This is the first time in my 30 years in the industry that I don't feel like I can see clearly.
Many of the older generation in the capital market know Ding Ying, who is the "first" 10-billion-level manager in China's public offering industry, and in today's words, he is the "top star manager".
Ding Ying graduated from university in 1994 and has worked in CITIC financial institutions for nearly 20 years. In 1995, he started his career in the proprietary investment department of CITIC**, and in 1999, when China's public offering was just germinating, Ding Ying became the first generation of public offering managers in China. In 2004, Ding Ying participated in the preparation of CITIC ** and managed the star product "CITIC Classic Configuration**" of about 13 billion yuan at that time, which was equivalent to 1% of the circulating market value of the whole market at that time, and became China's first 10 billion star ** manager. In October 2007, Ding Ying left the public offering industry and turned to the proprietary investment department of China Securities Construction Investment to continue his investment career.
After six years of focusing on proprietary investments that are more in-house, Ding Ying smelled the potential of the private equity industry and founded Comand Capital in 2013. "It's easy to forget a person in the market, even if he was famous before", because he has been away from the "market" for too long, Ding Ying did not have the "flow" of the past when he started his business, and it was not easy to raise funds at first, only 80 million yuan. However, his 20 years of accumulated strength can hardly hide the edge, with ten years of annualized investment performance of about 20%, Comand Capital has already ranked among the tens of billions of private placements.
Ding Ying's investment philosophy is not the same as others, he is good at macro and fundamental research from the bottom up and top down, and innovatively through quantitative (quantitative) analysis of the method of investment decision-making auxiliary verification, in the specific operation method, he is very flexible, can be long-term or short-term, can be centralized or decentralized.
Ding Ying was shortlisted for the "2023 Barron China Private Equity Elite 50" list this year, and Barron's Chinese recently conducted an in-depth interview with Ding Ying. In the interview, Ding Ying reviewed the "more difficult" bear market history of A-shares from 2001 to 2005, and he said in the interview that the current market situation is the "first time" in his 30 years of investment and practice, and he feels a little unclear.
He believes that the current market is still the first trend, PPI is at a low level, theoretically this situation in the economy before, the policy should work, but now it is different, more emphasis on structural adjustment than cyclical adjustment. Now is a process of bottom-finding, when the policy does not reach a threshold, the market will not be able to get up, but we still have to have expectations for the policy, the policy still has space, but we have to look at the rhythm, and we must slowly understand it in the process. The following is an edited transcript of the Chinese edition of Barron's and Ding Ying
The origin of the name "Cornhand".
Barron's Chinese Edition: Conmande's original English meaning is "special forces", can you share the origin of the name?
Ding Ying:When I started my business, I also attached great importance to the name, and the private equity firm is very much like a small elite force to achieve high-tech tasks, the so-called high-tech task is to adapt to market changes in any market environment, and control risks and achieve higher investment returns.
I grew up in a military headquarters, and I have a special affection for soldiers, especially special forces. In the 80s, there was a film starring Schwarzenegger called "Commando", which was translated into English as "Alone in Longtan" or "Commando". I like this film very much, and I hope that our company's temperament is the same as the image of the special forces starring Schwarzenegger, no matter what difficulties and hardships are encountered, we can deal with problems well and give customers a good experience, so I thought of this name to reflect our corporate culture and brand spirit.
Barron's Chinese Edition: Special forces are a bit of a one-man assault, you were previously from a brokerage firm, and the research support from the brokerage firm is generally not so sufficient, and the research support obtained by private placement is not so much compared to public offering, is there such a similarity?
Ding Ying:It is not a characteristic of large-scale operations, so to speak, but it is not a one-man operation either, we are a small force, and there must be a team. I want our team to be able to drive cars, planes, ships, and not only be very capable of martial arts, but also be proficient in science and technology. Like Mission Impossible, 007 are all IQ and EQ**, all-round warriors.
To invest well, more resource support is certain. I don't think investment should be done behind closed doors, but I want more research support, but if we don't get enough research support, we need to be able to survive ourselves.
Barron's Chinese Edition: You are China's first generation of tens of billions of public offering ** managers, at that time the amount of funds under management accounted for 1% of the whole market, in recent years there have been many top star ** managers in the public offering ** industry, many people say that scale is the killer of performance, what do you think?
