2020-07-03

Fund Micro Interview|Great Wall Fund Qu Shaojie:Low Valuation Overlays the Return of Prospective Stocks

By ddzyx

On July 3, Qu Shaojie, fund manager of the International Business Department of Great Wall Fund, made a guest appearance in the online interview section of the Toutiao Fund Channel today,”Fund Micro Interview”, looking forward to Hong Kong stock investment opportunities. Dialogue Qu Shaojie Great Wall Fund Qu Shaojie

Guest profile:Qu Shaojie, Bachelor of Finance Management and Investment, Sun Yat-Sen University, MBA Master of Finance, The Chinese University of Hong Kong , Registered Financial Analyst (CFA); Former QDII Trading Manager of E Fund Fund, Hong Kong Stock Fund Manager of YGD Asset Management Company (Hong Kong), Fund Manager of Shenzhen Daopu Capital Management Co., Ltd., Hong Kong Stock Investment Manager of Life Insurance Asset Management Co., Ltd.; 2018 Joined the Great Wall Fund in March. He used to be a researcher of the international business department and is currently a fund manager of the international business department.

Q:Welcome Mr. Qu Shaojie, fund manager of Great Wall Fund International Business Department The fund channel online interview section”Fund Micro Interview” is relatively unfamiliar to mainland investmentpeopleA shares What are the differences from the Hong Kong stock market? What is the linkage between A-shares, Hong Kong stocks and US stocks?

Qu Shaojie: Hong Kong and A shares have fundamental homogeneity and institutional differences.

More than 70%of the listed companies in Hong Kong stocks are leading companies in various industries in the Mainland in terms of market value. Therefore, the economic fundamentals of Hong Kong stocks are roughly the same as those of A-shares. The mainland economy is favorably listed on the Hong Kong Stock Exchange, such as Tencent, Alibaba, Meituan, China Merchants Bank, Ping An Group and other mainland companies will have guaranteed performance. Hong Kong stocks and A shares are essentially the same. Hong Kong stocks are all around us, except that they are listed on Hong Kong stocks, with the performance growth capability of leading attributes, but at a lower valuation waiting for us to invest. At the same time, Hong Kong Stock Connect also contains a large proportion of non-mainland enterprises, such as Hong Kong local retail enterprises, Hong Kong real estate, Hong Kong infrastructure and Macau Gaming, international financial groups, etc.

In terms of the trading system, Hong Kong stocks are quite different from A stocks. First, there is a clear difference between the trading system of Hong Kong stocks and A shares. A shares use T+1 trading system, that is, the stocks purchased on the same day can only be sold on the second trading day; and A shares use a daily limit trading system. Hong Kong stocks use the T+0 trading system, and they can be sold immediately after buying stocks. At the same time, Hong Kong stocks adopt a trading system with no daily limit.

In terms of trading participants, A-share retail investors are the main players. About 70%of the participants are individual investors, and trading is more active. Hong Kong stocks are dominated by institutions, and long-term investment ideas are prevalent, so trading of Hong Kong stocks is more bland. Although there are now land stocks and QFIIs that can invest in A shares, in general, A shares still belong to a stock market that is not sufficiently internationalized, and the internationalization of Hong Kong stocks is more obvious. Overseas investors such as Europe and the United States still have the main pricing power of Hong Kong stocks.

The United States is another investment market and has no direct connection with the fundamentals of the Chinese economy, so the correlation between the Hang Seng Index and the US stock index is extremely low. According to WIND data, the Hang Seng Index has been negatively correlated with the S&P 500 and Nasdaq in the past three years. The correlation between the Hang Seng Index and the Shanghai Stock Index is 60%. This correlation actually reflects the fact that 70%of the market value of Hong Kong stocks is actually a mainland enterprise.

Q:As a professional Hong Kong stock investor, in your opinion, what are the main aspects of the attractiveness of Hong Kong stocks?

Qu Shaojie: It can be said that Hong Kong stocks have obvious investment appeal. The biggest attraction comes from high-quality listed companies in Hong Kong, followed by these high-quality enterprises It has the characteristics of reasonable valuation and high dividend.

