Shenzhen private equity “ out of sea” , Chinese stocks are favored

Released time:2014-07-24Pageviews:28036

After a few years of silence, China's private equity market has been popular for nearly a year or two. The reason is that A shares are starting to weaken again, especially in the case of the gem. Many investors are pessimistic about it and feel "less opportunity." And overseas markets are emerging as a global economic recovery.

The further expansion of the QFII scale, the acceleration of the internationalization of the renminbi and the gradual approach of the shanghai-hong kong stock connect have led to the imagination of a number of prospective private equity institutions. Shenzhen private equity firms, which have set up overseas branches such as Hong Kong, have steadily strengthened their overseas markets and started to acquire the SFC's asset management licence.

To many private investors, the international allocation of assets is the source of private placement. Overseas investment options will bring greater market space to investment institutions, but the foreign exchange control in China restricts the raising of overseas funds to a certain extent and is expected to be further relaxed.

A shares is popular overseas

Tracing back domestic private "out of sea" has nearly ten years history, also made a batch of private enterprise. According to Zhu Ming, head of overseas operations at Infore capital in Shenzhen, most of the private equity approved by mainstream institutional investors in China has been developed overseas.

The domestic a-share market is characterized by 'short bull bear' and overseas' bull bear short '. From 2001 to the end of 2005, the domestic a-share market bubble burst. During the last few years of the bear market, many private equity firms went to Hong Kong to search for gold. In 2005, a batch of high-quality stocks appeared in the Hong Kong market, and large domestic state-owned enterprises made landfall in Hong Kong, allowing private equity to see a lot of investment space.

The reporter learned that Shenzhen xiaoyang assets in those years grew into a private placement of 5 billion yuan. In addition, Shenzhen tianma asset, Shenzhen new tongfang assets and other private equity institutions have also registered and issued funds overseas. And the cayman islands, due to the advantages of legal friendliness and moderate supervision, have become a favorite place for private equity.

However, after 2008, there has been a big shift in overseas private equity markets. In contrast to the domestic market size private constantly emerging, the threshold of the overseas market set up a private hedge fund gradually increase, the regulation is rigorous, step by step to obtain the SFC licensed and recognized by international investment Banks is harder. But overseas private equity, which weathered the 2008 financial crisis, has grown well, and many of its results have broken through the highs of 2007. Zhu Ming said.

China's private equity market, which has been dormant for several years, has been popular for nearly A year or two, and Mr. Zhu believes it has to do with A decline in domestic a-share market opportunities. “Chinext has spread to places where it can't be reached.” He analyzed that some astute investors found that many of the related concepts were in overseas markets, and that the global market economy was recovering and that everyone was at sea again.

However, in zhu Ming's view, many investors do not go to sea in a "normal" way. “ No fund, no long-term investment planning and objectives, no formal fund, or foreign trade to do us stocks.” In the long run, he argues, it is difficult to achieve sustainable development, and it is difficult to gain international recognition and is less likely to be favored by foreign investors.

“ Domestic retail investors, foreign institutional investors, domestic and foreign investors has very different ideas. The domestic market is more like a game market, while the operation of foreign markets requires long-term thinking.” Mr Zhu believes that while private equity is a wave of the sea, it is not easy to keep making money even if the market is good, with domestic thinking. Asset internationalization accelerated private placement overseas.

Asset internationalization accelerated private placement overseas.

In 2006, Shenzhen Tianma asset registered fund management company in the cayman islands, becoming one of the earliest private hedge fund management companies in China. It has netted 270% of net returns over the past eight years, with a net return of 55% on the tianma global fund, set up in 2013.

There are 31 overseas funds in China, according to the private network. As of the end of may, the data showed that the average yield of the product was 137.95%, while the benchmark was only 24.29% and the excess return was obvious.

How can private equity aimed at overseas? Many private equity firms see it as an "asset internationalization". “ With the accumulation of funds, domestic investors' demand for assets scattered in different parts of the world and different currencies is increasing year by year.” "Many countries have a high degree of internationalization. However, the internationalization of Chinese assets is relatively low, which indicates that there is still a lot of room for improvement." Liu Hongjun, an asset manager at Shenzhen tianma asset, told reporters. “ Overseas markets provide Chinese investors with untapped resources, including new technology and innovation.” In addition, the overseas market provides a wealth of financial instruments and trading flexibility. The trading efficiency and multi-space mechanism of multiple investment targets have made more investment strategies develop fertile soil.

