Rebirth of the Capital Legend

"I'm not a big fan of Changying Precision," Old Qian said. "It's mainly because it's owned by the 'Fushan Group.' While the Fushan Group has strong capital, the market structure isn't very good. With this kind of capital, I feel like even with the market's unanimous long position on Changying Precision, there will always be some issues. It's not as stable as Beijiang Communications Construction."

Zhao Qiang paused and said, "If we're talking about certainty, then Beijiang Communications Construction's stock definitely has much higher certainty. It can only be said that Changying Precision's stock, compared to other popular concept stocks in the market, has a slightly higher performance in terms of expected trend and gaming cost-effectiveness."

"That's not necessarily true," Lao Qian said. "Do you think that after a large amount of capital is concentrated and hyped up on a number of mainland real estate stocks in the Hong Kong stock market, will there be a corresponding reaction in the corresponding second- and third-tier real estate stocks in the mainland market? I think the possibility of such a reaction is still very high.

Today, many second- and third-tier real estate stocks, including Chongqing Development, Yango Group, Taihe Group, Jinke Group, and Beijing Capital Group, are performing very well. Not only have they all hit their daily limit, but judging by their market trends, there's clearly strong active buying activity. I have a feeling that among these stocks, a new leader with consecutive limit-up days will emerge, or perhaps a monster stock will emerge.

"The possibility of a market linkage between the two places you mentioned does exist," Sun Chengyu said. "And over the past two trading days, the trend of major infrastructure stocks has indeed been driven by the performance of stocks related to the real estate industry chain in the Hong Kong stock market. However, those second- and third-tier real estate stocks you just mentioned seem to have some flaws."

"What's the flaw?" asked Lao Qian.

Sun Chengyu paused and continued, "Either the market capitalization and circulating shares are too large, or the fundamentals are too poor. To be honest, these second- and third-tier stocks are far inferior to the mainland real estate stocks with the most frequent fluctuations and the strongest trends in the Hong Kong stock market, whether in valuation, fundamentals, or future expectations. Given these differences, a short-term wave of emotional speculation is possible, but to develop a sustained trend or give birth to a monster stock, it seems that some conditions are still missing, and the timing is not yet mature.

Compare this with the trend of the entire real estate industry chain in the Hong Kong stock market.

The trend of the core area of ​​infrastructure construction in the mainland market is indeed significantly different from that of the Hong Kong stock market.

In the Hong Kong stock market, a large number of funds that are concentrated on the main line of the real estate industry chain are concentrated in domestic real estate stocks, while in the mainland market, more core main funds, taking into account the expectations of the macroeconomic strategic guidelines, that is, taking into account the upward policy of the macroeconomic strategic guidelines of the New Era Road and the Maritime Silk Road, have always been keen on speculating on the two major sectors of building decoration and building materials, rather than the real estate sector.

After all, 99% of the companies in the real estate sector have basically shrunk their business domestically.

There are no conditions for expanding overseas.

At least in the short term, there is no way to quickly expand into foreign markets.

However, many core leading stocks in the two major sectors of building decoration and building materials, such as China Construction, China Communications Construction, China Railway Construction, China Construction, China Railway, China Metallurgical Group... and other core leading stocks with the word "Hua" in their names, under the guidance of the macroeconomic strategic policy of the Maritime Silk Road in the new era, can quickly expand into foreign markets and undertake many foreign infrastructure projects.

In other words, its expected future development space is greater than that of other stocks in the real estate sector.

This is also the underlying logic behind why, in the domestic market, a large number of funds have always chosen the construction decoration and building materials sectors as their speculation path and the corresponding targets, rather than the real estate development sector.

Based on this logic, I estimate that it will still be difficult for these second- and third-tier real estate stocks you mentioned to gain unanimous recognition from many active speculators in the market and to concentrate on buying them.

In contrast, many small- and medium-cap growth stocks in second- and third-tier cities, such as those in the building materials and architectural decoration sectors, offer a much higher speculative value than those of domestic real estate developers. For example, the recent success of Oriental Yuhong is likely due to this reason.

