Today (April 25), the A-share market fell across the board, with over 4,300 shares floating in the green. As of the close of the day, the Shanghai Stock Exchange Index and ChiNext Index fell by more than 5%, and the Shenzhen Component Index fell by more than 6%. After 22 months, the Shanghai Composite Index fell below 3,000 points.
During the session, a Bloomberg report on "Predicting that the situation will be worse than in 2008, Pinellia Investment will reduce China stock exposure to zero" was widely circulated in the thrilling decline of the stock index. Since Banxia Asset Management is considered one of the best-performing macro hedge funds in China, and market confidence is extremely fragile, the emergence of this view has increased the pessimism of some investors.
To further explain, Li Bei, the founder of Pinellia Investment, issued a special post at noon today in response to media reports, saying that the "short position" of Pinellia was not recent, but had already been done in this way at the end of last year. She emphasized that as a hedge fund that pursues absolute returns, this is not unusual. It is normal to take long positions when there is an opportunity and not to do so if there is no opportunity.
Banxia Investment cuts exposure to Chinese stocks to zero
According to reports, Li Bei said in an interview with Bloomberg that for fund managers, the situation this year may be worse than in 2008. Holding Treasuries could have been a successful strategy even during the global financial crisis, but now it's hard to find a place to make money, she said. Unpredictable events such as the war in Ukraine and the rapid spread of omicron variants caught Chinese fund managers who are good at seizing opportunities in various asset classes unprepared.
Li Bei said that zero stock positions were not unprecedented in her career as a macro fund manager, but were in sharp contrast to the past stance of peers buying stocks, especially after the rally in March sparked by pledges to support the economy. After the trend. However, the rally has now run out of steam. Leading quantitative funds said they still maintained full positions during the stock market decline, and some of them even bought on dips. In the
report, Li Bei said that in her career as a macro fund manager, zero stock positions are not unprecedented, but they are in sharp contrast to the past stance of peers buying stocks, especially under the support of Vice Premier Liu He The gains come after economic promises sparked a rally in March. The
report also quoted Li Bei's recent views, saying that the strong spread of the omicron variant means that China's zero-clearance policy "requires Shanghai people to make sacrifices, requires a greater impact on the economy, and requires many listed companies to "We will bear certain losses." He also mentioned that although the possibility of more prolonged lockdowns may further slow down the economy, the interest rate differential between China and the United States will close in view of high commodity prices and the Federal Reserve will accelerate the pace of interest rate hikes. Narrow, space to stimulate growth is restricted. She said that with local government debt already at high levels and households less willing to borrow, increasing leverage is hardly a viable option.
As for future trends, Li Bei believes in the report that the stock market may fall further due to disappointing economic and performance performance, and then rise as borrowing costs fall and the outlook improves. Banxia still has approximately 10% of its funds invested in stocks, but is fully hedged through index puts. But Li Bei still believes that she still hopes to make money this year, but not as much as in the past few years.
Li Bei responded:
At the end of last year, the net position in stocks was around 0.
At noon, Banxia Investment Li Bei issued an article in response to media reports, saying that this interview was completed two weeks ago, but it happened that the market fell sharply today, which triggered negative news. mood.
Li Bei said that in fact, as early as the end of last year, Banxia's stock net position was around 0. She believes that as a hedge fund that pursues absolute returns, this is nothing unusual. It is normal to take long positions when there is an opportunity and not to do so if there is no opportunity.
Li Bei believes that this year is more difficult for fund managers than in 2008. This difficulty is mainly reflected in two points:
1. First, the absolute level of interest rates is too low, and the United States is in an interest rate hike cycle. Although the domestic economy is in decline, it is very useful to long long-term government bonds in 2008 or 2018. The winning strategy has become unusable.
2. There is greater uncertainty this year. The development of wars and epidemics has brought a lot of uncertainty.This makes trend trading prone to fluctuations and retracements.
She said that as the war and the epidemic have entered a stable period, the market uncertainty has become much smaller. Although the economy is under relatively great pressure, there will definitely not be a financial crisis in this round between China and the United States.
First of all, the current leverage level of US financial institutions is obviously lower than that in 2008, and their balance sheets are much healthier. China's shadow banking has shrunk significantly after several years of regulation, and the risks are not great.
In terms of China’s real estate, Li Bei believes that there are unfavorable factors such as high residents’ leverage levels, and there may be a slight contraction in the future. However, she also said that it should be noted that the average down payment ratio in China is as high as 50%, and the protection for banks is very sufficient, and mortgage loans will not have large-scale bad debts. The total amount of real estate development loans is not large. Excluding state-owned enterprises, the total amount is estimated to be less than 10 trillion, accounting for less than 5% of the bank's total assets, which will not cause too much harm to the bank.
Regarding the stock market, Li Bei finally pointed out that the stock index has fallen sharply since the beginning of the year, and the risks of economic and earnings decline have been priced in. The potential downside space is obviously getting smaller and smaller. In her opinion, the risks in the stock market are obviously getting smaller and smaller, and the opportunities are obviously increasing. According to
information, Banxia Investment’s asset management scale exceeds RMB 5 billion. It was established in August 2015. Its founder, Li Bei, served as a special account investment manager at Bank of Communications Schroeder Fund, and as an investment director at Shanghai Honghu Investment. A fund manager, he later set up his own business and established Pinellia Investment.
This article comes from Caitongshe