“ Diversifying assets into different places, on the one hand, is to spread the risk of national wealth. On the other hand, the activities of these high net worth individuals are international. There are plenty of places to spend money overseas. Secondly, their next generation will be international free people, and more international activities. And they will look for more investment opportunities internationally.” Zhu Ming analysis, with the diversification development of investor demand, future asset internationalization will be a big trend. These foreign funds often have strong financial needs and need to find a way to add value, which is why overseas hedge funds can develop. However, the development of domestic private equity in overseas is still only in the initial stage. Currently, overseas hedge funds have accounted for half of the market, which is a relatively stable asset appreciation tool. Domestic private equity in this area also has a lot to do. “ Shenzhen people have more Hong Kong stocks, although the number of mainlanders in Hong Kong is currently only about 20%, but the proportion is increasing year by year, especially small and medium-sized stocks.” Zhu Ming said.

Business diversification and long term capital appreciation

The Hong Kong subsidiary of yingfeng capital, which acquired the SFC's asset management licence this year, recently launched a fund in Hong Kong. Zhu Ming told reporters that private placement of hedge funds overseas, for example, will be more issued with the absolute return value of long-term capital as the target product.

It is also understood that, from the perspective of investment targets, private equity funds mainly invest in Hong Kong, us listed Chinese stocks and B shares, and some of them invest in a-shares through QFII quota. However, some macro hedge funds mainly focus on bonds and foreign exchange.

The immigration account is also the "new favorite" of private placement in the last two years. Last year, yingfeng capital began to invest in the Hong Kong diaspora service business, to invest in asset management for investment immigrant clients. It is reported that the cost of this business is high, and Infore is hoping to do a good job in customer service and tap more customer resources. According to the reporter, at present some of the private placement of large immigrant private business is working with immigration agencies or Banks, mass customer service.

From the strategy point of view, China's overseas fund strategy is very much, long strategy for early more shares, then gradually increase the subjective tendency, relative value compound strategy, macro strategy, managed futures, stock industry, etc. Relatively speaking, the current good performance is still the stock investment mainly old products.

Some in the industry point out that for China's overseas funds, it would be better if they were just using short and short positions. Because with the Hong Kong local or overseas Chinese concept of funds of hedge funds, compared with domestic private investment team itself is in mainland China, in terms of fundamentals stronger study ability, this is also advantage.

China Concept Stock is favored, hope to relax foreign exchange control

The "China complex" is still on the minds of private investors, and China has a larger share of China's stocks from a number of overseas funds. For example, the fund of Infore investment just issued in Hong Kong is the most familiar seed enterprise.

“ Compared with a foreign enterprise, it is of course that Chinese enterprises can let us know and understand, which is our advantage.” Zhu Ming said. However, the Chinese shares are a small plate in the overseas market, and they also have the characteristics of risk returns. In the process of investment, they should pay attention to risk prevention and control.

In the interview, many private investors believe that the development space of overseas private placement is large, but the problems caused by small layout and domestic control of foreign exchange are the bottleneck. “ In recent years, it has been a relatively free and vigorous period in the history of global finance, and a batch of outstanding enterprises have been born. Rich financial products also make hedging strategies more flexible and secure.” Liu Hongjun said, no matter from the big expectation of RMB internationalization, or the specific tool of shanghai-hong kong stock connect, the "money to go to sea" has become the "pass" given by the political and economic environment. In addition, interest rate marketization and financial mixed operation are required to improve the "active management ability" in the domestic asset management industry. And hedge funds, long known as "the smartest money in the market", are also being driven by new investment opportunities.

In recent years, more and more Chinese companies go to sea, which is a good opportunity. Liu Hongjun said that the information selling point of more Chinese shares is brought to sea by the enterprise, and the number of shares will increase. However, the amount of $50,000 in the hands of ordinary Chinese is a bottleneck. “ Do a more effective investment, at least $200, 000.” In the absence of foreign exchange controls, Mr Zhu argues, it is better for investors to invest in an offshore fund than to invest in domestic private equity, with a wider range of options and can invest in the best companies in the world and the good companies that are listed overseas. And domestic good companies can also participate through QFII quota. By contrast, the domestic investment market can only be limited to the a-share market and the game ability of fund managers, which limits many people to do A lot of things. Therefore, to make China's overseas funds develop by leaps and bounds, it is necessary to put the relatively severe foreign exchange control in the investment field. At least in the area of securities investment, at least $200, 000 per person would be a relief. Of course, the premise is good customer identification and appropriate management.