In the Hong Kong stock market, the number of Chinese companies has accounted for half of the total number of listed companies, with a market value of over 70%. In terms of industry, there are leading companies in traditional industries such as consumption, education, property, finance, and real estate, as well as a number of listed companies in the Internet, high-tech, and new formats. In particular, the Hong Kong Stock Exchange revised the”Listing Rules” to make institutional arrangements for the secondary listing of China Prospective Shares and the listing of companies with”same shares but different rights” arrangements. Now that the Chinese internet giants are getting listed or listed on the Hong Kong stock market has become a trend, Ali, Tencent, Meituan, Xiaomi, Netease, JD.com, etc. have returned, and it is expected that more Chinese stocks will choose to list in Hong Kong.

Because institutional investors account for a larger share of transactions, the valuation of the above-mentioned high-quality companies is also more reasonable, which is more in line with performance growth and future development. At the same time, due to the existence of short selling mechanisms and various CBBCs in Hong Kong stocks, it is difficult for corporate valuations to be unreasonably high. When the valuation of a high-quality company is low at the time of purchase, the risk of valuation revision during the holding period is small, and investors can rest assured to earn the benefits of corporate performance growth. This is very popular with institutional investors.

In terms of dividend yield, Hong Kong stocks are also significantly better than many major global stock markets, which is a traditional dividend market.

Q:What will be the impact of”Chinese stocks” return in bulk on Hong Kong stocks? Will the Hong Kong stock market be their”safe haven”?

Qu Shaojie: In November 2019, the China Economic and Security Review Committee of the United States Congress submitted its 2019 annual report to Congress, recommending that the adoption of a variable interest entity structure be prohibited (VIE) companies are listed in the United States, and most Chinese stocks in the technology, Internet, media and education industries have adopted the VIE structure. At the same time, the US Senate passed the”Accountability Act for Foreign Companies”, which requires strengthened inspections of company finances and requires companies to prove that they are not controlled by foreign governments. For the above reasons, listing in the United States is no longer the first choice for Chinese technology Internet companies. Even companies that have successfully listed in the United States have a hedging plan to avoid being delisted and looking to leave the United States for a second listing.

The entry barrier for A-share listing is relatively high, and there are many requirements. First of all, the first condition is that the”Securities Law” and”Company Law” in China are very clear. It is a joint stock limited company established in China in accordance with the law. The Alibaba, JD.com and other listed stocks in the United States are registered overseas and are foreign-capitalized, making them fail to meet the A-share listing requirements.

Hong Kong stocks will undoubtedly be a safe haven for Chinese stocks. 1) The listing process on the Hong Kong stock market is more similar to the US stock market; 2) More flexible and flexible in terms of foreign-invested industry access and foreign exchange; 3) Enterprises with the same stocks and different rights are included in the Hong Kong Stock Connect, which is intended to return to the Chinese stock market Channels; 4) With Alibaba’s successful return experience, the return mechanism of Chinese stocks is relatively mature.

The return of Chinese stocks has greatly changed the ecological environment of Hong Kong stocks, which is essentially pushing Hong Kong stocks from the past financial real estate-based stock market to a more advanced new ecology such as technology Internet and biomedicine. change. As these high-growth giant companies choose to list on Hong Kong stocks, the valuation system of Hong Kong stocks will also change, and will move closer from the past low growth rate and low valuation to high growth rate and high valuation. Hong Kong stock investors will also continue to benefit from this major change in the return of Chinese stocks.

Q:”China Prospective Stocks” returns to the secondary listing in batches. Many investors plan to obtain the desired income by launching new stocks. Will Hong Kong stocks make stable profits without losing money? What risks should be paid attention to in the new process?

Qu Shaojie: The large-scale return of Chinese stocks has made many investors start to wonder whether they can go to the Hong Kong stock market to gain new profits. The actual situation is that there are not many channels for Hong Kong stocks to open new stocks. The average person is not eligible to participate, and playing new stocks in Hong Kong stocks is not a beautiful thing that makes money.

