Chinese and US regulators have signed an agreement on cooperation in audit supervision, which has injected a positive dose into Chinese stocks. For the long-term focus on Chinese stocks of the QDII fund, how will this good affect the future layout?

The China Securities Regulatory Commission and the Ministry of Finance signed an audit supervision cooperation agreement with the US Public Company Accounting Supervisory Board (PCAOB) on August 26, 2022, and will start the relevant cooperation in the near future, the China Securities Regulatory Commission announced a few days ago.

In the view of a number of QDII fund managers, the signing of a regulatory cooperation agreement between China and the United States constitutes a substantial benefit to Chinese stocks in the United States and is expected to attract additional capital allocation. At the same time, the trend of secondary or dual major listing of Chinese stocks in Hong Kong will not change, the structure of the Hong Kong stock market will be optimized, and liquidity will be further enhanced. Industry insiders believe that with the landing of regular supervision, the fading of the risk of delisting, and the gradual recovery of the domestic economic environment, Chinese stocks have greater investment potential, among which the relevant targets of the Internet are highlighted.

China-listed stocks in the United States ushered in a positive.

In the view of Xia Haoyang, manager of Guangfa China General connected ETF Fund, the signing of this agreement brings hope for PCAOB's reevaluation of accounting firms in mainland China and Hong Kong in 2022, and also creates conditions for both sides to resolve the risk of delisting of Chinese stocks. "We have also observed that market sentiment in the general interconnection sector has been boosted recently and may attract additional capital allocation in the future. Xia Haoyang told the Securities Times.

From a long-term perspective, Xia Haoyang believes that the signing of this agreement opens the door for China and the United States to deepen cooperation in the securities field dominated by Chinese stocks, and if the two sides can establish a relationship of long-term cooperation and mutual trust through an effective mechanism in the future, it will pave the way for the continued listing of Chinese stocks in the United States and the continued listing of Chinese enterprises in the United States, which is beneficial to overseas investors as well as Chinese stocks themselves.

Wang Xinchen, a core asset fund manager for the Internet industry in Castrol Hong Kong shares, shared a similar view, saying that the market had been worried about the collective delisting of Chinese stocks, and that the risk of delisting of these companies had been greatly reduced after the signing of the regulatory cooperation agreement. It also has long-term significance for the regulatory agreement to use Hong Kong as a place to review audit papers. In the long run, the high probability of large technology companies going to US stock listings is gone forever. Hong Kong's capital market can meet both offshore market and domestic regulatory conditions, and may become the first choice for overseas listing of science and technology enterprises.

Tao Yifei, manager of Haifutong Fund QDII, believes that when China and the United States sign an audit supervision cooperation agreement, in the short term, the possibility of collective and systematic delisting of Chinese stocks has been reduced, so it is good for Chinese stocks to a certain extent. From the medium to long term, it also depends on whether the two sides can cooperate smoothly, and can not rule out some accounting or management problems found by individual companies in the audit process, so the medium-and long-term risks still exist.

Listing in Hong Kong is still the main trend

It is worth noting that at present, many Chinese stocks have completed secondary or dual major listings in Hong Kong. Will the signing of the audit supervision cooperation agreement between China and the United States change the pace of listing of Chinese stocks in Hong Kong, and what impact will it have on the future of Hong Kong stocks?

In this regard, Xia Haoyang believes that pre-listed Chinese stocks face the risk of delisting in the United States, so many companies have chosen to complete the secondary listing or dual major listing in Hong Kong. From the investor's point of view, secondary and dual major listings of US stocks and Hong Kong stocks are convertible and fully priced, coupled with the relatively good liquidity of China General Interconnection ETF companies, so position customers will not be greatly affected and can continue to trade in the Hong Kong market through the conversion of US stocks to Hong Kong stocks.

However, as an alternative to US-listed Chinese stocks, secondary or dual major listings in Hong Kong will still be a trend. In the future, more Chinese stocks may be listed in Hong Kong, which will help to optimize the structure of the Hong Kong stock market and improve liquidity. Xia Haoyang said.

