news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

[introduction] chris hogbin, global head of investment at alliancebernstein: very optimistic about chinese assets in the medium to long term

china fund news reporter wu juanjuan

recently, chris hogbin, global head of investments at alliancebernsteinin an exclusive interview with this newspaper in shanghai, he said that he is very optimistic about the chinese market in the long term. for fundamental investors, china presents attractive opportunities. he said that as china's economy transitions to high-quality development, china's market style will also change accordingly. in the future, china will no longer be the only market for growth stocks, and opportunities for investors in other styles will also emerge.

alliancebernstein group is headquartered in the united states. as of the end of the second quarter of this year, its management scale was nearly us$770 billion, equivalent to more than 5 trillion yuan. it has offices in 27 countries and regions around the world and is known for its active management, innovation and diversified investment solutions. chris hogbin has 26 years of experience, 19 of which have been with alliancebernstein.

chris hogbin, global head of investments at alliancebernstein

the u.s. economy may achieve a soft landing

china fund news: recently, the federal reserve announced that it would cut the federal benchmark interest rate by 50 basis points. what do you think of this move?

Chris Hogbin: the logic of interest rate cuts is simple and clear. inflation has fallen, inflationary pressures in the economy have eased, and the labor market has moved toward a more balanced state. the federal reserve believes that the current interest rate is well above the neutral level and it is appropriate to take the initiative to cut interest rates.

the fed believes it can act earlier and achieve lower interest rates without causing a recession. with the opening of the interest rate cut channel, both fixed income and stock investors have opportunities for capital appreciation, and lower interest rates will contribute to the revision of earnings expectations in various industries.

china fund news: the market has two ways of interpreting the fed's interest rate cut. one is that powell is increasingly confident in controlling inflation, and the other is that there may be some worrying signs in the labor market. what do you think?

Chris Hogbin：the labor market has slowed somewhat but remains healthy. consumers have burned through the extra savings accumulated during the pandemic but are still enjoying real wage increases. coupled with the federal reserve's interest rate cuts, this can support a strong economy and achieve a soft landing transition into the mid-to-late economic cycle.

the baseline scenario we assume is that the u.s. economy achieves a soft landing in the next 12 to 24 months. although stagflation cannot be completely ruled out, we are not overly worried about the risk of recession at the moment.

china fund news: what economic indicators do you pay attention to?

Chris Hogbin：a soft landing will be driven by a continued strong and resilient job market. when interest rates fall, this will also be a boon for consumers. we will monitor job market conditions closely.

we need to consider other possibilities as well. is it too late and a more aggressive interest rate cutting cycle is needed to deal with potential weakness in economic fundamentals? if inflationary pressures fail to subside as expected, will the economy become stagflation? this is something we cannot completely rule out.

china fund news: what do you think of the u.s. housing market?

Chris Hogbin：due to the typical long-term fixed-rate loan model in the united states, when people need to sell their properties and refinance, they have to bear significantly higher interest rates. as a result, transaction volume dropped significantly. if interest rates continue to fall over the next 12 to 18 months, this may help the housing market return to a relatively balanced state, which is currently somewhat unbalanced.

china fund news: as the federal reserve enters an easing cycle, it usually means that the u.s. dollar weakens, which is usually good for emerging markets. how will the exchange rates of emerging market countries perform this time?

Chris Hogbin：a weaker dollar typically provides a favorable environment for emerging market performance. different emerging markets are at different stages of the economic cycle, and changes in interest rate differentials will affect exchange rate trends.

it should be noted that interest rate spreads are not the only variable for global funds. taking the chinese market as an example, we also need to consider the impact of institutional capital flows. we are very optimistic about china's bond and stock markets in the medium to long term.at present, international investors' allocation in china is still low. the investment decisions of international investors are affected by many factors. sometimes, interest rate spreads indicate that allocations may be increased or reduced, and actual fund flows may move in the opposite direction. because capital flows affect exchange rates, it is difficult to make precise predictions about short-term exchange rate trends.

china fund news: in the past two years, global investors have allocated a large amount of funds to u.s. stocks. will this trend be strengthened or weakened as the fed enters a rate-cutting cycle?

