[ fund manager's point of view] AIA Huatai Li Wenjie: Hong Kong people look at Hong Kong stocks. To this end, we interviewed Mr. Li Wenjie, director of AIA Huatai's overseas investment department. Mr. Li Wenjie is from Hong Kong, and I believe his introduction can bring us a brand-new perspective. A/H discount premium At present, there are 62 companies listed in both Hong Kong and mainland China. Li Wenjie said that the prices of these companies in the Hong Kong market are different from those in the A-share market. According to Hang Seng's A/H discount premium index, the overall premium of A-shares is around 8%. Although the overall premium rate is not high, the index is weighted by market value. In fact, the highest A/H discount premium is over 4%, and the lowest is over 1%. Interestingly, the worse the company's fundamentals, the higher the A-share premium. On the contrary, the better the company's fundamentals, the lower the A-share premium, or even the discount. There may be several reasons: First, A-share tradable shares are relatively small and easy to speculate; Second, A-share investors pay more attention to restructuring expectations and new share issuance. Third, the valuation methods of investors in the two places are different. H-shares and red chips Speaking of H-shares, Li Wenjie said that many people think that H-shares are the 62 companies mentioned above, but they are not. By definition, the H-share index refers to companies registered in the Mainland and listed in Hong Kong. Therefore, many stocks have H shares, but there are no A shares, including companies that everyone is very familiar with. Red chips refer to listed companies whose main business is in the mainland, but not registered in the mainland. Most of the initial red chips were so-called window companies, that is to say, large domestic state-owned enterprises or government-listed window companies in Hong Kong. However, in recent years, there are more and more enterprises related to the mainland in the Hong Kong market, and the definition of red chips is becoming more and more vague. The Hang Seng Index Company has also compiled a red chip index, but in fact it does not include all enterprises related to the Mainland. The pricing characteristics of the Hong Kong market are quite different from those of the mainland market. Li Wenjie believes that one of the significant differences is that the Hong Kong market is dominated by institutional investors, and retail investors account for very little of the total market turnover. At the same time, the Hong Kong stock market is also dominated by international funds, including international mutual funds, hedge funds and sovereign funds. Therefore, we can draw the following two points: First, investors in the Hong Kong market are relatively rational, and they all infer reasonable stock price targets from fundamentals. Nevertheless, Li Wenjie also said that this does not mean that the Hong Kong market is always rational. For example, in a bull market, the valuation is very unreasonable, which is the same as in other parts of the world. Differences between Hong Kong stocks and A-share markets From the perspective of transaction volume, Li Wenjie said that the top 1% companies in the Hong Kong market accounted for about 8% of the market; The turnover of the top 1% A-share companies only accounts for about 3% of the market. This shows that the trading volume in the Hong Kong market is mainly concentrated in large-cap stocks, while the A-share market is relatively scattered. From the perspective of volatility, Li Wenjie said that the volatility of the Hong Kong stock market is not lower than that of the A-share market. The main reason may be that Hong Kong stocks can be short. Once the market price is unreasonable, the long and short sides will play a game and the price will be adjusted back. Therefore, there are few unilateral markets in Hong Kong stocks. For example, in 26, A shares rose unilaterally, which is rare in Hong Kong. In addition, there is no price limit in the Hong Kong market, but this does not mean that the risk in the Hong Kong market is higher; There are no entry restrictions in the Hong Kong market, and people all over the world can open accounts in Hong Kong. There is no so-called online/offline issuance because of the different IPO issuance mechanisms in Hong Kong market. The IPO is completely market-oriented, and the Hong Kong Stock Exchange is only responsible for approving whether the materials meet the listing requirements, and will not interfere with the issuance price and progress; Securities short selling is applied to most companies, unlike the current 9 A shares; The warrant market is very active, most of which are bull and bear warrants and covered warrants issued by brokers; Hong Kong stock transactions are very concentrated, and A shares are relatively scattered; In addition to stock index futures, there are options trading in the futures market.