The landscape of global investment is undergoing rapid transformation, with each cross-border capital movement reflecting an invisible "world map." This map does not outline mountains or oceans but traces the tides of capital and market territories. It does not mark latitudes and longitudes but conceals currency fluctuations and geopolitical trends. Gaining a global perspective requires more than analyzing financial reports and regulations; it demands penetrating the fog of cultural, institutional, and cyclical factors to identify consensus amid change and anchor logic amid volatility.

As one of the earliest fund companies to focus on technology investments, Hua An Fund has assembled a research team with strong academic backgrounds and deep investment expertise. Leveraging extensive industry experience and collaborative capabilities, the firm continues to expand and refine its exploration of technology investment opportunities.

Su Qihan, Deputy Director of the Global Investment Department and a seasoned global investment expert, brings over 21 years of experience in securities and fund management, including more than 19 years in investment management. Since joining Hua An Fund in June 2004, he has developed a strong foundation in overseas investments. Su specializes in identifying high-growth sectors and discovering leading companies, adhering to the GARP (Growth at a Reasonable Price) strategy. He focuses on high-value growth stocks, consistently delivering long-term compound returns for investors.

In the seventh edition of "Insights: New Industries," Su Qihan shared key perspectives in a dialogue with fund managers. Below are highlights from the discussion.

1. Investing in Global Supply Chains: Unpacking Core Challenges in Hong Kong Stocks

Host: How do you define a "global perspective" in the context of supply chain investment?

Su Qihan: A global perspective can be broken down into three dimensions.

First, from a fundamental analysis standpoint, mature industries like AI and semiconductors are highly globalized, with key players and barriers distributed worldwide. Therefore, supply chain investing requires a global outlook to identify high-barrier segments and leading companies across different regions.

Second, public funds ultimately focus on stock pricing, which is influenced by global macroeconomic conditions and monetary policies, particularly within the dominant U.S. dollar pricing system. For open capital markets outside mainland China, a global perspective is essential to assessing liquidity trends.

Third, it involves comparing valuations of the same company or supply chain segment across different markets. Many A-share companies are now dual-listed in Hong Kong or the U.S., and each market has its own valuation framework. Investors must account for these differences when evaluating similar companies.

Host: Why do the same companies often perform differently in A-shares and Hong Kong stocks?

Su Qihan: The primary reason is liquidity. Dual-listed stocks generally trade at a premium in the A-share market due to higher liquidity. Even small-cap A-shares often see trading volumes dozens of times higher than their Hong Kong counterparts, which directly impacts valuations.

Another factor is taxation. Dividend tax policies differ between the two markets. A-share investors are exempt from dividend taxes after holding for one year, whereas Hong Kong dividends carry an approximate 20% tax premium, which also contributes to higher A-share valuations.

Third, investor structure plays a role. A-shares are influenced by both retail and institutional investors, often pushing valuations upward. In contrast, Hong Kong is a mature market dominated by institutional investors who adhere to global valuation standards and are constrained by cross-market comparisons.

Host: How do you view Hong Kong-listed internet platform companies, which have experienced significant valuation swings and now face AI-driven transformation?

Su Qihan: Most Chinese internet giants are listed in Hong Kong and are currently under pressure amid the AI wave.

On one hand, competition has intensified. As user growth plateaus, sectors like gaming, e-commerce, and food delivery have become increasingly saturated. Recent price wars among Alibaba, Meituan, and JD.com have led to heavy cost investments, exacerbating margin pressures.

On the other hand, many internet giants are still applying strategies from the high-growth era to their AI initiatives, spending heavily on marketing and promotion. As a result, AI-related costs include not only R&D but also substantial sales expenses, eroding profits accumulated during earlier growth phases.

Crucially, it remains uncertain whether future AI traffic will be captured by new AI-native players or incumbent internet giants. Yet capital expenditures are already rising, creating a dilemma: companies must commit significant cash outlays for an uncertain return, weighing on both profitability and valuations.

