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: Xu Nuo

Affected by risk aversion sentiment, publicly offered bitcoin ETFs have set new historical highs. On November 12, four bitcoin ETFs developed by top publicly offered subsidiaries in Hong Kong collectively surged by more than 9%, reaching their respective historical highs, with the highest trading volume $CSOP Bitcoin Futures ETF (03066.HK)$ having achieved a high yield of 87.88% within the year and a 3.4-fold increase in two years after the significant rise on the same day.

Some fund company professionals believe that the strong performance of bitcoin is related to the US elections and market risk aversion sentiment. From the perspective of asset categories, gold, bitcoin, and cash assets such as the US dollar have strong defensive attributes. These related assets are likely to outperform in the global risk-off scenario.

The bitcoin ETF has tripled in the past two years in terms of the highest increase.

On November 12th, influenced by the price of bitcoin, bitcoin ETFs launched by public fund subsidiaries have set historical highs one after another. Among them, the bitcoin ETFs launched by Hong Kong subsidiaries of Southern Fund, Huaxia Fund, Jiashi Fund, and Boshi Fund all rose by more than 9% on that day.

Securities Times noted that the bitcoin ETF launched by Nandong Dongying, a Hong Kong subsidiary of Nandong Fund, surged by 9.8% at the close on November 12th, with a daily turnover exceeding 93 million Hong Kong dollars, making it the bitcoin ETF with the largest single-day turnover in the market so far. As of the close on November 12th, the cumulative increase of Southern Bitcoin ETF this year has reached 87.88%, surpassing the highest annual return of 69% of the stock-oriented fund products under the public fund.

Industry insiders believe that the strong price of bitcoin ETFs is related to Trump's victory in the U.S. election, giving the market a great bullish signal. Trump promised to establish more crypto-friendly regulations, and his Republican Party is strengthening control of Congress to push his agenda. Other commitments include building a U.S. bitcoin strategic reserve and promoting bitcoin mining. His position sharply contrasts with the crackdown on this controversial industry by the U.S. Securities and Exchange Commission (SEC) during the Biden administration, data shows that this shift has sparked speculative purchases of tokens large and small. For example, prominent Brazilian hedge fund Verde established a bitcoin position before the U.S. election on November 5th, indicating Trump's support for digital assets during the campaign and the possibility of many crypto-friendly members in Congress, attracting investors to the crypto market.

Market risk aversion is also favorable for current bitcoin market investments. Fund personnel at Zhongou Fund believe that from the perspective of asset categories, assets such as gold, bitcoin, and cash / money market currencies have strong defensive capabilities, making them easier to outperform in global risk-averse preferences. In addition, the Middle East is traditionally a resource-exporting region, and companies related to oil and gas are easily driven by expectations of supply contraction during geopolitical tensions.

Public offering background stimulates the attractiveness of bitcoin

As institutional investors with a public fund background start to bet on and support bitcoin, the market's perception of bitcoin is rapidly changing, further boosting the price potential of bitcoin.

Due to long-term criticism from traditional investors, the price performance of Bitcoin has always relied on the participation of high-profile individuals and institutions. Although the Hong Kong subsidiary of Southern Fund ventured into bitcoin futures ETF as early as the end of 2022, becoming the first bitcoin ETF launched by a subsidiary under a public fund, Southern Bitcoin ETF, without the 'companionship' of a public fund, was relatively unknown in the market until April this year. It was not until more leading public funds in Hong Kong announced their involvement in bitcoin in April that the situation of bitcoin ETF fighting alone was broken. Following Southern Fund's previous receipt of bitcoin futures ETF, in April this year, Jiashi International, Huaxia Fund (Hong Kong), and Boshi International all officially announced that their virtual asset ETFs have been approved by the Securities and Futures Commission of Hong Kong (SFC). These are also the first batch of bitcoin spot ETFs and Ethereum spot ETFs launched in Asia.

Zhu Haokang, Head of Digital Asset Management and Family Wealth Management at Huaxia Fund (Hong Kong), stated that the issuance of Asian spot bitcoin and Ethereum ETFs provides a safe, efficient, and convenient tool for retail and institutional investors to allocate digital assets. "Hong Kong's spot crypto ETFs, recognized by regulatory agencies, listed on traditional exchanges, managed by professional fund companies, and regulated by collaborating crypto exchanges, along with the globally pioneering mechanism of in-kind creation and redemption, are expected to attract crypto asset investors looking to convert physical crypto assets into ETF products."

In fact, the notion that Bitcoin is a scam has long dominated traditional financial markets and professionals in traditional financial institutions, which has led to Bitcoin's price being largely influenced by the support of heavyweight institutions and investors. The market has taken notice that when globally renowned technology giant and Tesla founder entered the Bitcoin market, there was a significant change in Bitcoin's situation. Tesla, led by Musk, first bought Bitcoin in 2021, and with the disclosure of relevant information, Bitcoin's market saw a turnaround rebound.

Wall Street giant BlackRock's involvement in Bitcoin further supported this belief, stimulating more well-known traditional financial institutions to enter the Bitcoin market. According to FactSet's data, as of last Friday, the assets under management of Bitcoin exchange-traded funds (ETFs) were approximately $34.3 billion. This surpassed one of the largest gold ETFs, iShares Gold Trust (IAU), whose assets under management were slightly below $33 billion.

Fund companies may accelerate their entry with the help of Hong Kong platforms.

Industry insiders expect that as the price of Bitcoin continues to rise, especially after the first batch of Bitcoin spot ETFs successfully entered at high levels, it may stimulate more public funds to leverage Hong Kong platforms to lay out this business.

Currently, public funds primarily use the licenses and platforms of Hong Kong subsidiaries to develop Bitcoin ETFs. In 2022, the China Securities Regulatory Commission issued opinions on accelerating the high-quality development of the public fund industry, explicitly supporting qualified fund management companies to establish overseas subsidiaries to enhance their ability to serve overseas investors and globally allocate assets. Currently, about 30 public fund companies have established subsidiaries in Hong Kong, including Ruifeng Fund's Hong Kong subsidiary approved in March last year. Industry insiders believe that the increasing deployment of public funds in Hong Kong platforms also signifies the operational space provided for developing innovative businesses such as Bitcoin in the Hong Kong market.

JPMorgan analysts state that the 2024 U.S. presidential election has been one of the most important elections for the country. As the nation stands on the edge of a major economic crossroads, a clear direction is necessary. In a historic outcome, Donald Trump defeated incumbent Vice President Kamala Harris. This victory is huge for the cryptocurrency industry and the stock market. It is expected that this situation will continue, with both assets having significant growth potential amid geopolitical tensions in the U.S. dollar.

Especially since the approval of the U.S. Bitcoin spot ETF earlier this year, its fundraising ability has outperformed many traditional fund companies, attracting a large influx of funds within just nine months. The additional amount has even surpassed some of the leading ETF products in the entire market, further stimulating more traditional institutional investors to buy Bitcoin or develop the Bitcoin ETF market.

Editor/rice