Taking Japan as a mirror, three directions of China's overseas investment

In 1990, the Japanese stock market bubble peaked, and in the following 22 years, the Nikkei 225 index fell by 80%. During this period, the Japanese stock market still went out of dozens of doubled stocks;

 

In 1990, the Japanese stock market bubble peaked, and in the following 22 years, the Nikkei 225 index fell by 80%. During this period, the Japanese stock market still went out of dozens of doubled stocks;

 

In the ten years from 2012 to 2022, the Nikkei index rose by 184%. In these ten years, dozens of "tenfold stocks" have appeared in the Japanese stock market.

 

 

This shows that during the economic downturn, there will still be bull stocks in the market, and these bull stocks have a common feature, that is, companies go overseas!

When the downward pressure on the domestic economy increases and consumer demand is sluggish, the production capacity is placed overseas. Although the export data falls, the income and profits of enterprises can grow, which is the source of these companies' excess returns.

 

 

Drawing lessons from Japan, China's current manufacturing industry also has a lot of room for improvement in going overseas. From export to going overseas, it may be the main source of excess A-share returns in the future.

Referring to the experience of Japanese companies going overseas, industries with comparative advantages are the first to go overseas. Based on this, I have found three directions in which A-shares can have the logic of going overseas.

The first direction is home appliances, light industry, textiles and clothing, automobiles, machinery and equipment, etc. These industries account for a high proportion of overseas business revenue, and overseas revenue is still growing continuously, and net profit is also increasing;

 

 

The second direction is electronic components, chemicals, general equipment, automobiles, etc. The proportion of overseas business of these companies has increased, corresponding to the increase in overseas revenue, but profits have not increased significantly. These companies have the potential to go overseas.

 

 

The third direction is advanced manufacturing industries such as lithium batteries, new energy vehicles, and photovoltaics. We have global competitiveness in these fields. Although there are various restrictions now, the trend of enterprises going overseas still exists, and these companies also have the strength to compete overseas.