Ding Ying:I don't think it's a killer, it may be blunted, and there is a weak negative correlation with performance, because when the management scale is very large, it may play a certain role in blocking short-term changes in the market, but you can never change the trend of the market. In my early management, I bought 10% of the market turnover in one day, but the market should still be **. In other words, the large scale may bring some trading impact, but it cannot change the trend of the market, so the scale does not have such a big impact.
on the Internet.
The bear market of 2004-2005 was harder than it is now
Barron's Chinese Edition: You are a veteran of China's investment community, with nearly 30 years of investment experience since 1994
Ding Ying:The relatively difficult times were in 2004 and 2005, and the Shanghai Composite Index peaked in 2001 for two years, and in 2004 it was nearly two years. At that time, I managed a relatively large scale, and in March 2004, I took over the 12 billion CITIC Classic Configuration**, when it was issued at 1700 points, and the lowest fell to 1000 points, and the market was unprecedentedly desperate, and my pressure was the greatest at that time.
Many people think that 2007-2008 was the most stressful, but I left the public offering in October 2007 and switched to the brokerage firm, and I didn't manage much money at that time, so the pressure was not great for me. But the time I really felt stressed was in 2004-2005, and some of my friends I used to know had problems during that time.
Barron's Chinese: Do you think 2015 and 2018 will be difficult?
Ding Ying:I think it's okay, because the ** time is relatively short, and I came back soon, and there is a saying that long pain is better than short pain, so I didn't feel difficult at that time.
Barron's Chinese Edition: The market has fallen for three years from 2021 to now, which do you think is more difficult than 2004-2005?
Ding Ying:I think 2004-2005 was a bit more difficult, because we now have added stock index hedging, as well as quantitative aids, and we are more capable now than we were then.
Barron's Chinese: Look at your product drawdown is really well controlled.
Ding Ying:In 2004-2005, I was not rich in risk control science, but in 2005, I went to Wharton School with the ** Industry Association to study, and I understood how to combine the quantitative and fundamental aspects of investment, so we handled it better in this round.
For the first time in 30 years, I couldn't see clearly
Barron's Chinese Edition: Based on the state of the market alone, how long do you think this bear market is in the history of A-shares?
Ding Ying:It's long, but it's not long enough compared to the 2001-2005 period.
Barron's Chinese Edition: 2001-2005 is equivalent to a decline of 5 years, right?
Ding Ying:4 years and 1 quarter, the first quarter of 2001 began to adjust, the real ** was in June, the lowest point appeared in June 2005, but the rise was in December 2005.
Barron's Chinese: What happened when it bottomed out in June 2005?
Ding Ying:The main ones are the reform of the split shares, as well as the reform of the exchange rate. Before the implementation of the equity division reform, everyone's perception was different, and it also fell below 1000 points, and then with the economic recovery, coupled with the advancement of the equity division reform, everyone's confidence became stronger and stronger, and it rose too much, to 6000 points.
Barron's Chinese: What bottom characteristics or catalysts do you think are missing from the current state of the market bottom compared to the state of the 2005 bottom?
Ding Ying:I think it is necessary to make an analogy between the main contradiction of the current market and the main contradiction of the market at that time, and what is the main contradiction of our current marketIf this major contradiction is not eliminated, I think it will be difficult to completely change it. This may be the first time I have faced such a problem in my 30 years of investment practice, and I still don't see how to solve this problem. I've been optimistic for the past 30 years, but this time I couldn't see it clearly.
Barron's Chinese: What do you think is the main contradiction at the moment?
Ding Ying:The geopolitical risks of de-globalization have changed from the previous period of globalization to mutual constraints, adding a lot of distractions from an investment perspective.
Barron's Chinese: What do you think is the impact of geopolitics on the macroeconomy?
Ding Ying:It affects both economic substance and future preferences. In essence, the impact of various industrial policies is real, and these effects are not over, so risk appetite has also been affected.
Barron's Chinese: Do you think you will be able to achieve the same market returns in the future as in the past?
