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

While the secondary market is changing rapidly, the Hong Kong IPO market is quietly brewing for a warm comeback.

According to Wind data, the Hong Kong IPO market has welcomed a total of 48 new companies this year, with fundraising reaching 57 billion Hong Kong dollars, exceeding last year's full-year total of 46.3 billion yuan, only $MIDEA GROUP (00300.HK)$contributing to 31 billion Hong Kong dollars, not only becoming the largest IPO in the Hong Kong stock market in nearly three years, but also sparking institutional investors' interest in multiple upcoming star enterprise IPO projects.

According to bankers interviewed by Securities Times, the market recently has a preference for larger-scale IPO projects due to their higher liquidity; at the same time, institutional investors are no longer blindly pursuing high growth but are instead interested in enterprises with good cash flow, aiming to achieve a balance between growth and returns. Optimistically, this year's Hong Kong IPO total fundraising is expected to reach billions of U.S. dollars, breaking into the top three globally.

Raised 57 billion Hong Kong dollars within the year

As of now, Wind data shows that the Hong Kong Stock Exchange has added 48 new IPO companies this year, including 45 on the main board and 3 on the Growth Enterprise Market (GEM). Although there is still a certain gap compared to the full year of 70 in 2023, with the once-in-three-years Midea Group's 31 billion Hong Kong dollar IPO project, the Hong Kong Stock Exchange's IPO fundraising scale has reached 57.022 billion Hong Kong dollars, far exceeding last year's 46.334 billion Hong Kong dollars.

In a recent interview with China Securities Journalists, UBS Group's Global Investment Banking Vice Chairman and Co-Head of Asian Corporate Clients, Li Zhengguo, stated that Midea Group's large IPO is a "landmark" project, with many global sovereign wealth funds and long-term offline funds subscribing, and a relatively good performance in the secondary market after listing, all of which have brought positive feedback to the market. "Indeed, many investors are asking which IPO projects are worth participating in the future, and we believe that it is expected to drive a very good overall performance of the Hong Kong stock IPO market."

Looking at the projects in reserve at the Hong Kong Stock Exchange, the parent company of Evian, China Resources Group, has passed the hearing and is expected to raise between 5 to 1 billion US dollars, and is expected to list in November; two star companies with billion-dollar valuations, the Chinese dining brand Little Garden and S.F. Holding, have also been approved by the China Securities Regulatory Commission for listing hearings. "It is expected that the Hong Kong stock IPO market will remain active in the fourth quarter, with the annual fundraising scale expected to reach billions of dollars, returning to the top three in the world." Li Zhengguo said.

Currently, the total amount raised by Hong Kong Stock Exchange IPOs is 57.022 billion Hong Kong dollars, equivalent to 7.339 billion US dollars, less than the 18.346 billion US dollars of the Nasdaq and the 14.628 billion US dollars of the NYSE.

8 new stocks are oversubscribed online by over a hundred times

In terms of IPO subscriptions, among the 48 new IPO stocks in Hong Kong this year, 45 of them have all achieved oversubscription. Among them, 8 have oversubscribed by over a hundred times, namely$UBOT HOLDING (08529.HK)$501 times,$METASURFACE (08637.HK)$494 times,$TIANJUDIHE (02479.HK)$331 times,$CAROTE LTD (02549.HK)$269 times,$AUTOSTREETS (02443.HK)$217 times,$FUJING HOLDINGS (02497.HK)$201 times,$WUHAN YOUJI (02881.HK)$190 times,$LAOPU GOLD (06181.HK)$101 times. There are 6 other subscription multiples exceeding 50 times.

In 2023, the average IPO new stock subscription multiple is only 6.76 times, with the highest being$YAN PALACE (01497.HK)$,$ZX INC (09890.HK)$The subscription multiples were 20.91 times and 20.8 times respectively. Comparatively, it shows that the enthusiasm of Hong Kong stock investors for IPOs this year has clearly warmed up, which may be related to the increase in new stock IPO returns on the HKEX.

According to statistics from Chinese journalists from brokerage institutions, out of the 46 Hong Kong Stock Exchange IPO new stocks with data statistics this year, 27 had positive first-day gains, accounting for 58.7%; compared to 52.86% and 37.5% in 2023 and 2022, respectively.

However, it is worth noting that the Hong Kong stock market still lacks large-scale IPO projects this year. Based on the listing date calculation, the average net IPO fundraising amount of 70 new stocks in 2023 is 0.539 billion Hong Kong dollars, with a median of 0.226 billion Hong Kong dollars; in 2024, 48 new stocks have an average net IPO fundraising amount of 0.991 billion Hong Kong dollars, but the median is only 0.196 billion Hong Kong dollars. Excluding the impact of Midea Group, the average is only 0.373 billion Hong Kong dollars.

In fact, among this year's 48 new stocks, there are 16 companies with IPO net fundraising amounts of less than 0.1 billion Hong Kong dollars, with the smallest being only 12 million Hong Kong dollars; there are 19 companies between 0.1 billion Hong Kong dollars and 0.5 billion Hong Kong dollars, 9 companies between 0.5 billion Hong Kong dollars and 1 billion Hong Kong dollars, and only 4 companies with over 1 billion Hong Kong dollars.

UBS Group: Investor interest is growing, favoring such new stocks

Data compiled by Rain Capital shows that out of the 45 companies newly listed in the Hong Kong stock market in the first three quarters of this year, 17 are from the TMT industry, accounting for 37.8%; 7 are from the medical care industry, accounting for 15.6%. Among 154 new listing applications during the same period, around 56 are from the TMT industry, accounting for 36.4%, and 33 are from the medical care industry, accounting for 21.4%.

It can be seen that in recent years, the Hong Kong Stock Exchange has achieved good results in reform measures for sectors such as biotechnology and specialized technology. By adjusting valuations and financing thresholds, more companies are further encouraged to choose Hong Kong as their destination for listing and fundraising.

So, from the perspective of institutional investors, what kind of companies are more popular? According to Li Zhengguo, the market currently favors several types of companies: first, those with larger scale, which usually have better liquidity; second, companies with better cash flow and ROI, because investors are no longer purely focused on growth, but also hope to achieve a certain balance between growth and returns, hence some traditional industrial companies are regaining favor with investors; third, due to the macro environment, resource and energy companies have also attracted considerable attention recently.

A recent example is Midea, which went public during the Mid-Autumn Festival. More than ten well-known domestic and foreign investment institutions, including UBS Asset Management, are vying to become cornerstone investors of the company. This is mainly due to the attractive valuation of the company at the time of the IPO, as well as the industry it belongs to being favored by institutional investors - consumer industry. The cash flow is also very substantial.

Editor / jayden