China Business Knowledge @ CUHK Luncheon Series: Understanding China’s Investment Environment

Why Stock Recommendations of Analysts in China are Distorted: The Role of Fund Managers

Stock recommendations of financial analysts are often overly optimistic with the majority of them being ‘Strong Buy’ or ‘Buy’. This is true everywhere but especially in China. A number of explanations have been proposed, such as cultivating relationship with management or obtaining investment banking business from the firms. Based on his research, Prof. Gu Zhaoyang discusses how institutional investors can play a role in analysts’ biased behavior. His study shows evidence that through the allocation of commission fees and personal social connections, mutual fund managers can unduly influence financial analysts in recommending favorably the stocks that the funds have invested in.

Investing in China: Dos and Don’ts

What is it like to invest in China today? What are the factors to consider when making an investment decision? Patrick Cheung Wing-hon shares his insights and first hand experiences in investing in China, particularly in the areas of technology, innovation and consumer-related industries.

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