Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Wang Rui

In terms of optimizing the securities market, John Lee Ka-chiu has put forward four measures, including exploring new overseas funds, attracting corporate listings, optimizing listing approvals, and improving market efficiency. Many of these measures are consistent with the long-term planning of the Hong Kong Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited. However, some Hong Kong financial institutions expressed disappointment that the policy address did not mention reducing the stock stamp duty.

Actively developing overseas networks.

Regarding the exploration of new overseas funds, John Lee Ka-chiu mentioned the need to list exchange-traded funds (ETFs) tracking Hong Kong stock indices in the Middle East to attract local funds to allocate investments in Hong Kong stocks.

"We will continue to actively expand and deepen our overseas networks, including financial cooperation with the Middle East, ASEAN region, hosting more international financial events, and seeking further cooperation in the financial field with Islamic markets." John Lee Ka-chiu stated that efforts will be made to collaborate with large sovereign funds in regions such as the Middle East to jointly establish funds, invest in assets in the Mainland and other regions.

According to reports, there are 2,700 single-family offices in Hong Kong, with industry estimates suggesting Hong Kong will become the world's largest cross-border wealth management center by 2028. John Lee Ka-chiu stated that every effort will be made to attract more global funds to be managed in Hong Kong, including promoting private equity funds to explore new sales channels through the Hong Kong Exchange. Additionally, consultations will be conducted with the industry to increase the types of qualified transactions eligible for tax reduction for funds and single-family offices.

In fact, the Chief Executive Officer of the Securities and Futures Commission of Hong Kong, Ashley Alder, and the Executive Director of Investment Products, Christina Choi, paid their first visit to Saudi Arabia and the United Arab Emirates in May this year. They met with local financial regulatory authorities, stock exchanges, large asset management companies, and financial institutions to enhance financial services cooperation between Hong Kong and the two regions in order to promote the development of each other's markets.

The Securities and Futures Commission of Hong Kong also mentioned in its "Strategic Focus for 2024-2026" the plan to expand its overseas network to broaden the issuer and investor base in Hong Kong. They are exploring potential cooperation opportunities with overseas regulatory bodies or the possibility of linking markets. Actively participating in the formulation of international standards and taking on leadership roles in the International Organization of Securities Commissions to continue consolidating Hong Kong's international position.

Optimizing the listing path for companies.

Attracting more high-quality companies to list in Hong Kong has been a key focus of the Hong Kong securities market in recent years. In line with this goal, John Lee Ka-chiu proposed two measures.

Firstly, making good use of the advantage of the "Mutual Market Access" with the mainland market to attract international companies to list in Hong Kong, while promoting large mainland enterprises to list in Hong Kong, striving to achieve more iconic IPOs in the short term.

On September 20, Charles Li Xiaojia, the Chief Executive of the Hong Kong Stock Exchange, pointed out in a public speech that Hong Kong is the preferred overseas financing platform for mainland companies. Over the past decade, the total amount of funds raised in the new stock market has approached nearly $300 billion, leading the global fundraising. As of the end of August 2024, the total amount of refinancing of listed companies on the Hong Kong Stock Exchange has exceeded $24 billion.

In 2023, the Hong Kong Stock Exchange introduced a new chapter (Chapter 18C) in its listing rules for specialized technology companies, providing financing convenience for specialized, special and new companies that are not yet commercialized or in the early stages of commercialization, aligning with the country's strategy to support the development of "specialized, special and new" enterprises. In September of this year, the Hong Kong Stock Exchange further lowered the IPO threshold for specialized technology companies, providing greater flexibility for issuers and investors.

Secondly, announcing specific measures to further optimize the listing approval process, making the listing application approval time more predictable.

According to the latest quarterly report released by the Hong Kong Securities and Futures Commission, in the second quarter of this year, the Commission processed 53 new listing applications, including one from a specialized technology company, and five from unprofitable biotechnology companies. In the three years ending June 30th of this year, 365 listing applications were reviewed, with 94% of the applications reviewed in less than 60 business days.

On October 14th, Chan Yat-ting stated that the Hong Kong Stock Exchange is closely communicating with the Hong Kong Securities and Futures Commission and other market participants, preparing to consult with the market on lowering the minimum price consultation conclusion, exploring specific measures to improve the listing process, including increasing efficiency and regulatory support, and will soon seek market feedback on the reform of price discovery in the new stock market.

Continuously enhancing market efficiency.

This time, John Lee Ka-chiu also revealed that the Hong Kong Securities and Futures Commission and the Stock Exchange will enhance market efficiency and reduce trading costs by reviewing margin deposit arrangements, optimizing margin and collateral requirements, and other means.

It is important to note that continuously improving trading efficiency and reducing trading costs in line with major international exchanges has always been an important goal of the Hong Kong securities market. In the past two years, the Hong Kong securities market has indeed achieved several breakthroughs in improving market efficiency. For example, it recently formally implemented arrangements to maintain normal market trading in inclement weather - just a few years ago, this arrangement was still considered impractical.

Just a few days ago, the Stock Exchange revealed that it is preparing a white paper to be released in the first half of next year, prompting the industry to discuss the settlement cycle of the Hong Kong market. It will continue to optimize systems, develop the next generation of settlement and delivery platforms, with the aim of ensuring that the Stock Exchange spot market infrastructure will have the ability to accommodate a T+1 settlement cycle by the end of 2025.

The Hong Kong Securities and Futures Commission welcomed the proposed measures in the latest Policy Address on October 16th, stating that further optimization of the listing approval process, improving market efficiency, and reducing transaction costs will consolidate Hong Kong's position as an international financial center. They also mentioned their commitment to assisting in establishing a financial technology innovation ecosystem and strengthening regulation of virtual asset trading.

However, while welcoming and supporting multiple financial-related measures in the Policy Address, the Hong Kong Securities and Futures Practitioners Association expressed disappointment at John Lee Ka-chiu's failure to mention a reduction in the stock stamp duty. Association Chairman Chan Chi-wah stated that with the global economic outlook full of uncertainties and increasing competition in financial markets, timely reduction of the stock stamp duty is vital to enhancing Hong Kong's financial market attractiveness. The current level of stamp duty to some extent inhibits market liquidity, increases investor trading costs, and weakens Hong Kong's competitiveness with other international financial centers.

He suggested that the Hong Kong government carefully consider developing a medium to long-term strategy to gradually reduce the stock stamp duty and eventually abolish the tax. He also believes that this will help increase trading volume, attract more companies to list in Hong Kong, promote financial innovation, create more job opportunities, and drive economic growth.

Editor/rice