Ding Ying:It should be, and even more than it is. Because we can do more things now than we used to, we can do hedging trades, and I feel like we're entering an era of hedging. A lot of companies are actually very high, and some may not be that high, or even undervalued, so you should get better returns if you do a matching strategy.
It's hard when the trend ends
Barron's Chinese Edition: Recently, the SSE 50 and CSI 300 have fallen below the lows of October last year, hitting new lows, do you think there are any unfinished bearishness in the market now?
Ding Ying:**The trend has not changed, once the trend is formed, it is difficult for you to ** (when will it end), each of us is weak in the market, that is, the information we know, our knowledge structure, understanding is not enough.
Barron's Chinese: It's hard to fully understand the market?
Ding Ying:Right or wrong, you have to keep learning with a heart of reverence. You may be able to judge the current situation and some dynamic marginal changes, and then you can also know the flow of market funds, the level of the market energy field, and then make corresponding choices, you can have the ability to deal with it. You can't completely ** the market, but like driving, you can deal with various road conditions in the process of driving forward.
Barron's Chinese Edition: It is true that the market can't but can deal with it, there are many factors that affect the trend, ** more specific, have you had a bullish company in the past but could not understand the market trend?
Ding Ying:There should be many reasons for this, and you can't bet all on the initial information, but rather readjust it over time and new information as it comes out**.
Barron's Chinese: When you go against the market trend, do you exchange views with your peers?
Ding Ying:Communication is a must, but it is not the main basis for decision-making, and we are now gradually developing a quantitative analysis method. The first will pay attention to the fundamentals, conduct ** ratings, and pay attention to the changes in stock prices, conduct quantitative analysis, and then balance, whether to adjust its weight, and communicate with peers is a small part of collecting information.
The Shanghai Composite Index is likely to be mediocre in the future
Barron's Chinese Edition: Can you share how the market ecology of A-shares has changed over the past 30 years?
Ding Ying:The changes are earth-shaking, when I entered the market in 1994, the market size was very small, with a daily trading volume of less than 100 million, and the characteristics of the capital market were more obvious at that time.
After the development of public offerings, everyone began to advocate value investment. By 2004, we issued more than 10 billion**, and since then, we have successively issued more than 10 billion**, and the market size was about 1 at that time2 trillion, one ** accounts for 1%. At first, everyone concentrated on holdings, but later the investment style gradually diversified, and portfolio investment became popular.
After the stock index ** came out in 2010, various strategies such as arbitrage appeared, which were more colorful, and then after I did private equity in 2013, it was even more varied, including the rise of quantification in recent years, which is a big change.
Barron's Chinese Edition: A-shares implement a registration system, the market expansion is relatively large, some people think that the Shanghai Composite Index will not appear in the past index bull, what do you think?
Ding Ying:I think the Shanghai Composite Index should be mediocre.
Barron's Chinese Edition: That means there won't be too much **?
Ding Ying:I think so, because the Shanghai Composite Index covers too many constituent stocks, and there are too many traditional economic constituent stocks. I think it's hard to get a particularly high alpha without a lot of updates.
Value investing and long-term holding are not necessarily the same
Barron's Chinese Edition: Just mentioned the emergence of the stock index ** hedging tool, do you think the reason for the very large volatility of the A** field is the lack of sufficient hedging mechanism?
Ding Ying:I think it's related, we are not familiar enough with the short strategy as a whole in the market, there are more people who study the long strategy, and there is a lack of growth from another hedging force.
Barron's Chinese Edition: You can only make money by going long, so it's easy to speculate the valuation too high, right?
Ding Ying:The valuation of A-shares was actually very expensive in 2001, and after the adjustment, it was very expensive again in 2007 and 2015, and the valuation began to return, and in 2021, everyone went to buy the popular **, making the valuation of core assets very expensive, so in the past two years, we have been on the way to the return of valuation.
Barron's Chinese Edition: Some people think that long-term value investing is not applicable to A-shares
Ding Ying:Value investing is applicable, and long-term investment is like this, because of the long entry, but must be sold in the valuation bubble. That is to say, value investing is definitely applicable, because my data in the past 20 years or so shows that the average annual compound return is more than 20%, and I don't think value investment is useless, but value investment and long-term holding are not necessarily the same.
