Economics & Finance
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China Business Knowledge @ CUHK Luncheon Series: Understanding China’s Investment Environment
How “quanxi” affects the investment environment in China
By China Business Knowledge @ CUHK
With the theme Understanding China’s Investment Environment, the second talk of China Business Knowledge @ CUHK Luncheon Series was held at CUHK Business School Town Centre on 26 October, 2017.
Based on his research, Prof. Gu Zhaoyang talked about “Why Stock Recommendations of Analysts in China are Distorted: the Role of Fund Managers”. Professor Gu is the Director of the School of Accountancy at CUHK Business School. His study analyzed the key role institutional investors played in the biased behavior of analysts. At the talk, he carefully explained with evidence why financial analysts in China would often give overly optimistic stock recommendations – with the majority being “Buy”, or “Strong Buy”.
Prof. Gu pointed out that by allocating commission fees and using their personal connections (or “guanxi”), managers of mutual funds can unduly influence analysts to recommend stocks that the funds have invested in.
Following Prof. Gu’s talk, Mr. Patrick Cheung Wing-hon, an alumnus of CUHK Business School, shared with the audience his rich investment experience in China, particularly in technology, innovation and consumer-related industries under the topic: “Investing in China: Dos and Don’ts.” As Chairman of HGI Capital Holdings and Founding and Managing Partner of Zhong Wei Capital, Patrick offered his valuable views on China’s investment trends in the next five to ten years, and why AI would become the next wave of development penetrating into every industry.
Nearly 60 participants, from the business community, academia, and the media, attended the talk with great enthusiasm. The participants found the research and insights offered by both speakers highly relevant to today’s business environment.