Aberdeen Standard Investment Yao Hongyao: Now Is A Good Time To Invest In A Shares.

Foreign private equity giants are running into the Chinese market. At present, there are 22 foreign private placement companies, and 54 private placement products have been put on record.

"Now is a good opportunity for A share investment, the runway is still very long, and A share valuation is attractive." The first China international hedge fund annual meeting was organized by the private placement network, Yao Hongyao, an investment director and investment director of China stock exchange.

Yao Hong Yao

According to public information, Aberdeen standard investment management is the brand of Standard Life Aberdeen PLC, which was merged by standard life group and Aberdeen Asset Management Group and was established in 2017.

As early as 2015, Aberdeen standard was established in Shanghai's wholly owned subsidiary, Aberdeen standard investment management (Shanghai) Limited. In 2017, it was put on the record of the China Securities Investment Fund Association, and the first A share fund product was issued in 2018.

"Now we focus on private placement, and we will consider the development of public offerings in the future." Yao Hongyao told reporters on twenty-first Century economic report.

Good timing for A share investment

In recent years, a large number of foreign investors are eager to enter the A share investment. We all wonder how foreign capital looks at the A share market.

"When I do this question and answer question abroad, I will give 4 companies -- Alibaba, Tencent, Haitian flavor industry and national tourism. Which one has the best performance in three years?" Yao Hongyao said, "a lot of people in the United States will choose Haitian flavor industry. Many European countries choose CITS. No one will choose Alibaba or Tencent that are listed overseas. The answer is actually the national brigade. The cumulative rate of return in the past three years is close to 260%.

Yao Hongyao believes that the focus of this Q & A is that most foreign investors have invested quite a lot in the Chinese market, but they often invest in stocks outside China, such as Alibaba and Tencent. They have very low awareness of A shares and low allocation of A shares.

In the US stock market, emerging industries and technology stocks account for the majority. However, the width and depth of the A share market are larger than that of Hong Kong stock and the US stock market, and they cover different industries and different sectors. At the same time, the correlation between the A share market and the global market is not high, and the overlap with the foreign index is relatively low.

"The correlation degree between A shares and MSCI is only 0.4, and the correlation degree for Hong Kong stocks is only 0.7, and the correlation degree is very low, which can disperse risks and returns. The MSCI international index is very low in A shares, and it does not match China's second largest economy, which means its allocation in China will gradually increase. Up to now, the allocation of A shares in global emerging markets has increased to 3.4%, which is faster than what we saw and experienced in other markets. Yao Hongyao said.

"A shares have won the overseas market this year, which is very attractive to international investors." Yao Hongyao pointed out.

Yao Hongyao said that it is a good time to invest in A shares. "From the valuation point of view, the A share price earnings ratio is about 14 times, under the average line, and the market is still attractive. From the perspective of profit growth rate, the growth of EPS is about 15% of A shares this year and next year. Compared with overseas markets, A shares have a relatively high profit growth rate, but the P / E ratio is not so high, which is more reasonable than other markets.

Yao Hongyao believes that in the long run, the upgrading of China's big consumption is a very long runway. In the next more than 10 years, the upgrading of China's middle class will continue to expand. The proportion of high-end consumer groups will increase from 60 million in 2017 to more than 100 million in 2025, which implies enormous consumption upgrading opportunities.

"Recently, many voices say that consumption is downgrading, but the overall trend is still upgrading. The more expensive the tobacco, beer and liquor, the higher the growth rate. It can be said that consumption upgrading is a very long runway. In this context, tourism, food and beverage, financial insurance, health care and other fields are our long-term focus. Yao Hongyao said.

Four aspects of stock selection

"We also have A share funds overseas. Faced with international investors, this year and the end of last year, a lot of positions were added to A shares. Yao Hongyao introduced.

Copying the offshore A share fund, Aberdeen standard investment management (Shanghai) Limited also issued the first A share fund in 2018.

In the A share market, Yao Hongyao said that the quality of the company is the most critical. "Quality includes four parts: first, how wide is the moat? The company's business model is very important; the two is the executive ability of the management, management records and performance in the past; three, the company must have a very sound financial statements and financial situation, debt ratio can not be too high; four is concerned about ESG.

"For overseas investors, the three elements of environmental protection, social contribution and corporate governance are very important. If a company has integrity problems, it means that their management is not standardized. For such a company, we will not consider investing. " Yao Hongyao said.

"We have been in the A share market for 20 years, and we have seen more than 500 companies. Among them, more than 100 of the companies that are more closely watched in quality category. Finally, only by selecting the 33, we can choose the best. Yao Hongyao said.

It is worth noting that after many foreign private placement, its management fund product returns rate is often no better than the domestic private placement.

In this regard, Yao Hongyao told the twenty-first Century economic news reporter that each foreign private placement situation is not the same. "Our stock fund performance is better, because we operate in the way of public offering, and do not choose time, close to full warehouse."

"Some foreign investors who come to invest in A shares may choose more time, but many of these overseas institutions do not make any choice outside, so if the incoming China wants to do this, the effect will not be ideal. Moreover, they have relatively few pure equity funds, mainly alternative or diversified products. And we are active equity funds. " Yao Hongyao said.