Barron's Chinese Edition: It is difficult for A-shares to have a slow bull trend like U.S. stocks, right?
Ding Ying:**It may not have shown a long-term slow bull in the past, but in the long run, it is also a long-term bull, but the fluctuation range is very large, and the feeling of each point is different.
Barron's Chinese Edition: The index has been bullish for a long time, but it has been more volatile in the process.
Ding Ying:Yes, the volatility is relatively large, and it is true that if you don't trade, the comfort level in the A** market is not high enough.
I was introduced to Buffett's investment philosophy for the first time
Barron's Chinese Edition: You have worked in CITIC for nearly 20 years, and you came out of the self-operated investment of China Securities Construction Investment, because the brokerage has no public performance record, when you founded Comman Capital, was it difficult to raise funds at the beginning?
Ding Ying:It would have been much better if I had come out earlier, because there is traffic in the public offering, and I had been away from the public offering for 6 years at that time, and it is easy for the market to forget about a person, even if you were famous before. So when I first started fundraising, I only raised 80 million yuan and began to establish the company Comand Capital.
Barron's Chinese: You started your career at brokerage after graduating from science and engineering in 1994, can you look back at how your investment approach has changed?
Ding Ying:At the beginning, I was studying and using, working in the business department of China International Trust and Investment Corporation (now CITIC**), from the account opening and clearing counter, then making a red vest, and then having the opportunity to do proprietary investment.
At that time, my method was very simple, that is, to do ** splint trading, at that time the price difference of the transaction was a penny, you only need to buy a dollar, a piece and a cent to sell, it is a steady profit.
After that, I will look at some technical analysis indicators, such as before 10 o'clock, the increase is not more than 2%, the volume ratio is about 2 to chase in, and run away within three days, such a ** transaction is also a more effective strategy. Later, wave theory became popular, and I attended a training course run by a famous person at the time to learn wave theory.
At the end of 1995, when I went to the headquarters of CITIC ** to do self-management, there were not many professional investors at that time, and there were still a few people who did fundamental investment. On a business trip, I bought a book called "Warren Buffett's Way", and after reading it, I immediately felt that it was right, and I was very excited. I used to feel that staring at some *** tickets all day had no life value, and I was very confused, and I felt clearer after reading Buffett's books, that is, at that time, there were Chinese books translated by Buffett in China.
Later, I studied for a part-time master's degree in monetary finance from the Chinese Academy of Social Sciences, which improved my knowledge of finance and added more fundamental factors to my investment. After that, I participated in the training of the China Securities Regulatory Commission in Dongguan at that time, learned the knowledge of management, and was fortunate to become the first batch of practitioners to start more practical value investment.
After going from Changsheng to CITIC, I managed 12 billion, and I should emphasize more on long-term strategic investment. In 2004, when the Merrill Lynch clock model came out, we added the Merrill Lynch clock to our analysis for asset allocation.
Later, there are more and more varieties in the stock index ETF market, and there are more and more investment tools, and after quantitative development, more small strategies can be developed to verify, and the investment methods are very rich.
The intersection with the "Cycle King" Zhou Jintao
Barron's Chinese: Can you summarize your current investment style?
Ding Ying:We take into account fundamental research and quantitative analysis to assist judgment, take into account growth and value, dynamic adjustment concentration and decentralization, dynamic adjustment long-term and short-term.
Barron's Chinese: I feel like your approach to investing is flexible.
Ding Ying:The specific response is very flexible, the investment framework is very stable, you can understand that we call scientific and systematic value investment, in the short-term and long-term, centralized and decentralized, growth value and other specific operational issues, we are very flexible.
Barron's Chinese Edition: Your fundamental analysis of your investment philosophy includes top-down, and you had some work intersections with Zhou Jintao when you were at CSC, how did that affect you?
Ding Ying:In fact, I met Zhou Jintao when I was in CITIC**, and he spoke very accurately in 2007. Later, there were at least three years of intersection when we were building investment, and we were all members of the investment committee at that time, and there were more exchanges, but in 2010-2013, when we were building investment, the cycle theory was actually a little less effective, maybe various policies were hedging that round of cycle, and later I had exchanges with him after I did private equity, and his cycle theory was very effective.