Chris Hogbin：over the past two years, the u.s. stock market has been dominated by a very narrow sector - the so-called "seven heroes of the u.s. stock market." the market is moving towards decentralization, which will have a beneficial impact on the stock market during a rate cut cycle. in addition to the "seven heroes", there are many attractive companies on the market. as the market's growth expectations for the "seven heroes" and their own scale effects weaken, other parts of the u.s. stock market still have the potential to continue to drive overall performance. our portfolio is focusing on these relatively neglected areas. they present attractive earnings revision opportunities in a rate-cutting environment. of course, we also need to continue to pay attention to those outstanding "seven heroes" companies.

as a final aside, while we are relatively bullish on the u.s. stock market, one should also look to markets outside the u.s. where exciting investment opportunities exist.

china fund news: as the federal reserve enters the interest rate cutting cycle, do you think that in terms of factor style, value, size or quality factors will have the advantage in the us market?

Chris Hogbin：quality factors tend to perform better in the mid-to-late stages of the economic cycle we are currently in. that said, investing in high-quality companies with competitive advantages and relatively stable cash flows, while focusing on reasonable valuations, can be a good strategy. it should be noted that the "seven heroes of u.s. stocks" also include many high-quality companies, so it does not mean that they should be completely abandoned. our focus is on finding additional opportunities in increasingly fragmented markets, where we as active managers can bring value to our clients.

china fund news: what are your views on the japanese stock market?

Chris Hogbin ：the japanese market has shown a trend worthy of attention. the return on equity of japanese companies has increased and the underlying corporate governance has improved. this is partly due to corporate governance reforms across japan. as roe rises, so do stock valuations.

at present, there is still a considerable gap between the level of return on equity of japanese companies and some other markets. although the market generally expects that the average return on equity of japanese companies will increase from 8% to 9% to 11% to 12% in the next three years, this is still only half of the us market. japan needs to make more efforts. at the corporate level, corporate governance and structural reforms need to be made to narrow this gap.

japan's economy has shown signs of emerging from its long-term deflationary woes. currency changes will also have an impact in the medium term as the us cuts interest rates and japan begins to raise them.

attractive opportunities can be found in china

china fund news: global investors’ sentiment towards the chinese market is relatively sluggish. what catalysts are needed for global investors to return to the chinese market?

Chris Hogbin ：when we speak to global investors, stock market returns are often their first concern. secondly, they focus on china’s real estate industry. we believe that although the real estate industry may remain weak, it is gradually coming out of the woods and the drag of real estate on the economy is reducing.

in addition, there are many interesting areas in the chinese economy. for example, after four years of difficult performance in the industrial and consumer sectors, valuations look quite attractive. in the medium to long term, we maintain a fairly optimistic attitude towards the chinese market.the key is to find the right investment direction and area. today's chinese economy is more complex and diversified than in the past few decades.

china fund news: can you explain in detail why you are optimistic about the consumer industry?

Chris Hogbin ：our investment in chinese stocks adopts a value-oriented investment strategy rather than chasing growth. the so-called value investing is to look for companies with attractive fundamentals, reasonable valuations and clear catalysts. given current valuation levels, we believe there are many untapped opportunities in the consumer sector.in the past, most global investors entered the chinese market with the initial intention of pursuing growth. however, as china's economic development enters a new stage, in the next 10 years, china will not only need growth investors, but also investors who are good at other investment styles. when economic growth is high, growth investments are indeed popular. but as growth slows, adopting a different investment style may capture more attractive opportunities.

china fund news: how do you view china’s economic transformation?

