Most participants in the China A market are retail-focused and sentiment-driven. This leads to mispricing opportunities making it particularly interesting to access through an actively managed approach
- Domestic and foreign inflows into Chinese equities are set to continue
- The Ownership Reform Plan is designed to improve corporate governance and increase companies’ focus on maximising shareholder value
- Chinese GDP is stabilising with a clear focus on consumption-driven growth
- Financial regulatory reform should facilitate growth and ensure greater stability in financial markets
- The government encourages domestic investors to allocate to their home stock market
Philosophy and investment process:
The investment team uses an artificial intelligence (AI) model which aims to identify statistically strong performers through estimating the implied volatility of stocks in a large and still inefficient pool of opportunities.
Applying AI models takes the emotion out of investing and focuses on market volatility, which is important in a market dominated by retail investors (>80%) and government intervention. The model is used to systematically identify strong performers in different market cycles and to adjust and learn from the past hit ratio. It applies rigorous risk management to improve the risk–return profile and is able to become more defensive and acts as an effective downside protection tool, adding stability to the investment.
The 11-strong Shanghai-based team is dedicated to A-share equities and comprises 6 seasoned investment professionals with extensive experience and proven track records.
The CIO Sylvain Yuan has 11 years’ experience in quantitative and derivatives trading and research. He is the former Head of Alternatives for HFT Investment Management Co. Ltd and was previously a derivatives trader at BNP Paribas and HSBC.
The strategies are managed by UBP Investment Management Shanghai (Ltd) applying a quantitative philosophy to select stocks across the CSI 800 investment universe. The investment universe spans relative and total return strategies, allowing investors to seek different types of exposure in China.