Wang Xinchen said that in the short term, the overall liquidity of the Hong Kong market is relatively poor, superimposed by the US interest rate hike cycle and overseas recession risk, resulting in the recent poor performance of innovative growth assets in Hong Kong stocks. But in the long run, whether the performance of a capital market is good or bad or not is directly related to the quality and future prospects of listed companies. "if more and more innovative enterprises land on Hong Kong stocks, the asset quality and long-term performance of Hong Kong stocks are expected to improve significantly. He told the Securities Times.

Tao Yifei analyzed it from the perspective of liquidity. He believes that as the possibility of collective delisting of Chinese stocks has been reduced in the short term, the urgency of returning Chinese stocks to Hong Kong is not as urgent as it used to be, and the liquidity impact risk caused by the collective return of Chinese stocks to Hong Kong stocks has also been correspondingly reduced. therefore, for Hong Kong stocks, there should also be some advantages in the short term. In the medium to long term, the overall trend of the listing of Chinese stocks back to Hong Kong should not change. These outstanding companies will be listed in Hong Kong stocks in an orderly manner in the future, and will also attract more investors to invest in Hong Kong stocks.

The general interconnection is favored.

In view of this positive, will the QDII fund with long-term investment in overseas markets increase the allocation of Chinese stocks? Which overseas subdivision track configuration opportunities are more optimistic in the future?

In this regard, Xia Haoyang believes that in terms of the recent performance of overseas markets, the market's trading expectations for US stocks have changed from recession expectations to tightening expectations, mainly due to the recent hawkish remarks made by Federal Reserve Chairman Powell. Then, the current US economy has not yet entered the upward channel, and tightening interest rates may affect the pace of US economic recovery in the later stage, so US stocks may have the risk of killing profits in the future. Investors need to pay close attention to the relevant market indicators.

In contrast, Xia Haoyang believes that at present, Chinese stocks deserve attention in overseas listed assets because they benefit from the favorable audit regulatory cooperation between China and the United States, as well as the overall domestic economic stability and performance to a certain extent. In addition, Chinese stocks have experienced a sharp pullback in the early stage, and the overall valuation level is relatively low, with a certain value of attention.

As far as the track is concerned, Xia Haoyang pays more attention to the general interconnection plate, which has benefited from Sino-US audit regulatory cooperation and performance recovery. He believes that from the perspective of domestic policy, the uncertainty faced by the Internet industry has been alleviated, and follow-up investment is expected to pay more attention to fundamentals and valuation. He suggested that in the context of the current "policy bottom, valuation floor" and looking forward to the bottom of the performance brought about by the economic recovery, investors can maintain their attention to the interconnected plate, comply with the trend, and pay attention to the beta opportunities brought about by the recovery of the industry.

Wang Xinchen told the Securities Times that his Castrol Global Internet QDII Fund has disclosed the top ten heavy stocks in the semi-annual report, of which the allocation of US-listed stocks has reached a relatively high level. The valuation of US-listed stocks reached an extremely low level in the second quarter of this year. Looking forward to the future, with the landing of normal supervision, the fading of the risk of delisting, and the gradual recovery of the domestic economic environment, Chinese-listed stocks have greater investment potential. Wang Xinchen said that he is optimistic about the overall investment opportunities. In the field of segmentation, he is optimistic about the short video business model with good fundamentals so far this year, as well as the local life and Internet advertising industry that can be driven by the recovery after the epidemic.

Tao Yifei is also optimistic about the overall opportunities for US-listed stocks, arguing that the overall valuation of US-listed stocks has been suppressed because of concerns about delisting in the past. But now ushered in a positive, the overall valuation of Chinese stocks should have a certain recovery, so more optimistic about the allocation of excellent Chinese stocks. He also said that following the first quarter of this year, the second-quarter results of Internet platform companies also basically exceeded market expectations, so he is optimistic about investment opportunities for corresponding stocks in the context of improved fundamentals and rising valuations.