"Isn't the fundamental reason for Oriental Yuhong's strong stock performance due to President Su's unwavering commitment to 'Fuxing Road' and the increasingly clear expectations for explosive future performance?" Zhao Qiang asked. "It shouldn't have anything to do with the macroeconomic strategic direction of the so-called New Era Silk Road and Maritime Silk Road, right?"

Sun Chengyu said, "From an emotional perspective, it's indeed the influence of President Su's 'Fuxing Road' seat that has led to this stock consistently topping the investor attention lists in both markets. From a fundamental perspective, it's also the increasingly certain expectations of explosive future performance that have supported the stock's current share price, and the continued willingness of many major institutional investors to buy at high levels. However... it's a bit far-fetched to say that this stock has remained so strong for three consecutive months, more than doubling in value, and has become the focal point of sentimental changes in the entire major infrastructure project, with no connection to the macroeconomic strategic direction of the New Era Silk Road and Maritime Silk Road. Without this underlying logic and hype, the stock's valuation wouldn't have risen to its current level, let alone remained so stable."

"The concept of the New Era Road and the Maritime Silk Road..." Lao Qian said, "During last year's bull market, it was the key market trend supporting the Shanghai Composite Index's continued breakthroughs. It was also a hot topic for major investors in the market at the time. But now... it seems that many investors inside and outside the market have lowered their expectations by comparison. Moreover, the actual positive factors along this line are becoming less and less."

Sun Chengyu nodded and continued, "During the bull market last year, this core concept theme was indeed hotly speculated by various fund groups both inside and outside the market. However, at that time, this line was still in the pure concept stage, and the entire underlying logic was not solid enough. Moreover, the fundamentals of the entire domestic real estate market and related industries in the real estate industry chain had not yet seen improvement, making it difficult to have substantial performance growth to verify this underlying logic.

Therefore, a lot of funds were concentrated in this concept theme area for speculation at that time, but in the end no money was made.

Many people not only did not make any money, but also suffered a lot of losses.

However, things are different now. After nearly two years of matchmaking by the country, many overseas projects have begun to start.

In other words, this is no longer a purely nihilistic concept.

Rather, it is a real benefit that can bring substantial performance growth to corresponding industrial chain companies and expand the demand of the entire industrial chain.

It can accelerate and help the fundamentals of the two core sectors of building decoration and building materials to undergo a complete transformation.

It has also led to a general performance explosion for many companies in this industry chain.

In other words, the expectations of this line are becoming clearer and clearer. After the good news, the performance realization period is becoming clearer and clearer. In this case... the higher the stock price rises, the higher the certainty is.

This is why I said that the stock of Beijiang Communications Construction has the right time, place and people.

First of all, this stock has a state-owned background, and when it comes to connecting with foreign infrastructure projects, private enterprises can only reap the benefits. The first ones to get the project must be state-owned enterprises.

There is no doubt that the stock of Beijiang Communications Construction meets this requirement.

Furthermore, the location of Beijiang Communications Construction Company and its main business development scope are closer to the Middle East. As the saying goes, those who are close to the water get the moon first. Being close is naturally an advantage.

Furthermore, this stock has a small market cap, high market attention, and strong sentiment...

These are the core logics that can help this stock perform well.

In addition, Oriental Yuhong's stock continues to receive high attention in the market, and the stock has huge room for growth over the past few months.

All of this provides guidance for the subsequent market development of Beijiang Communications Construction's stock.

It also provides certain guidance for the speculation space for many short-term capital groups that are concentrated on speculating on this stock.

Beijiang Communications Construction and Oriental Yuhong are the two stocks that serve as the core leading stocks of the entire infrastructure line to provide guidance.

Supported by these underlying logic and broader context, small- and medium-cap growth stocks in the building decoration and construction sectors will undoubtedly continue to attract significant attention from short-term investors. This will also inevitably lead to the emergence of numerous concept-driven stocks that can follow the lead of Beijiang Communications Construction.