2. Shifting Pricing Power in Hong Kong Stocks: Diversifying Risk with Hong Kong Exposure

Host: Hong Kong has long been considered an offshore market dominated by foreign investors. Is pricing power shifting as southbound capital inflows increase?

Su Qihan: Yes, pricing power in Hong Kong stocks is indeed changing. Since the launch of the southbound trading channel in late 2015, and especially after insurers were permitted to invest in Hong Kong stocks in 2020, mainland investors' share of Hong Kong trading has risen noticeably. Data show that before southbound trading, the Hang Seng Index and HSCEI were more correlated with the S&P 500. Now, Hong Kong stocks show stronger correlation with A-shares. Mainland capital now accounts for 30% to nearly 50% of Hong Kong trading volume—proof that "crossing the river to seize pricing power" is no longer just a slogan.

Host: How do mainland and foreign investors differ in their approaches to Hong Kong stocks?

Su Qihan: Foreign investors typically treat Hong Kong as a small part of their emerging market allocation, adopting a top-down approach. They often overlook small-cap, low-liquidity stocks.

Mainland investors, by contrast, often invest in Hong Kong based on relative valuation. Their stock selection is more bottom-up: they first form views on familiar A-share sectors or companies, then seek comparable Hong Kong-listed counterparts with better valuations or fundamentals.

This leads to different focus areas: mainland investors tend to target small- and mid-cap growth stocks, while foreign investors prefer large-cap index constituents with higher liquidity.

Host: What advice would you give retail investors interested in Hong Kong stocks but concerned about complexity? Is it necessary to include Hong Kong funds for diversification?

Su Qihan: Hong Kong stocks differ significantly from A-shares in liquidity, investor structure, and trading mechanisms, often exhibiting higher volatility. The market operates under a registration-based system, requiring stronger company analysis and financial statement interpretation skills. For most retail investors, accessing Hong Kong stocks through professional fund managers is more prudent.

Regarding passive versus active funds: Hong Kong lacks a broad market index comparable to the CSI 300 or Wind All Share Index. Existing indices are either overly concentrated in financials or internet stocks. Passive product development also lags, with limited sector or thematic ETFs available. Therefore, actively managed funds with long-term Hong Kong experience may offer better alpha potential.

Including Hong Kong exposure is essential. The market hosts many high-quality Chinese companies not available in A-shares, such as leaders in biopharma, internet, AI, and new consumption. Ignoring Hong Kong means missing key opportunities in China’s economic transformation.

3. Two Decades at Hua An: Cultivating Talent and a Collaborative Culture

Host: You joined Hua An Fund in 2004. What has fostered such a strong sense of belonging over these 20+ years?

Su Qihan: Having completed my undergraduate through doctoral studies at Tongji University, I naturally value stability. At Hua An, I progressed from product development to A-share research, and eventually to global investment—a journey reflecting the firm’s mentorship-driven talent development model.

Most of Hua An’s portfolio managers are cultivated internally, and I advanced from analyst to assistant fund manager and then to fund manager. This apprenticeship culture naturally fosters a sense of belonging.

Moreover, our overseas investment team operates as an integrated unit, creating a family-like environment. Analysts and fund managers collaborate closely in daily operations, further strengthening camaraderie and commitment.

Host: How does this mentorship model work in practice?

Su Qihan: In our department, fund managers and analysts participate together in weekly, monthly, and bi-monthly investment meetings. They also collaborate closely on company visits and research. Through this exposure, analysts naturally absorb fund managers’ perspectives and gain practical investment insights.

Another key step is the transition period for analysts promoted to assistant fund managers, during which they co-manage a fund with senior managers. This hands-on experience accelerates skill development through real-world application.

Risk Disclosure: Fund management companies do not guarantee fund profits or minimum returns. Past performance is not indicative of future results. The performance of other funds managed by the same company does not guarantee the performance of this fund. Fund returns are subject to volatility. Investors should exercise caution and review the fund’s prospectus and legal documents carefully before investing.

MACD golden cross signals have formed, and several stocks are showing strong upward momentum.

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