In order to start a new stock in Hong Kong stocks, it is necessary to hold a Hong Kong stock account. This is unavailable to mainland investors. At present, the only way for the mainland to participate in the new channel for Hong Kong stocks is to open QDII, and many QDIIs have suspended purchases. Even if you can still purchase, QDII funds have no new funds similar to A shares. Therefore, the operability of Hong Kong stocks to launch new ones is relatively low.

In addition, even if you open a local stock account in Hong Kong to get a new qualification for Hong Kong stocks, it is not a steady profit to make a new one in the Hong Kong stock market. It is normal to lose money by playing a new one. Compared with the new market value of A shares that need to be allocated and the winning rate of tens of thousands, Hong Kong stocks are indeed more friendly to small and medium investors. Not only the participation threshold is low, the winning rate is high, but you can also use the stock equity mortgage financing to subscribe for new shares. However, there are no restrictions on the rise and fall of new shares on the Hong Kong stock market on the day of listing, and there is a high probability of breakout, with both returns and risks coexisting. On the first day of listing on JD.com, the stock price closed at HK$234, a 3.5%increase from the issue price. The JD Hong Kong listing offer price of 226 Hong Kong dollars, 50 shares per lot, calculated based on the closing price on the 18th, each lot of 400 Hong Kong dollars. Regardless of the cost, whether it is successful or not, as long as you start a new business, you need to pay a brokerage fee of 100 Hong Kong dollars, so the income of the first-hand Jingdong new shares is 300 Hong Kong dollars. According to statistics, the top 56 new shares of Hong Kong stocks as of June 20 this year, with the exception of handling fees, there were 30 profitable accounts on the book, accounting for 54%, and 26 losses, accounting for 46%. The odds of making a new profit are relatively slightly greater.

Although it is very lively to launch new stocks in Hong Kong, it is not a good strategy that can bring stable returns. If you are really optimistic about a listed new stock, you can buy it and hold it for a long time after the listing. This is the more common practice for Hong Kong stock investment.

Q:How do you view mid- to long-term investment opportunities for Hong Kong stocks? What are the opportunities and risks?

Qu Shaojie: The investment opportunities for Hong Kong stocks that can be seen now are that Hong Kong stocks have become a global valuation depression from a valuation perspective. Compared with the major global stock markets, the PB and PE of the Hang Seng Index are the lowest. The Hang Seng Index has now”broken the net”, PB fell below 1, and the valuation level has entered the historical bottom area. In the history of Hong Kong stocks breaking the first three times or nearly one year after breaking the net, the Hang Seng Index has rebounded significantly, 27.1%, 79.0%and 83.8%respectively. The lower valuation provides a higher margin of safety for investment. At present, the allocation of Hong Kong stock assets can be attacked if it can be withdrawn. As of June 29, the net purchase of funds from Hong Kong stocks to the south has reached HK$294.7 billion. Institutional funds are increasing investment in Hong Kong stocks. I personally judge that institutional funds are just looking at investment opportunities where the current value of Hong Kong stocks is undervalued The future revenue is expected to be quite abundant.

In the medium and long term, Hong Kong stocks have more obvious investment opportunities. Most Hong Kong stocks are essentially”land companies” choosing to list in Hong Kong instead of”Hong Kong companies”. Mainland companies account for 70%of the value of the Hong Kong stock market and 80%of the trading volume. With the accelerated return of Chinese stocks to Hong Kong, This proportion is still rising. Most of the mainland enterprises that have already been returning are leading in various industries. Their relatively stable growth and excellent performance have added the most core investment value to the long-term investment of Hong Kong stocks. Compared with foreign investors such as Europe and the United States, mainland investors have more advantages, and it is easier to deeply understand the business model and conduct research activities. However, in the past, Hong Kong stocks were mostly priced by European and American banks, and land-based discourse power was weak. With the opening of the land-port interconnection mechanism, Hong Kong Stock Connect funds continue to sweep south, and this situation is changing. The Hong Kong stock market will become a mature stock market dominated by mainland investors and foreign investors, investing in high-quality mainland companies.

Another long-term investment value of Hong Kong stocks is its high-dividend market characteristics. Hong Kong stock companies have a good tradition of dividends, and investors also pay more attention to corporate dividends for each period. The dividend rate of the Hang Seng Index is significantly higher than that of markets such as Europe, America, Japan, South Korea, and China A-shares. Currently, the world has entered a low interest rate environment. From the perspective of asset allocation, Hong Kong stocks have a very attractive dividend rate.