For example, stocks such as Tianshan Cement, Beijiang Construction, Shibei Hi-Tech, etc., weren't they completely driven up?

That's why I say that compared to the real estate sector, it's very likely that among the two major sectors of building decoration and building materials, the trend-following stocks that hit the daily limit today will be stronger and more worth investing in."

"Brother Sun's analysis makes a lot of sense." Zhao Qiang pondered Sun Chengyu's analysis for a moment, nodded, and said, "I hadn't thought about it so much before. I've always been puzzled as to why the real estate sector, the main line of the real estate industry chain, in the Hong Kong stock market has performed so strongly, while in our mainland market, the real estate sector has always been lagging behind the construction and decoration and building materials sectors. Now, after Brother Sun's explanation, I finally understand everything."

"Then why are the steel, nonferrous metals, and coal sectors, all part of the core infrastructure sector, so weak, unable to outperform the real estate, building decoration, and construction materials sectors?" Old Qian pondered for a moment and continued, "Logically, these sectors are more cyclical. In addition to the macro-positive factors of the recovery of major infrastructure and the New Era Road and Maritime Silk Road, there's also the positive impact of supply-side structural reform. But the result... it seems that the more positive factors there are, the weaker the trend. And as for performance, it seems that the many core leading stocks in these three sectors have performed well in the past two quarters. Judging from their performance, they have clearly bottomed out and the industry fundamentals have reversed, yet their stock prices are lukewarm."

Sun Chengyu responded: "Steel, coal, and nonferrous metals are not closely related to the outbreak of the real estate cycle, the recovery of large-scale infrastructure, and the macroeconomic development strategy of the new era of the Silk Road and the Maritime Silk Road.

Furthermore, these major sectors have not only driven up stock prices due to performance.

The room for imagination in other areas is really too narrow.

In addition, although the supply-side reform has shown initial success, a large number of investors in the market are still skeptical about it.

In other words, there are major differences in cognition and expectations.

Generally speaking, this kind of divergence can only be eliminated through further performance realization of most companies in the industry.

At that time, when the differences are eliminated, these sectors will naturally regain their strong upward trend, or even continue to soar to catch up with the valuation levels of other sectors in the main area of ​​large infrastructure.

Among these, I think the coal sector, which is currently the least optimistic, should have the highest expectation gap.

After all, the coal price fell so badly before.

Coupled with the country's strategic investment in new energy, people are very pessimistic about the coal sector and believe that this type of energy will be eliminated in the future.

But looking at it now...

The development of the new energy industry cannot be achieved overnight.

Not to mention the maturity of related technologies, just the scale of expansion will take many years to plan.

In addition, with economic growth, electricity demand will further expand. At the current stage, thermal power is unlikely to withdraw from the main stage of electricity demand.

So, on to the huge electricity gap.

Coal will inevitably usher in a strong cyclical reversal, and its prices will also usher in a strong cyclical reversal.

In addition, with the coal market downturn for several years and the advancement of the country's supply-side reform, the entire coal industry has basically completed industrial integration. That is, small companies and small coal mining enterprises have either gone bankrupt or have been acquired by large state-owned enterprises.

Or because they cannot keep up with technological reforms, they have voluntarily given up market share.

In general, market concentration is rapidly increasing in the entire coal industry.

As the degree of re-concentration increases and future industrial demand has reversed and will continue to reverse in the future, there will naturally be great explosive power.

Therefore, I dare to predict that this unpopular sector will definitely produce many long-term bull stocks in the future.

However, the consensus expectations for this sector are not strong enough at present, and there are not many major financial institutions to make layouts, so the trend is still lacking in initiative.

This means this sector is worth keeping an eye on, but as for layout… it’s still a little early.”

"Brother Sun's analysis of the coal sector is very insightful and far-sighted." Zhao Qiang was deeply moved after listening to Sun Chengyu's analysis of the future trends of various sectors in the major infrastructure sector. He said with a smile, "It seems that this unpopular sector of coal really needs more attention and a gradual increase in the weight of the position."