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00:00I just want to start with the latest news flow we are seeing today, right?
00:03The market is really concerned about this AI sell-off that is led by South Korea.
00:08And yes, granted, China is weathering it a little bit better,
00:12but what is your outlook on Chinese AI?
00:16Well, I think we are still quite optimistic of the whole industry
00:21and the growth that are actually starting to take off.
00:25So this is not, from our perspective, a short-term bubble.
00:31We felt like this time around, well, everyone will say this time is different,
00:36but we really need to look into the earnings and performance and fundamentals
00:41to know if there is a concrete performance and fundamentals
00:46that are laying out for this AI and technology upgrade.
00:50And we all say that this is a revolutionary of forces.
00:53So from what we have seen on the ground,
00:57we do believe that the fundamentals are starting to be there already.
01:02And our portfolio manager joking about it,
01:05well, as the price is going up, all the stocks are getting cheaper.
01:10So definitely the earnings are showing the signs.
01:12So we are still quite optimistic.
01:14And we have seen that really the market has been quite volatile,
01:18but you have all, you know, observed that the whole supply chain are getting very strong.
01:24I just want to challenge that a little bit because we do see a bit of concentration risk, right?
01:31I think last month's data showed that the top 10% of stock is driving 60% of turnover.
01:36Is there any sign of, you know, pockets of equities looking a little bit overheated?
01:42I think overheating certainly is there.
01:46I wouldn't deny it.
01:47But every trend turns out to be overheating in the process.
01:54And for an active fundamental researcher or portfolio manager,
02:00I think our job is to determine this overheating process,
02:06just managing the risk along the way.
02:09So where do we see actual bubble is overheated?
02:13Or do we see that we have concrete numbers to back them up?
02:19And up till now, we think there definitely will be overheating process going forward.
02:25But risk management need to be very cautious where we can determine
02:30when is a good time to get out.
02:33So could you be a little bit specific?
02:35Where are you seeing signs of overheating?
02:39You did mention that this is a stock picker's market.
02:42It's not a time to invest broadly in index tracking funds.
02:45Well, I think in the beginning of last year,
02:49we definitely have seen great index products to be very rewarding.
02:54And this year, I think equity stock picking really starts to show the color.
03:00And we have really good returns.
03:02Like in the past one year, maybe 100%, 200% return from our active equity.
03:09But what we are looking at is the scaling game is still working.
03:16So the scaling game for large language model,
03:19the scaling game for all the computing technology is still going forward.
03:27And we need to be cautious when that scaling process is slowing down or even stop.
03:35And that is the whole cycle probably coming to a plateau.
03:42And then the whole growth story probably will pivot.
03:45And that's when we probably will be very cautious.
03:49I want to ask about the geopolitical risk that we are seeing,
03:52because the U.S. have been tightening scrutiny over that.
03:55For example, they are barring mainland investors from participating in SpaceX IPOs.
04:00And then you have these big tech firms that are being blacklisted.
04:04What sort of challenge does that pose to your business?
04:08Well, certainly, I think, well, barring investments certainly will deny a lot of the accessibility.
04:15At the same time, we still is a firm believer of globalization.
04:21And we are very strong behind the support of cooperation between two countries
04:28or even a larger global technology community as a whole.
04:34So we are trying to actually launch products,
04:38actually to unify the different regions and different supply chains.
04:42So last month, we actually launched a product on global AI in Hong Kong.
04:51So we are trying really to give people a holistic view
04:54instead of just looking at China separately and then looking at U.S. separately.
05:00We hope that we still have a holistic perspective and investment tool
05:05to actually get all the supply chain working for our investors.
05:09Yeah, speaking of that, I know that China has some caps, right?
05:14We all know China has caps on their Q-fee sort of capital.
05:17And I understand your company is coming up with some innovative products
05:21to really bridge that gap and allow investors to tap into international equity.
05:27Could you just tell us a little bit more about these new products?
05:30Yeah, thank you.
05:31We actually still think that the regulators in mainland China
05:36and the regulators in Hong Kong are working closely together, actually,
05:41to provide more accessibility to the market.
05:45Actually, just yesterday, the Hong Kong officials in Beijing
05:49held a press conference saying that they probably will enlarge the connect
05:53in the financial instruments in the greater Bay Area.
05:57And I think that's a great tool that domestic investors can use that
06:02to invest in Hong Kong's product and with that,
06:05an extension to international products.
06:07And at the same time, companies like China AMC,
06:11we are trying also to launch more products internationally
06:14and also serve as sub-advisory to different products worldwide.
06:19Like, we have a product in Brazil, in Thailand.
06:22We have three products in Canada.
06:25And last year, we launched a CNQQ product.
06:27It's like the Chinese version of, you know, QQQ in Nasdaq.
06:33So I think accessibility really matters.