Q:Based on the current status of A shares and Hong Kong stocks, which areas and sectors are worthy of attention?

Qu Shaojie: The industry characteristics of the Hong Kong stock market are very distinctive, and they are very different from the A-share market, with obvious complementarities. A shares have certain advantages in food and beverage, white goods, pharmaceuticals, consumer electronics, semiconductors, and advanced manufacturing. The Internet sector of Hong Kong stocks is getting stronger and stronger, including Tencent, Alibaba, Meituan, JD.com, Netease, etc. This list is still growing with the return of Chinese stocks. Hong Kong stock technology stocks are also a strong sector, consumer electronics, mobile phone optics, acoustics, and SMIC, which is about to land on A shares. In the future, the Internet and technology sectors will be the leader in the Hong Kong stock market segment, become a magic weapon to gather popularity, and will also bring huge returns to investors.

In addition, there are medicine, education, property services, catering services, etc. These sectors have formed new forces in Hong Kong stocks in the past few years, and a number of high-quality companies have appeared. The performance growth momentum is rapid, and a number of Bull stocks are not much more expensive than A stocks; in addition to banks, insurance, real estate, etc., Hong Kong stocks have some scarce targets such as AIA, Sunac, etc., the overall valuation will be lower, and the dividend rate will be higher. Gaming, real estate retailing of Hong Kong companies, is another sector where A-shares do not, but the recent poor performance.

Q:In your opinion, what are the main differences between investment in the Hong Kong stock market and investment in the A-share market? What is the biggest difficulty in Hong Kong stock investment?

Qu Shaojie: Hong Kong stocks and A shares are different in the listing system and the transaction settlement system, but these differences are not substantial differences. . The main and core difference is that the investment philosophy adopted by the two markets is obviously different. The Hong Kong stock market place pursues a performance-oriented investment philosophy. Leading companies with stable performance are the darling of the market. The concept of”concept stocks” is hardly heard in this market. Only concepts in Hong Kong stocks will not be sought after by funds. . The reasons for the different investment concepts are also easy to understand. Institutional investors account for the majority of investors in the Hong Kong stock market, trading is inactive, and stocks are bought according to performance and held for a long time. Individual investors in the A-share market are still the main body and frequent transactions. It is easy to chase hot spots and concepts, and the shareholding cycle is short.

This difference in investment philosophy has become a difficult point for ordinary individual investors in the Mainland to invest in Hong Kong stocks. If you look at Hong Kong stocks with the game-changing investment ideas developed by A-shares, you will find that many Hong Kong stocks also have With some popular concepts of A shares, the valuation is also lower, so I hope that I can make a profit on these stocks. However, the concept of speculation in the Hong Kong stock market is too difficult, institutional investors are very rational, and investing in concept stocks with no performance often ends in losses.

Now, the Mainland has issued many Hong Kong Stock Connect funds under the interconnection mechanism. The investment of Hong Kong Stock Connect funds is mostly managed by fund managers with many years of Hong Kong stock investment experience. The investment philosophy is consistent with the Hong Kong stock market. Become a good helper for mainland investors to participate in Hong Kong stock investment.

Q:At the helm of”deep water” like the Hong Kong stock market, as a fund manager, which aspects of ability are most critical?

Qu Shaojie: Investing in the Hong Kong stock market requires training of three levels of ability. The first level is to form your own investment philosophy, know what you want to do, and what part of the money you want to earn, this is especially critical. Although Hong Kong stock investment is based on the market with holding high-quality stocks as the main investment philosophy, there are still other points such as high dividend strategy, value strategy and growth strategy, as well as neutral strategies, and the application of futures and options is also very convenient. Doing or not investing in cyclical stocks is also at this level. If you have a strong ability to grasp cyclical trends, you can also invest in cyclical stocks.

