From Bullish Flag to 6.8% Return: Worth Getting On Board?

Friends who have been following our blog for a long time must know that we have always held 券商 ETF (512000) and it's still running the grid.

This securities ETF has had some ups and downs. When East Finance turned 3 was undergoing a strong redemption, we sold out East Finance turned 3 as a relay to buy into the securities ETF.

Because the securities ETF (512000) holds East Finance (300059) as its largest holding stock, as of the first quarter this year, it holds a ratio of 18.40%.

As of today, our securities ETF has yielded a 6.80% return.

Today, we're going to discuss whether this securities ETF is still worth paying attention to?

Index funds are not worth investing in; it's all about the valuation.

The securities ETF (512000) tracks the CSI 399975 Securities Companies Index, which currently has a sample size of 49 securities companies.

From a valuation perspective, the index is still undervalued over the past period. That means it's still worth paying attention to.

Why do we choose grid trading?

Looking at the performance over the past 5 years, the overall performance of the CSI 399975 Securities Companies Index is weaker than that of the Shanghai Composite. From the trend chart, it's also clear that the index is not suitable for long-term holding, with a oscillating pattern.

Another point to note is that the year-on-year volatility of the index is higher than that of the Shanghai Composite.

This suggests that the securities companies may be more suitable for grid trading, where we buy in when the valuation is low and sell out when it's high.

So, we chose to do grid trading.

The creation date of our securities ETF grid was July 15, 2022.

Let's take a look at the performance during this period:

This is the excess return generated by the grid strategy, which has reached 2.15%.

Are we still optimistic about securities companies?

From a valuation perspective, it's still worth paying attention.

Looking at the industry's performance this year, some securities companies have already exceeded expectations, such as Northeast Securities (000686) which has already risen two days in a row.

This is mainly due to the favorable market environment and the implementation of the comprehensive registration system, which can be said to have ushered in a turning point.

Additionally, last year's base was also low, which is another important reason for this year's excess return.

Everbright Securities also pointed out in their research report that the performance of securities companies is determined by changes in market cycles and regulatory cycles. Usually, during an economic upswing, stock prices tend to perform well, and the comprehensive registration system will accelerate the valuation repair for the securities sector, but short-term price increases still require a favorable market environment.

Today, the Shanghai Composite Index closed at 3385.61 points, setting a new high in nearly 10 months. The total trading volume was 1.12 trillion yuan, with 11 consecutive days of trading volume exceeding 1 trillion yuan.

The National Bureau of Statistics also released data on the first quarter's economic performance. The economy started the year well, with GDP growing by 4.5%.

As we are currently in a recovery phase, there are opportunities to make money, and people still want to get in. This will also be beneficial for securities companies.

However, considering the volatility of securities ETF prices, I still recommend that everyone use grid trading strategies with caution, if they're very optimistic about the future development of securities companies, they can buy a little more, and reduce their holdings when the valuation is high.

If you have any questions, feel free to consult us.

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