Chris Hogbin ：many people try to simplify this process, believing that china will turn from export-oriented to domestic demand-driven. but in fact, the situation is much more complex. it is clear that china has achieved great success in many industries. for example, china's new energy vehicles, technology and some export industries are in a leading position in the world. these achievements will support china's transformation to the next stage of development.

china fund news: can you share your key investment ideas in the chinese market?

Chris Hogbin ：alliancebernstein has been involved in the chinese market for a long time. in the past few years, we have established a public fund company in shanghai and completed our first fund raising earlier this year. our team is committed to bringing alliancebernstein’s global capabilities to the local market. to achieve this, the key is to combine in-depth fundamental research insights and quantitative analysis capabilities to find and seize opportunities in the chinese market. it is guided by this approach that we have discovered attractive investment opportunities in areas such as consumer and industrial, and constructed a relatively broad and diversified investment portfolio.

china fund news: regarding the chinese market, what are the most common questions that customers ask you?

Chris Hogbin ：customers usually ask two questions: first, about the real estate industry, how long the real estate problem will last and what potential risks there are; second, when the government will introduce stimulus policies.

but while these questions are important, even more critical is discovering attractive individual stock investment opportunities. given the breadth of the chinese market, we see many opportunities, especially at the current relatively low valuation levels.

unique insight is the core competitiveness of stock researchers

china fund news: how do you use generative artificial intelligence?

Chris Hogbin：as far as the investment business is concerned, we use more analytical artificial intelligence. for example, artificial intelligence can be used to analyze meeting records and generate signals to prompt investment managers to change their mood. in terms of generative artificial intelligence, we are currently mainly applying it in non-investment businesses such as customer communication, legal affairs and human resources, such as assisting in drafting contracts. this year, we also appointed a chief artificial intelligence officer to lead the team to promote artificial intelligence applications. in the investment business, we are not currently using generative artificial intelligence. we are making more use of analytical artificial intelligence to improve the efficiency of analysts and fund managers, allowing them to spend more time analyzing and thinking instead of collecting data. data.

china fund news: why did you decide to create the position of chief artificial intelligence officer?

Chris Hogbin：artificial intelligence has the potential to revolutionize the way businesses operate, and we are still in the early stages of this transformation. if each business department is allowed to explore on its own, it may not be able to pay enough attention to artificial intelligence applications. therefore, we hope to put one person in charge of the company's artificial intelligence activities, who can not only coordinate all aspects of work, but also explain the potential of artificial intelligence to all employees and encourage employees to try its applications.

as someone interested in economic history, i have always been interested in technological change. although people often worry about the impact of technology on employment, technology ultimately allows people to improve their skills. artificial intelligence can help analysts quickly browse meeting records and summarize them, greatly saving time and allowing them to focus more on creating value. so, i'm optimistic about that. we just need to actively embrace ai so that we can focus our time on more valuable activities.

china fund news: in the era of artificial intelligence, what new skills are needed for stock research?

Chris Hogbin：the core qualities required of a good equity researcher have not changed. however, as artificial intelligence develops, we need researchers to have more technology-related skills and a willingness to embrace new technologies. the value of artificial intelligence is that it can improve their work efficiency and give them more time to think and analyze instead of simply collecting data. therefore, when introducing talents, we will pay more attention to this aspect of quality.

for stock research, the most important thing is unique insight and thinking ability. investing is hard work and there is a lot of information to digest. in-depth understanding of the key factors that drive changes in things and the formation of one's own unique viewpoints. this kind of creative thinking and judgment is difficult to replace with artificial intelligence.

china fund news: please tell me what are the three major risks you are concerned about now?

Chris Hogbin：the first is the u.s. labor market, which would be a significant risk if there were significant turmoil. the second is inflation. while we believe inflationary pressures have eased significantly, they still require close attention. if these two factors occur at the same time and lead to stagflation, it will be a completely new environment. the third is the upcoming election in the united states, the results of which are highly uncertain. different results will also have a great impact on the policies of certain industries or regions, and we are paying close attention to this. overall, these three major risks are closely related to the u.s. market.

editor: captain

reviewer: xu wen