The second level of competence is the ability to recognize macroeconomics and industry. The Hong Kong market is dominated by mainland companies, but there are also Hong Kong companies and Macau gaming companies. Japan and South Korea, local institutions in Hong Kong and mainland investors have easy capital outflows and inflows, and are greatly affected by the global economy and international monetary policies. Therefore, investing in Hong Kong stocks has a higher understanding of the macroeconomic and international environment than A-share investment. How to make a favorable judgment under these different considerations requires the fund manager to form an independence on the basis of understanding. The ability to think.

The third level of ability is the ability to predict business operations, that is, the stock picking ability that we usually talk about. Based on the analysis of business operations, financial data, future development direction, industry status, management level and other aspects, select companies that meet your investment philosophy to fill your investment portfolio.

Q:What is your investment philosophy? The data shows that although the overall performance of Hong Kong stocks has not been good in the past two years, your portfolio has contributed a good positive return. How is it done?

Qu Shaojie: The investment strategy that I have adopted is the investment concept of”buy top-performing stocks for a long time” which is commonly used in the Hong Kong stock market. This investment philosophy is the simplest in theory and can help me solve the first two of the aforementioned three levels of competence. The idea of ​​buying blue-chip stocks and holding them is to earn the profits brought by the company’s performance and obtain the company’s dividend income; while long-term holdings obscure the short-term changes of the macro economy, the disturbance of capital inflows and outflows, Industry and enterprise valuations fluctuate in the short term. Refocusing on the search for companies with outstanding performance makes investment simple.

I have adopted this idea myself for many years. Years of practice have proved that this idea has captured the focus of investment and can bring good returns to the portfolio. For example, a Shanghai-Hong Kong-Shenzhen fund I manage has It was established on June 26 to June 30, 2020, an increase of 23.59%, during which the performance benchmark fell by 2.9%, and the Hang Seng Index fell by 13.34%. The main reason for the obvious contrast between the fund and the Hang Seng Index is that the portfolio has invested in many excellent companies. These high-quality companies have also achieved impressive profit growth under the influence of various adverse factors such as the Sino-US trade war and epidemic conditions. The Hong Kong stock market attaches great importance to corporate performance, so the stock prices of open stocks have all hit new highs after falling for about a month due to the epidemic, and the fund’s net worth has continued to rise.

Q:What are the suggestions for ordinary investors to invest in Hong Kong stocks? Borrowing the Shanghai-Hong Kong-Shenzhen Fund to distribute Hong Kong stocks, how do you think about screening?

Qu Shaojie:At this stage, Hong Kong stock investment is at the time, a series of Chinese stocks return to Hong Kong stocks to add fresh blood to Hong Kong stocks, greatly changing Hong Kong stocks Ecology and attributes. By investing in the Hong Kong Stock Connect Fund, coupled with high-quality technology Internet leading assets can enrich the asset allocation of investors, with great appeal and predictable future returns. The selection of Hong Kong stock funds can be roughly referred to the following steps:

First of all, I suggest that fund investors investing in Hong Kong stock funds should preferably hold for a long time. The performance of the Hong Kong stock market is heavy, and the achievement of corporate performance is reflected in the quarter, more often in the semi-annual report and annual report. The selected Hong Kong stock fund needs a process to realize its investment philosophy. At present, the valuation level of the Hong Kong stock market is reasonably low, which is a suitable time to lay out and select a good fund for investment.

Second, the past fund net value trend is of certain significance for judging the performance of subsequent funds, but bear in mind that the past performance of the fund cannot represent the future performance. You can mainly observe the relationship between fund returns and volatility from past performance, and try to choose funds with medium or high returns and low volatility. Under special market conditions, all funds will fall into a pit. At this time, it depends on whether the fund can come out of the pit to a new high. If it can go out of the trough, it often means that the fund holds a stock with excellent performance.

Thirdly, the selection of Hong Kong stock funds must determine whether the performance of the fund is predictable, that is, to observe what Yang’s investment philosophy the fund has adopted. This point, you can first check the fund contract, the contract has a clear description of the investment strategy. Then go to review the key stocks announced by the fund every quarter to see if the investment philosophy in the fund contract is actually implemented. You need to be vigilant if the holding stocks change frequently.

The fund is risky and investment needs to be cautious. The above is the guest interview question and answer record, which only represents the interviewee’s personal views, not the headlines of today.