06:36And then we, as a portfolio manager and fund manager,
06:40should be proactive.
06:41Yes.
06:42When it comes to ETM, which is China AMC's specialty, right,
06:46in China, this is still a relatively young industry.
06:50And in terms of the product mix, it's not as diverse as, say, in Hong Kong,
06:55where you have leveraged single-stock ETFs, actively managed ETFs.
07:01Tell us about some of the innovations you are seeing
07:04or you are creating in that space.
07:06Because I understand you are working with index builders
07:09to create more specialized ETFs.
07:11Yeah, we call it active indexing,
07:14even though we don't really have active ETFs yet.
07:17But our belief as the largest ETF provider
07:21is index always the key,
07:23is the fundamental what investors are actually investing.
07:27So how do we express our fundamental views
07:30through indexing, through how to composite the index,
07:34I think is the number one question that we need to answer.
07:38So with the, you know, the market is changing so quickly
07:43and the supply chain also is changing very quickly,
07:46we try to modify the index to keep up
07:51or to even guide the investors to different sectors to the market.
07:58So in China, I think we are never saying
08:02that we are a passive investor in ETFs.
08:05We are actually very active in creating index
08:08and then constantly optimize the index
08:12to really keep up with the whole changing of the technology.
08:19And in China, we know that people are compulsive savers.
08:24Yeah.
08:24What are you seeing in terms of retail flows?
08:28And are you expecting more of this deposit migration
08:32into equity investments, into ETFs?
08:35Yeah.
08:36I think this whole deposit migration
08:40really starts to going to be the best opportunity
08:44for China's asset managers to ever have seen
08:47in the next 10 years.
08:49So we have this term of deposit migration
08:54that from, because the interest is so low in China
08:58and even though people originally really keep their savings
09:02in real estate or in deposits, they start to reaching out.
09:07And this year, we have definitely seen products like,
09:10we say like balanced funds
09:13or fixed income enhanced type of funds
09:16really start to attract attention from retail investors
09:19or deposit savers.
09:22At the same time, FOF can also provide like TRS
09:25and low risk type of products
09:28really attract more attention from investors.
09:31I think migrating to equity or ETF will be a long way to go,
09:35but the trend is start to picking up.
09:38So speaking of interest rates,
09:40what is your outlook on whether the PBOC
09:43will loosen monetary policy further?
09:46Well, we didn't really see much of the window
09:51probably to lower interest rates in the near term
09:53because with the economy in the first quarter
09:57to be quite satisfactory,
10:00I think while the PBOC and the central government
10:04really sending out quite optimistic looks
10:07and our projection for the Asia earning this year
10:11will be nearly 10%.
10:12So with that, I think, well, the monetary policy
10:16will still provide a quite comfortable range,
10:20but at the same time, I think the interest rate
10:22probably will be like the secondary instruments
10:26they will consider.
10:27Yeah, we have been seeing this improvement
10:30in earnings this year, right?
10:33Especially when it comes to onshore stocks,
10:35but what is your outlook on some of these blue-chip names
10:38that has been lagging behind quite significantly?
10:41I would say it's a good time
10:43if we're a long-term asset allocator.
10:47So we are actually very actively
10:50to push insurance companies
10:52or even our social security fund
10:56actually to allocate more,
10:58especially at this time,
11:00to large blue-chips
11:01as dividend type of driven product.
11:04Because at this time,
11:06really, they are quite a good bargain already.
11:09Okay, let's expand to the global macro environment
11:12because now we have expectations
11:14of a Fed rate hike.
11:16We have all these geopolitics news
11:18coming out of the Middle East,
11:20oil prices in focus.
11:22What do you think is the most important factor
11:25that would be shaping Chinese markets
11:27in the second half?
11:29For Chinese market,
11:31I think because it's so large
11:33and then definitely we have seen
11:35in the past several years
11:36the new economy really is picking up and booming.
11:40I think a lot of the investors
11:42are more interested in China right now
11:44because of the whole trend behind,
11:47you know, deep-seek
11:48and then all the innovations coming along.
11:53But at the same time,
11:54because China's economy is so large
11:57and then we don't really forget
11:59the traditional side of the business,
12:01right, the traditional economy.
12:03So for China,
12:04even though the geopolitical tension outside
12:07is very volatile,
12:09but we have a lot of, you know,
12:11domestic, you know, work we need to be done,
12:15especially around the domestic consumers' confidence,
12:20the spending on consumption,
12:22and also how we are going to start
12:24to really push back
12:26on the job of real estate.
12:29So these, I think,
12:30are still mingled in our investment minds
12:32and we need to be very active
12:35in reacting to the numbers
12:37that are coming out on the second quarter.
12:39And we actually just got
12:41the inflation data out today
12:42and the trade data yesterday as well
12:44and it still shows this bifurcated economy, right?
