer to intrinsic value." Zheng Ke commented, "Based on the comprehensive judgment of many factors such as the overall size of U.S. debt, the U.S. election, and the current valuation level of U.S. stocks, we believe that systemic risks in U.S. stocks will come at any time, but not necessarily this time. In the long run, we believe that overseas assets will experience drastic fluctuations next year, or 'contraction', which is inevitable."

"Therefore, our investment framework tends to avoid high-profile assets and focus on those least eye-catching assets. When such assets are at a value trough at the same time, it may be an excellent investment opportunity," said Zheng Ke.