Shi Bin, Head Of China'S Stock Exchange, UBS, Said: "A Good Company Will Live With It Forever."

Under the trend of foreign institutions competing to enter the domestic market, as the private sector that has been approved two years ago, the layout logic of UBS's A shares is gradually clear.

In twenty-first Century, the economic news reporter learned that UBS assets were driven by value investment and focused on the long-term holding of high-value stocks in the consumer sector, in order to get excess returns for investors.

A few days ago, Shi Bin, head of China stock team of UBS assets, told reporters in an interview with twenty-first Century economic report that at present, there is no lack of liquidity and capital in the A share market. A shares have many investment opportunities and space under the trend of long-term foreign capital allocation of A shares.

As a fund manager who has worked in UBS for more than 13 years, "insisting on long-term investment" may become Shi Bin's label. Reporters learned that UBS assets from the long-term growth potential of the industry to tap outstanding enterprises and carry out a layout of up to 10 years, which also allows UBS assets have lower turnover and longer holding cycle.

The investment style of UBS assets has undoubtedly become a clear reference to the phenomenon of "scattered retail" in the domestic market.

Shi Bin, head of China Securities, UBS assets.

Super long term investment

As a foreign private equity organization, value investment is the idea implemented by UBS.

In twenty-first Century, the economic report reporter learned from the exchange with Shi Bin that the long term promising field of UBS assets is the industry with large consumer concepts, including medical and other related services.

In Shi Bin's view, the advantage of such industries is limited by the slowdown in economic growth and has certain growth potential.

"These industries are still at a relatively early stage of development, and the potential for long-term growth is relatively large." Shi Bin said, "of course, it is more important to dig good companies from bottom to top, and to intervene through reasonable valuation."

Under this strategy, the Shi Bin team even held some stocks for 10 years, instead of selling some cash stocks because of the short-term performance of some companies.

"An excellent company will continue to be excellent. As long as the competitiveness of the company is not weakened and the growth can continue, its share price is in fact highly related to the fundamentals." Shi Bin said, "the key is to see whether a company's competitiveness is continuously increasing or weakening at any time point. This is the reason why we are willing to hold some advantageous enterprises for a long time."

Under the ultra long term investment logic, the average annual turnover rate of UBS assets is only about 0.2 times, while the shareholding cycle is 5 years. In fact, the turnover rate is much lower than the average level of the domestic public offering agencies. According to the statistics, the turnover rate of the public offering industry in the first half of 2019 was 1.69 times, and the turnover rate even reached 5.60 times, 3.55 times and 3.21 times during the period from 2015 to 2017.

"At least four or five of our stocks can be held for more than 10 years, and some are shorter, but they are also in the 1-2 year cycle, so the average is about 5 years." Shi Bin said.

The answer to Shi Bin's answer is "a lifetime" for the most promising company, which is the longest held Bank of UBS.

"A good company will live with us for a lifetime. In fact, the cycle can be long or short. The key is to have a thorough understanding of the company and consult the opinions of industry experts." Shi Bin said frankly.

Shi Bin also admitted that the companies concerned about UBS assets did not even take the listing as a standard.

"HUAWEI, for example, is not listed, but there are many suppliers who have great influence on the whole industry chain. If they do not follow it, you can not tell how some companies are affected by its actions. So the concern for this kind of company is also very close, because its market impact is very large.

The ultra long term shareholding cycle and value investing strategy also brought UBS assets to a higher scale ceiling. According to the reporter's understanding, the current management scale of its Chinese team is about 16 billion US dollars, of which about 3 billion US dollars are allocated to A shares.

The future of A shares

In fact, A shares are also in the process of transformation from the retail market to the institutional market. In Shi Bin's view, the long-term capital allocation to the A share market can further guide the smooth fluctuation of the stock market.

"Long term capital is very important. Mature markets with a relatively high proportion of long-term funds tend to have a lower turnover rate as long term capital avoids large fluctuations caused by changes in investment sentiment throughout the market." Shi Bin said, "if it is the volatility caused by fundamentals, I think it is understandable, but because of the large fluctuations in investment sentiment, it is not conducive to long-term investment."

Shi Bin also believes that a higher turnover rate and emotional market are not conducive to the guarantee of market allocation efficiency.

"Long-term investment in good companies, companies can get market returns, market incentives. If a good company fluctuates like a bad company, it is unfair to a good company. Shi Bin pointed out that "in the long run, the turnover rate of A shares in the whole market will come down, and will gradually move closer to the mature market."

Standing at the moment, Shi Bin believes that the investment opportunities of the A share market in the coming year need not be pessimistic.

"We are optimistic about the market as a whole, although the economic growth rate will decline, but this market is not lack of liquidity, no shortage of funds." Shi Bin said frankly.

From Shi Bin's point of view, funds in many other areas are likely to flow further into the capital market from the perspective of asset allocation.

"Many funds may not be allocated in the capital market, but now the regulation of the real estate market is still relatively strict, so the possibility of large capital flows to the real estate market is not very large. From this perspective, the allocation of funds in the stock market should continue to exist, and foreign capital will continue to increase the allocation of A shares." Shi Bin said.

"So I think in this case, the capital side is relatively loose. From the perspective of the whole market, some stocks industry may be allocated more, and we are generally more positive or looking for opportunities. Shi Bin said.