Barron's Chinese: Do you think the economic cycle is accurate?
Ding Ying:It has its deep logic, and I believe it. Sometimes the cycle may be lengthened or shortened for various reasons, and the cycle has inertia, but the external force of external changes sometimes changes its original trajectory. So I think it's a good way to start with the cycle and deal with some changes in the future.
Barron's Chinese: Do you think there are also external influences in this economic cycle?
Ding Ying:We are going to do cross-cyclical adjustment, counter-cyclical adjustment, which is definitely different from before, and it may take longer.
How quantification can assist subjective investing
Barron's Chinese Edition: Your investment philosophy is fundamental research plus quantitative analysis assistance, and many people's impression is that subjective and quantitative are opposites
Ding Ying:I studied automation myself, and when I was in college, I edited large database software, and from the very beginning of my entry into the market, I thought that I should use advanced computer statistical methods to support my investments.
This is how I understand quantitative analysis: through the computer to process relevant fundamentals, market trends and other data to assist investment judgment, I think the two are not contradictory, but complement each other. I combine fundamentals with quantification, and the analysis cycle is different from those quantifications, and my quantitative analysis lies in the fact that fundamental research is relatively low-frequency, but stock prices fluctuate every day, so I use computers to process a wide range of information about stock price trends in the short term, which is much more efficient than the human brain.
So on the one hand, I do fundamental ratings, and on the other hand, I do trading strategy ratings, and combine the two to form our special asset allocation ideas, which are ultimately good from the practical results.
Barron's Chinese Edition: You are equivalent to taking some quantitative conclusions and then supporting fundamental judgments?
Ding Ying:Yes, if the two are in conflict, it would be good if I did not accept them, and I would accept the conclusion that they corroborate each other.
Barron's Chinese Edition: You have improved your fundamental analysis this year, with more emphasis on the prosperity of the track in the stock selection dimension, and the company is in second place, can you talk about the perception behind this improvement?
Ding Ying:In the past two years, it is obvious that the trend of the industry is heavier than the trend of the first, because we are in a century of unprecedented changes, some tracks as a whole have been impacted, even the best companies are inevitably affected, especially in the changes in the external environment, changes in artificial intelligence, investment value is not the same.
Now the policy is more emphasizing the combination of cross-cyclical and counter-cyclical
Barron's Chinese Edition: When you make choices in your investment system, how high is your current ** level?
Ding Ying:After this year's reduction, we are now about 5 percent.
Barron's Chinese Edition: Just mentioned that this year's economy is lower than expected, I see that you said before that you attach great importance to the PPI as an economic indicator, can you talk about why you attach so much importance to this indicator?
Ding Ying:Relatively real. It's a true representation of the world.
Barron's Chinese: Can it reflect changes in global supply and demand?
Ding Ying:Yes, when I talked to Rogers in 2005, I didn't understand that he said that commodities are a big bull market, and when I asked him, he said that because of the difference between supply and demand, in fact, the PPI is very reflective of the real situation.
Barron's Chinese Edition: Now that the PPI is in a negative growth trend, what level do you think the PPI will return to the economy?
Ding Ying:It is not so important which value it is, but this negative growth trend stops, and then goes up, and then it may be in the process of recovery.
Now there is a certain game component, the PPI is at a low level, and theoretically this situation has occurred in the economy before, and the policy should work. But now it is different, and now the emphasis on the combination of trans-cyclical and counter-cyclical is that structural adjustment is more important than cyclical adjustment, so it will not be as effective as before.
But we still have to look forward to the policy, and when the policy does not reach a threshold, the market will not be able to get up. Now is a process of finding the bottom, the policy is on the way to be introduced, if you can go in on the left side, for example, I am currently 5 into ** is on the left side, and the other 5 into ** is on the right side.
Barron's Chinese Edition: You just said that the current policy is more cross-cyclical, not the counter-cyclical adjustment before, what do you think is the original purpose of the policy?
Ding Ying:The common prosperity and disorderly expansion of capital that we have mentioned in recent years are the rectification of past problems. It is necessary to squeeze these empty bubbles and pursue a longer-term, high-quality development.
In the past two years, the excess income of the product has been **
Barron's Chinese Edition: The products you manage have run out of relatively ** excess returns in the past two years, which industries are the ** of these excess returns?
