Securities Times: Schroeder is one of the first foreign-funded asset management companies to enter China. How do you view the current situation and prospects of Chinas capital market?
Guo Wei: this year marks the 30th anniversary of the establishment of Chinas capital market. There are more than 4000 A-share listed companies with a market value of more than 80 trillion yuan. The balance of the bond market has reached 110 trillion yuan, and the market value of Chinas bond market and stock market has reached the second place in the world. Such a market volume means huge opportunities for both Chinese investors and global investors.
We believe that Chinas capital market is still in the stage of rapid development. Compared with other major markets, Chinas capital market is still very young and developing rapidly. In the future, we need to gradually change the thinking of becoming bigger and stronger to intensive cultivation, so as to match the future high-quality growth model.
With the orderly progress of RMB internationalization, financial assets denominated in RMB have become the focus of the market. However, the global allocation of financial assets requires the improvement and interconnection of infrastructure, the mutual recognition of legal system and accounting standards, and the perfection of pricing mechanism and risk management tools. We believe that on the road of opening to the outside world in the future, Chinas capital market should not only constantly connect with the rules and regulations of the international financial market, but also actively use the experience of mature markets to improve its own financial market system.
The continuous progress of Chinas reform and opening up has made Chinas capital market more friendly and open to global investors. For example, the latest move is to allow private equity funds to do investment management for institutions under the same global group. These measures are a good driving force for the internationalization of Chinas capital market and the attraction of foreign investment in Chinas market.
Securities Times reporter: how to look at the short-term and long-term investment opportunities of a shares?
Guo Wei: in terms of A-share development trend, China has effectively controlled the epidemic this year, and the domestic real economy recovers faster than the overseas economy, providing more potential and development space for A-share listed companies. Looking forward to the future, the service industry will gradually become the main force of economic development, the new economic sector will grow substantially, the growth rate of e-commerce will continue to be higher than that of traditional retail, the education and leisure industry will account for a larger proportion of consumer spending, and the sustained growth rate will be far higher than the overall economy. The rapid development of A-share market and continuous financial opening provide more opportunities for international investors to grasp these trends.
In the short term, we believe that loose monetary policy and active fiscal policy will continue, and we will be in a relatively long period of low interest rates. Various indicators show that in the future, both domestic and global liquidity will be abundant and interest rates will be very low. Therefore, we have no reason to be pessimistic about a shares and should hold a more positive attitude.
In the long run, we believe that overseas investors will also remain optimistic about the A-share market. From the perspective of the three-year capital flow from 2017 to 2019, the net capital inflow to the North reaches 1997 billion, 294.2 billion and 351.7 billion respectively, showing an increasing trend year by year. With the continuous opening of domestic financial economy to foreign investment and the increasing weight of Chinas capital market in important international indexes, we believe that foreign investment will further increase the allocation of a shares.
Focus on localization
Further layout the Chinese market
Securities Times: with the further acceleration of Chinas financial opening up, does Schroeder have more layout plans?
Guo Wei: Schroeder group has been working in the Chinese market for more than 20 years and has deep feelings for China. We are still in the private fund license. We are very concerned about the progress of the opening of public funds to foreign investors. We will also pay attention to the relevant policies of the CSRC to further liberalize this business application. In addition, we also see market opportunities in wealth management, financial management and other fields. In the future, we will make more layout according to the progress of Chinas further opening up. We hope that we will have a deeper and wider footprint in China in the future.
Securities Times: how can foreign asset management institutions introduce overseas experience into the Chinese market?
Guo Wei: Schroeder has been in the asset management industry for more than 200 years. We deeply feel that the trust of customers is very important. On the one hand, we should adhere to a stable corporate culture; on the other hand, with the development of the times, we should keep pace with the times and constantly innovate. While we are developing our business globally, we attach great importance to our localization strategy.
In terms of localization, we have made a lot of explorations: first, relying on Schroeders global investment system and resources, we have selected some investment strategies that are more suitable for the local market on the basis of detailed local market research. For more than ten years, we have been observing the effectiveness and rationality of overseas investment methods in China, and constantly adjust them according to the situation; second, we use local teams to manage local funds. Since 2018, we have further optimized the localized investment and research system, and selected six investment strategies that meet the needs of the local market in China; third, we flexibly use localized marketing and brand promotion methods For example, in 2016, we launched the official account of WeChat, established wealth in 2019, launched investor investment personality testing tools, and so on. The four is to provide employees with a flexible and comfortable working environment and suitable working methods.
Diversified allocation to cope with low interest rate
ESG investment has excess return
Securities Times: low interest rate is a major challenge to the world. From the perspective of investment management, what do you think can be done?
Guo Wei: before the epidemic, the world was already facing a low interest rate environment. In this case, asset allocation becomes very important. Diversified asset allocation can help us realize risk diversification, and also help us find investment opportunities in the market, and then actively capture market growth opportunities.
According to Schroeders practice, the first is to carry out the multi asset investment strategy of pre risk or risk premium, which is a very prominent investment strategy. This strategy includes two points: one is to have a strong sense of risk in investment, the other is to diversify asset allocation. Of course, asset allocation structure should be adjusted flexibly according to market changes.
We will research and classify the assets according to the risk premium first, and then allocate the assets according to the categories of stocks and bonds, and then take the initiative to make dynamic adjustment through quantitative research.
In addition, we started to integrate ESG investment system into the investment process 20 years ago. ESG is an investment concept that focuses on corporate environment, social and governance performance, which has been highly valued by fund managers and investment management institutions in Europe and America.
For Schroeder, focusing on ESG is not only to meet the expectations of the society for a responsible asset management organization, but also we believe that through ESG research, we can tap the sources of excess earnings beyond the companys financial fundamentals. For example, our Asian corporate bond portfolio has been integrated with the internal certification process, which is in line with the relevant standards and guidelines of global ESG. In practical operation, we will conduct internal ESG research and rating for enterprises considering investment. In addition to the traditional credit rating, ESG rating is the consideration factor when making investment decisions. We believe that ESG rating can complement the traditional credit rating and help to determine the overall credit analysis capability, which will also be reflected in our portfolio. Now, more and more investors, in addition to hoping for return on investment, also hope that their investment can contribute to a sustainable society. Source: Securities Times editor: Yang Bin_ NF4368
For Schroeder, focusing on ESG is not only to meet the expectations of the society for a responsible asset management organization, but also we believe that through ESG research, we can tap the sources of excess earnings beyond the companys financial fundamentals. For example, our Asian corporate bond portfolio has been integrated with the internal certification process, which is in line with the relevant standards and guidelines of global ESG. In practical operation, we will conduct internal ESG research and rating for enterprises considering investment. In addition to the traditional credit rating, ESG rating is the consideration factor when making investment decisions. We believe that ESG rating can complement the traditional credit rating and help to determine the overall credit analysis capability, which will also be reflected in our portfolio.
Now, more and more investors, in addition to hoping for return on investment, also hope that their investment can contribute to a sustainable society.