"As Charles Dickens said, it was the winter of despair and now
it is the spring of hope," said Yifei Li, China chair for the
alternative investment provider Man Group, at the inaugural University of Virginia Darden School of Business Shanghai Investing Summit. The summit was presented by the Darden Center for Asset Management and the Darden Center for Global Initiatives and sponsored by CFA
Institute China, Virginia Economic Development Partnership and
Shanghai United Media Group.
Li ― who previously held leadership roles at MTV Greater
China, MTV Networks Asia and Viacom ― participated in a keynote
discussion with Darden Dean Robert F. Bruner, which set the stage for the 9 May event
in Shanghai, China. The summit occurred at a pivotal moment in
economic history, as the buzz intensifies that the Chinese economy
is likely to surpass the U.S. economy sometime in 2014 ― if it has
Li spoke of the spectacular transformation of China over the
past three plus decades and the country's dynamic, evolving
The panels that followed ― on hedge funds and alternatives,
breakthrough investing opportunities and perspectives of large
institutional investors ― echoed the optimism for China, a nation
of 1.35 billion people, as a core market for growth.
Keynote speaker Liang Xinjun, vice chair and CEO of Fosun Group,
predicted that the next 10 years for China will spur a transition
from quantity to quality as the middle class grows, the demand for
consumer and luxury goods rises, and the mobile internet booms.
A Nascent Industry
"China is entering the era of hedge fund industry development,"
said Li. Institutional investors are diversifying, family offices
and foundations are emerging, and regulations are relaxing ― but
still highly complex.
"Before, there were only three organizations that could invest
offshore," she said. Now, many organizations, including insurance
companies, state-owned enterprises and family enterprises, are
seizing opportunities ― onshore and offshore. Membership in the
Asset Management Association of China has surged.
"The number of firms emerging in China's alternatives industry
is truly impressive," said John G. Macfarlane III, a 1979 graduate
of the Darden School and founding partner and chair of Vinci
Zafferano Capital, who moderated a discussion on hedge funds and
alternatives. "China's extensive resources in human capital ―
properly managed ― offer tremendous
To find that opportunity, Hua Fan, head of fixed income and
absolute return investment department at China Investment
Corporation, underscored the importance of research in the search
for good value ― no matter the industry or region. "The challenge
is to balance global perspective with local expertise," she
Patrik Edsparr, CIO and co-founder of Tor Investment Management,
also urged attention to detail. "There are compelling investment
opportunities that have scarcity in capital," he said, "but there
are also a lot of fads."
As Chinese investors increasingly look to invest overseas,
Fanglu Wang, senior managing director of CITIC Capital, noted:
"Chinese overseas investment has largely been viewed with
skepticism and with some resistance."
Wang said that Chinese firms must work to form long-term
relationships with foreign investors and to create international
consortiums to align their interests and enter markets as a
Building the Chinese Brand
Chinese foreign direct investment in the U.S. just surpassed
U.S. foreign direct investment in China, said Jerry Peng, CEO of
Four Seas Capital Management and a 2003 Darden graduate and a
trustee of the Darden School Foundation, who moderated the panel on
breakthrough investing opportunities.
As an example, panelist Jim Cheng, principal of New Richmond
Ventures, former secretary of commerce and trade for the
Commonwealth of Virginia, a 1987 graduate of Darden and a trustee
of the Darden School Foundation, cited Shuanghui International
Holdings' recent multi-billion dollar acquisition of Smithfield
Foods, which is the largest producer of pork products in the United
States. The deal was the largest acquisition of a U.S. firm by a
"Americans tend to see China as a 'Made in China' logo," said
Cheng. "It will help the public perception and the investing
perception when more Chinese brands establish themselves in
America. Branding is so important for the image of a country."
Qian Jiannong, president of tourism and commercial group and
senior assistant president of Fosun Group, also highlighted that
the momentum in China provides a big investment opportunity for
European and U.S. companies.
Understanding the complexity and uniqueness of the Chinese
market is key, said Qing Shan Liu, CEO of Manulife TEDA Fund
Management Company. "When Western investors look at China, they use
Western models to analyze the Chinese economy. That might not be
the right approach," he said.
Shan Liu expressed his confidence in the leadership of the
Chinese government, building on earlier statements by Li, who
emphasized the depth of talent of the people working in the
"The Chinese government is the richest government, and the land
belongs to the government," said Shan Liu. "When Western countries
have crises, the governments don't have the reserves to solve them.
In China, we do."
Other Pockets of Performance
Though most discussion centered on China as the core market for
growth, the panel led by Peter Rodriguez, Darden's senior associate dean for degree programs,
looked at other opportunities in the world.
Ichiro Suzuki, senior portfolio manager of Nomura Asset
Management and a 1984 Darden graduate, who is based in Tokyo,
expressed confidence in equities of well-managed firms and advised
that if investors are willing to manage money for five years,
opportunities abound ― even in the smaller markets.
Peter Chen, head of business development for Asia Pacific, CPPIB
Asia Inc. added: "We always look for a market that's large and deep
enough to protect itself from systemic shocks." Chen listed China,
India, Australia, Japan, Korea and Southeast Asia as potential
pockets of performance.
Regardless of their investing preferences, the speakers and
panelists at the Shanghai Investing Summit shared similar concerns.
In Beijing, air pollution is the principal worry.
On the global stage, political instability and crises topped the
"It's the unknown unknowns," said Wang. "What keeps me up at
night is how much we really know about emerging markets. What don't
we know and what could go wrong?"
The second annual Darden Shanghai Investing Summit will take
place in Shanghai, China, in May 2015.
About the Darden School of Business
The University of Virginia Darden School of Business is one of
the world's leading business schools, offering MBA, Ph.D. and
Executive Education programs. The unique Darden experience combines
the case study method, top-ranked faculty whose research advances
global managerial practice and business education, and a tight-knit
learning environment to develop responsible and complete leaders
who are ready to make an impact.
About the Darden Center for Global
The Darden Center for Global Initiatives strengthens and expands
Darden's global community, in Charlottesville and around the world,
by providing educational opportunities and by building
partnerships. The center designs and provides transformational
global academic experiences for MBA students, develops and manages
global partner school networks, supports student co-curricular
activity that is globally-focused, and serves as a hub for global
activity at the Darden School.
About the Darden Center for Asset
The Darden Center for Asset Management serves as a hub of
thought leadership and professional development for faculty,
students, alumni and business practitioners in the field of asset
management. The center prepares future leaders for the industry and
delivers a steady stream of research exploring the full spectrum of
asset classes in this important field: equities, fixed income,
cash, currency, real estate, infrastructure, hedge funds and
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