12:48Consumption is still lagging.
12:49Do you think we should be prepared
12:51for still quite a prolonged slump
12:54when it comes to the consumption names?
12:56I think the multiples really
12:58needs to have time to kick in.
13:02So we have a better performing stock market.
13:07We have people have better returns
13:09on their financial investments.
13:11We have a lot of the new economy
13:13that are earning better returns.
13:16And that will circulate back
13:18to the consuming and consumption side.
13:20But it really takes time.
13:22Like multiples think time to actually be able to talk.
13:24How long do you think?
13:26Well, we are more optimistic
13:29probably in the fourth quarter
13:32to see things are starting to panning out
13:35from the beginning side
13:37to be the multiplier into the end.
13:40But there are consumer names currently
13:43I think doing better unexpectedly
13:46and we need to be more focused
13:49on new economy at the same time
13:51how that will really influence
13:55the consumer side.
13:56What are you seeing in terms
13:58of global capital flows now?
14:00Global capital flows,
14:02well, we experience a lot of inflows
14:05in our products through Qfee.
14:07And also we are looking at more interested
14:10in domestic equity
14:13from international investors.
14:15But I would say it's still more concentrated
14:18on the transactional side
14:20from the international investors.
14:22So the asset allocation investors
14:25are not coming yet
14:26as strongly as we probably have expected
14:30or have seen in the past.
14:31So I would say it's still early
14:33in the terms of international money
14:35coming into domestic market.
14:37But certainly I think
14:38people are starting to show more
14:40stronger interest.
14:42What do you think it would take
14:43to attract more of these global investors
14:45to come into the domestic market?
14:47Well, the current story
14:48is still the technology upgrade.
14:51But I think I also understand
14:53that like what you mentioned today
14:55about the traditional side of the economy
14:58and certainly international investors
15:00are more concerned
15:01with those type of investments.
15:04But we do think
15:06that we need to show
15:08a different side of China.
15:09And then that probably is the first step.
15:12And we think the economy is a cycle.
15:16And then like the flywheel
15:17is already moving,
15:20starting from the new economy.
15:21And the flywheel,
15:22once it started,
15:24I think it would just probably
15:25amplify a lot of different aspects
15:27of the economy.
15:29We have to talk about
15:31the latest regulatory crackdown
15:33when it comes to outbound investment.
15:35I'm just wondering,
15:36do you see any direct impact
15:38of that on your business?
15:40I would say it's probably
15:42a plus for my business
15:43because originally,
15:45I think people have different ways
15:47in investing overseas.
15:50And of course,
15:51I think currently,
15:52it's just a regulation.
15:53It's not really tightening,
15:55but it's more demanding
15:57more compliance
15:58with the regulations
15:59that already were in place.
16:02But at the same time,
16:03we've seen that people
16:04are starting to use
16:05more QDI product
16:07to invest overseas.
16:08We've seen that people
16:10have more requests
16:11from our Greater Bay Area
16:14Financial Instruments Connect.
16:16We have seen that,
16:18well, people start to talk
16:20about more about
16:21the ETF Connect project as well.
16:23So I definitely think,
16:25well, once those loopholes
16:27were sort of sealed,
16:29I think the formal channel
16:32will be more open.
16:33Yeah, so that's my judgment.
16:36Okay, so it might be good
16:37for your business.
16:38Yes.
16:39You are one of the first movers
16:41when it comes to tokenized assets,
16:43especially when it comes
16:44to tokenized RMB assets.
16:46Right.
16:46Tell us more about
16:47the products that you have
16:49and why should investors
16:50be looking into
16:51these alternative assets?
16:53Yeah, we at China IMC,
16:55we are very proud
16:56to be the innovator
16:57in this area
16:58and also with the guidance
17:01of the Hong Kong MA
17:02and also the CSRC.
17:04And I think tokenized product
17:08is more like our way
17:11to put things,
17:13put concept into proof.
17:14So it's not just how investors
17:17should transform
17:18their traditional investments
17:20into tokenized products.
17:22It's our way
17:23to build an infrastructure
17:25so that once digital assets
17:27start to kicking in
17:30in different areas,
17:32different regions,
17:33different business scenarios,
17:34there will be readiness
17:36in the infrastructure
17:38for tokenized investments.
17:40So that side,
17:42I think at this time,
17:44we are still exploring,
17:45we have already finalized,
17:48you know,
17:48tokenized money market fund
17:50in both RMB
17:51and the Hong Kong dollars
17:52and also US dollars.
17:54We also have the first
17:55tokenized gold ETF ready.
17:59So in that sense,
18:00we want to be a bridge
18:01between the traditional
18:03investment instruments
18:04and the tokenized digital assets
18:07to link them together.
18:08and to be better.
18:08So in that sense,
18:08So in that sense,
18:08this product
18:08that you can use
18:08And also
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