Can I invest in the GEM 50 constituent stocks?
Some time ago, news reported that the GEM registration system was accelerating. As a result, the GEM rose instead of falling. Until today, the GEM has been rebounding and is getting closer to the high point in March. I decided to invest in an index fund, and the current profit is 56.62%.
Many people are biased against the GEM and believe that the companies on the GEM are small and medium-sized companies with small and medium market capitalization or fraudulent companies. Indeed, when GEM was first established, most of the companies on it were junk. However, after more than 10 years of development, the GEM is no longer the same as before. Currently, there are more than 800 listed companies in total, with a total market value exceeding RMB 6 trillion and a circulating market value exceeding RMB 1 trillion. A number of leading companies in various segments with high market value, high growth and high competitiveness have emerged.
For example, the large-scale Aier Ophthalmology, Oriental Fortune, Mindray Medical, and CATL. These companies are all in the entrepreneurial sector. Because the GEM is positioned for entrepreneurial companies, small and medium-sized enterprises, and high-tech industrial enterprises. So the news two days ago also said that companies in traditional industries will no longer be listed on the GEM.
So with the advancement of the registration system and various reforms, the companies listed on the GEM in the future will mainly be high-tech, high-growth, and highly competitive innovative companies, and the benchmark will be the inclusion of US stocks. Stark. Of course, the quality of the company is still very different from the quality of the companies on Nasdaq. In any case, with the official launch of the GEM registration system (expected in August), the quality of the GEM index constituent stocks will be further improved in the future, so old friends must learn to gradually let go of their prejudices against the GEM.
There are two main popular GEM indexes:
One is the GEM Index (399006), and the other is the GEM 50 Index (399673), both of which are available. Index funds that track them.
How to invest in these two indexes?
If you are not optimistic about the animal husbandry industry in the long term and are optimistic about the pharmaceutical industry, then invest in the "GEM 50". For example, in the past few months, Wen's shares, the largest weighted stock on the GEM, which focuses on livestock and poultry breeding, has been falling, so the performance of the GEM index in recent months has not been as good as the "GEM 50". In addition, the weight of pharmaceutical stocks in the "GEM 50" is greater than that of pharmaceutical stocks in the "GEM". Therefore, if the pharmaceutical industry does well, the "GEM 50" will rise more than the "GEM".
Whether it is GEM or GEM 50, it is not suitable to add to it now. Because the pharmaceutical industry among the top ten heavyweight stocks has entered the overvalued zone, the valuations of GEM 50 and GEM have also become very expensive. So don’t buy these two index funds now. If you have people who buy these two index funds, I suggest you start reducing your positions in batches to stop profits or hold the base unchanged.
Because although it has been overvalued, it is still possible to continue to rise after being overvalued. So for conservative people, it’s time to start taking profits. For those who are more aggressive, you can start to take profits in batches, that is, the higher the price goes up, the more you sell, and when it goes up a little, you sell a little more, until you are sold out. For those who are more aggressive, you can hold it still and continue to ride the rise, but it is also possible Profit taking at any time. So it depends on what kind of risk preference you are, and just get the right one.