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Hello everyone, I am Dolphin Analyst!

Led by Federal Reserve Chairman Powell as a major symbol, the overall hawkish interest rate hike and anti-inflation stance have dragged global markets except Hong Kong stocks into a deep plunge.

In fact, in the article "Layoffs Not Enough to Cover, U.S. Still Needs to "Decline" Further" that I wrote before, I have expressed similar information: the Fed's main goal is employment rate + inflation rate.

Although there are signs of a decline in the high point of inflation, the labor market is still overly prosperous, and it will take at least about 5 consecutive months of net layoffs of 500,000-600,000 people per month for the labor force to return to supply-demand balance, which is similar to an economic recession.

Without achieving this, rapid policy shifts may lead to previous efforts being in vain, and the shortage of labor force will continue to be unsolved, forming sustained wage inflation expectations. Therefore, the Fed's hawkish stance is basically within expectations.

On the other hand, Hong Kong stocks are the only unique one as China's version of Nasdaq, and the main carrier of Chinese Internet asset listings. The two countries' Securities Regulatory Commissions seem to have made significant progress in the issue of the delisting of Chinese companies in the US— the US may send auditors to China (to Hong Kong) to review the audit work papers of Chinese companies listed in the US.

At the same time, due to the tightening of expected funds and A-shares being in the season of shockingly poor financial reports, northbound funds have turned net sellers again, and the selling amount is not low.

II. Alpha Dolphin Portfolio Returns:

Although there is a major macro event such as the expectation of interest rate hike that has put pressure overall, some companies are still able to achieve their own alpha by relying on strong fundamental performance during the concentrated period of financial report releases in both A-shares and Hong Kong stocks.

So, last week, even in the overall market downturn, Dolphin's Alpha Dolphin achieved a significant relative return despite a slight drop of 0.2% in absolute returns: while the Shanghai and Shenzhen 300 Index fell 1% and the S&P 500 fell 4% during the same period.

From the start of testing to last weekend, the absolute return of the portfolio was 14.3%, and its relative return compared to the S&P 500 was 22%.

Six, Chinese concepts generally rise, U.S. concepts generally fall, new energy and semiconductor adjustments, consumption is lukewarm.

Last week, among the positions and stocks that Dolphin was concerned about: Chinese concepts generally rose, and especially with the background of the financial reporting season, stocks with strong fundamentals had more significant increases.

The biggest news at the industry level is that the timed bomb of the retreat of Chinese concepts from the U.S. stock market and return to the Hong Kong stock market seems to have been temporarily held back, but subsequent developments still need to be observed for any fluctuations.

In addition, although the stock prices of consumption-related companies are relatively sluggish at present, some companies have demonstrated considerable resilience during the financial reporting season, such as Maotai, Huarun, Tsingtao, which Dolphin Analyst pays attention to in the alcoholic beverage category; as well as Nongfu Spring in the bottled water category, whose business stability is comparatively strong in both the first and second half of the year with a positive outlook.

Industry related to new energy is experiencing a collective correction, whereas this sector's rebound has already been considerable as this sector was among those mainly pushed in the first half of the year in terms of promotions and stable/booming overseas demand, and it should also be considered where next year's growth will come from after the stimulus is over when the second half of the year progresses.

After the U.S. stock market rebounded for a month and a half, it continues to pull back, particularly last week, when the hawkish remarks of the chairman of the Federal Reserve seriously affected the market's expectations of rapid policy changes to a looser stance.

Correspondingly, all U.S. assets held by Dolphin Analyst experienced relatively significant pullbacks, and with a growth pattern, the pullback rate becomes even more significant.

Regarding the drivers of the significant increase and decrease in Dolphin Analyst's recommended stocks last week:

Regarding the flow of funds into stocks followed by Dolphin Analyst last week: Tencent, around 300 yuan, continues to be bought by southbound funds; besides, southbound funds also started to continuously purchase Xiaomi in the past two weeks, while northbound funds began to purchase Enjie and Ningde Times.

Last week, BOE, which had been continuously purchased before, became the top seller; furthermore, the continued sales of Meituan, Kuaishou, Minha, and SMIC, etc., were still ongoing.

Seven, assets distribution of the portfolio and adjustments

From the launch of internal testing on March 1, Longbridge Alpha Dolphin portfolio's overall profit on Friday last week was nearly 14.1% (including dividend income), while equity returns were close to 17%.

The portfolio was not adjusted last week, and a total of 32 stocks were configured, including 10 standard models and 22 low-priced stocks. As of last weekend, Alpha Dolphin's asset allocation and equity asset holdings are as follows:

Eighth, focus of the week

This week marks the end of the earnings season: the key focus is on Pinduoduo, and whether it will exceed market expectations; also, during the downturn in new energy, we will see if BYD can continue to support the pillar of the entire vehicle.

Other companies like BOE will likely continue to struggle for the quarter, and perhaps even the third quarter of the year; we will pay more attention to marginal improvements in product pricing. Goertek will mainly pay attention to the trend of VR adoption, while Gree and Midea will mainly focus on whether they can improve their performance after the extremely hot summer.

Recent articles in the Dolphin Portfolio Weekly can be found here:

"A rumor-driven bloodbath: risk is still lurking, searching for sugar in broken glass."

"The US moves left, China moves right, and the cost-effectiveness of US assets has returned."

"Still too slow to lay off, the US must continue to decline."

"US stocks celebrate 'funerals' with bad news: recession is a good thing, and extreme interest rate hikes are viewed as negative."

"The second half of interest rate hikes is here, and the opening of the 'performance thunderstorm'"

"The epidemic will strike back, the US will decline, and capital will change."

"China's assets at present: 'No news is good news' for US stocks." 《Growing Is Already a Carnival, But Is America Definitely in Decline?》

《Is America in Decline or Stagnation in 2023?》

《American Petroleum Inflation, Can China's New Energy Vehicles Grow Stronger?》

《As the Fed Raises Interest Rates, China's Asset Opportunities Increase》

《US Stock Market Inflation Again Explodes, How Far Can the Rebound Go?》

《The Most Down-to-Earth Approach, Dolphin Portfolio Takes Off》

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