Ding Ying:We added the computer industry in the fourth quarter of last year and the electronics industry this year, which is more in line with this year's market opportunities.
Barron's Chinese Edition: Did the computers added last year benefit from artificial intelligence?
Ding Ying:Yes, artificial intelligence and consumer electronics are expected, and the quantitative indicators that the entire computer sector tracked from us last year were very attractive, plus some targets encountered in the survey felt good, and then they were added.
Barron's Chinese Edition: Many people think that the good targets of artificial intelligence are in the US stocks, and the A-shares do not really have the performance to support the artificial intelligence targets, what do you think of this problem?
Ding Ying:I also agree with their judgment that we may not have an advantage overall, but we have some companies that have done well on the material side and parts side, and they have actually benefited.
Barron's Chinese Edition: Many people are optimistic about the investment opportunities in the pharmaceutical sector next year, what do you think?
Ding Ying:From a quantitative and fundamental point of view, there should be opportunities in this sector, and the quantitative indicators are slowly coming out, and in our rating system, it is moving upward. The fundamental logic is that the impact of pharmaceutical centralized procurement and pharmaceutical anti-corruption may gradually dissipate next year, while the demand for medical care still exists with the aging population.
Next year, medicine will return to the normal development trend, so it will not give too low a valuation. In history, there are two fields, one is information technology, and the other is biomedicine, which accounts for more than half of the whole market.
Barron's Chinese: Are you still bullish on new energy?
Ding Ying:I'm bullish on the long term, but it's a cyclical growth sector. These two years is the cycle of downward adjustment process, China's inventory cycle is usually 42 months, it stands to reason that the adjustment of two years is relatively long, if from June and July last year, it may be adjusted almost in the second quarter of next year, and the stock price will not react in advance, it is possible.
So the stock price can't be exact, you can vaguely feel these things, and then add some quantification to track the vague things with higher precision, so you may miss some of them, but you can't miss them all.
Barron's Chinese: Quantitative analysis assistance is equivalent to doing a very fine fundamental and market tracking, right?
Ding Ying:Yes, we reflect on how the rating changes every week, knowing both the status value and the change value, and quantifying the daily frequency change.
There is room for policy, it just depends on the rhythm
Barron's Chinese: Do you think there's a good chance of a systematic valuation rise in the market next year?
Ding Ying:There is this possibility, and now the interest rate is relatively low, and the ** Politburo meeting mentioned that it will be established first and then broken. Normally, China's economy has a goal in this era, I think it should be at 5%, because to achieve great rejuvenation, we are not allowed to grow too low, so when everyone is particularly unconfident, I believe that our decision-making ability is very strong, and I hope to see the changes in the Third Plenum, which is more conducive to the development of the long-term capital market.
In fact, our economic policy in recent years has been relatively contractive, and the United States has been relatively expansionary, so our policy has space, but it depends on the rhythm, and now the economy is relatively slow, and we must slowly understand it in the process, I think there is no harm to professional investors.
Barron's Chinese: What risks do you think you should be looking for in the next quarter or two?
Ding Ying:I think the U.S. economy is very good, but it may not be as good as everyone thinks, and China's economy has many problems, but it may not be as bad as everyone thinks. I'm actually keeping this attitude, but when the trend doesn't reverse, I can't intervene too early.
Favorite investor
Barron's Chinese: Who is your favorite investor?
Ding Ying:In the past, I preferred Warren Buffett or Rogers, but now I think Duan Yongping is also very good, he is very successful in business, and then he turned to investment, both domestic and U.S. stock investment has done very well, and every transformation is very successful, which is worth learning from.
Barron's Chinese: Do you have any hobbies outside of investing?
Ding Ying:I like sports, and I was on the varsity table tennis team in college.
Barron's Chinese: How much do you think investment success has to do with personality?
Ding Ying:It has a lot to do with it, sometimes you find that two people have the same knowledge structure, why some investments are successful and some are not, the decisive factor may be the tolerance for trends and contrarians, it depends on the personality.
Barron's Chinese: Thank you.
Wen Kang Guoliang
Edited by Ren Peng
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Market analysis.