Category: Money tips Release Date: 2007-01-17
Week Rockwell: Guotai Junan Investment Management Co., Ltd., vice president for mergers and acquisitions
China's stock market will soon usher in a period of great development, not only there will be more listed companies, there will be more overseas investment institutions to join. In this New Year, we need to make foreign investments of the Fund to compare ideas in order to understand that the forthcoming A-share market with our rivals including the foreign funds.
1, flat peach will Vs. Olympic Games
Domestic fund managers are mostly the Department of Economics majors in college, or in the SFC's previous winners of talent evaluation, but they did not give the majority of investors, the expected return on investment. There are two main reasons: the understanding of the economic cycle, and outdated investment philosophy. Opening the domestic financial textbooks, whether it is the Commission assessment, or institutions of higher learning materials, regarded Markowitz's portfolio theory, regarded as a classic. Unfortunately, this is a foreign investment fund managers are moving away from the set of things. Year has been, and Markowitz portfolio theory, with the creation of Eugene Farmer said in his later years: If the portfolio theory is correct, then the market will have to wait 7000 years occur six times the standard deviation of the Change Range , while in the real world, every four years, there will be such a boom or a crash. In other words, according to Markowitz's theory, boom and crash should have been similar to the "Queen Mother of the peach will", while the real world situation is that the "Olympics."
Study its root causes, Markowitz to asset price movements as a random variable with mean and standard deviation to measure the benefits and risks of this asset. This basic assumption is wrong. Now finance believe that asset prices are a controlled magnetic field within the random process, asset prices subject only to the next moment the amount of information covered by the impact, instead of in line with our humanity in any of currently known probability distribution. This is the fundamental starting point of different.
2, combined Vs. Hedge
On this premise, we will find that like to talk about the domestic investment fund portfolio, they do also in a variety of carefully constructed portfolios to meet their preferences because, according to Markowitz theory, the world's best combination of the existence of a This combination can help you gain the same level of risk for better returns. In early 2004, there is a famous investment fund manager told me that they have constructed a portfolio, each of which a share plus 1.15 shares of Yanzhou Coal Mining Company Huaneng just be able to defuse the risk of the combination. His idea is very natural: Huaneng Power International, and Yanzhou Coal Mining Company should have a negative correlation between the two combine relatively safe. If the coal price increases, then the rise in Huaneng Power International fell Yanzhou Coal Mining; if coal prices fall, then the rise in Huaneng Power International Yanzhou Coal Mining shares fell. By early 2005, the investment portfolio of two stocks fell by 56% and 47%, the entire portfolio was down about 50% of the net. If it is overseas fund managers, they will use hedging methods: Huaneng Power International bought the stock, based on its share of coal in the futures market to buy the same amount of coal, long-term contracts, direct hedging. If you are in early 2004, domestic investment manager does not use a combination of recommendations but the preference for using foreign funds of hedge recommendations, then you will achieve about 15% of the proceeds. Because of rising coal prices fell faster than the rate of Huaneng Power International, hedging strategies to bring you a positive return. Throughout the world are studying the era of the hedge of our investment fund managers are still struggling to tap the value of the portfolio. I have to worried about their future performance.
Third, cash flow Vs. Options
Domestic investment manager's price-earnings ratio is a comparison of preference for another one to compare book value. They have to suppress many of the stock price-earnings ratio to an extremely low level, and are still concerned about: the economic cycle decline inflection point will be the present and future performance will substantially decline. I'm sure they will not be a group of happy investors, because they have always been worried by the oppressed. In fact, the value of an asset consists of two aspects, embodied in its cash flow can be expected that part of the value of the option value reflected in the uncertainty of future opportunities. Foreign investment funds looked to the higher option value of those stocks, because only the value of the cash flow of the stock is actually a variety of fixed-income. Many of our investment fund managers who will Shenxiao QFII Jiancang Baoshan Iron and Steel at this time, long power, G on the port. Because the judge in accordance with domestic fund managers, these industries are at a cyclical top, and soon to enter the winter, and these companies with low price-earnings ratio although it looks real soon rises. QFII they can not understand is this: these companies represent a very high option value.
For example: G on Hong Kong's stock is a typical call option, G terminal on the Hong Kong-owned resources have been built, and will never again require substantial additional investment, future cash generated from operating activities with high profit margins. In other words, G on the worst-case scenario has happened in Hong Kong, and in the future no matter what degree of uncertainty, the worst is idle for a period of terminal resources, time, and will not be a greater loss; if the occurrence of future benefit uncertainty, then the G on the Hong Kong will be able to run at low cost to profit. This is similar to a Baosteel you buy a warrant, the worst thing is invalid warrants, but as long as the future, there is still time, warrants have not expired, you can always continue to hold this warrants, which in turn is how some situation? for you, any uncertainty in the future everything in your favor, and the G terminal on the Hong Kong life than the one-year warrants Baosteel longer, is a 30-year or even longer calls. Once we put G on Hong Kong as China's foreign trade is to look at more options, we will find: the investment value of this stock has been with the recent round of domestic investment funds, "Bao Tuan sell-off" and gradually manifested. G on the purchase of shares in Hong Kong, in addition to enjoy a steady cash flow, dividends, he also acquired a virtually free option. I can assert that in the country on a Hong Kong fund selling G process, then the main dish must be QFII.
China will soon enter the WTO, a comprehensive financial liberalization era, we are doomed to welcome more overseas investment institutions, we should understand their thinking, are familiar with their investment philosophy, so that they will not in our local "home" defeat on foreign investment.
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