Ping An Asset Management is fast ramping up its quantitative investment capabilities for both its parent insurer’s general account portfolio and for its third-party client business, with team buildouts across Hong Kong and Shanghai.
This reflects a trend among institutional investors in China, which have in recent years been warming to quant funds, said Xia Chun, chief research officer at mainland wealth manager Noah Holdings. A growing number of large firms have been moving to set up quant teams in recent years, he added.
Moreover, London-based alternatives manager Man Group launched China's first quant fund in December, with an initial focus on listed futures. Such funds generally employ financial models to identify undervalued stocks by analysing huge amounts of company data, or use technical analysis for spotting trends in stocks.
Ping An AM itself has been recently bolstering its quant team in Shanghai, adding four this year to bring the desk up to 15, with a view to making more concerted efforts to seek alpha in Chinese stocks.
Jay Wei joined in April from Allianz Global Investors where he was a portfolio manager. Pauline Ju arrived in March; she was most recently founder of Boston-based Annapurna Investments and before that, senior portfolio manager at State Street Global Advisors
Ju and Wei are investment managers of quant products and are responsible, among others, for building the systems and models.
In addition, Li Yajun and Harry Li started as investment researchers in January, reporting to Wei and Ju. Li Yaju was senior quantitative researcher at Thomson Reuters, while Harry Li previously worked at QS Investors, a quant manager owned by US fund group Legg Mason.
Their predecessor firms all declined to comment on the departures.
SPEARHEADING THE TEAMS
These moves come as Ping An AM has also been aggressively increasing its investment headcount in the past couple of years in Hong Kong, where it also has a quant desk focused on equity markets in Hong Kong and elsewhere outside China. It is now moving to add sales staff in the city.
Leading the quant teams are heavy-hitters Chai Chai-Kit and Larry Zhang in Hong Kong and Shanghai, respectively.
Zhang came on board in Shanghai as chief investment officer and deputy general manager in January from China Investment Corporation (CIC), where he had been head of public equities until the end of last year. CIC did not reply to AsianInvestor’s query about his departure.
The latter’s appointment is still awaiting approval from the China Banking and Insurance Regulatory Commission, the spokeswoman for Ping An AM told AsianInvestor.
Zhang’s substantial quant investment experience should boost Ping An AM’s capabilities in this area, which it aims to make one of its core competencies, said the spokeswoman.
He had also worked as senior adviser for global investment at China’s National Council of Social Security Fund and as portfolio manager at Barclays Global Investors, according to his LinkedIn profile.
Chai has been in place since July last year. He is focused on leveraging quantitative analytics to revamp Ping An’s equity investment processes and methodologies, Tung Hoi, co-CIO of Ping An Insurance and chairman and chief executive of the overseas insurance business, said in May.
The firm's main focus for listed markets now is on using passive investments such as exchange-traded funds and factor-based strategies, Tung told AsianInvestor at the time.
Ping An AM’s assets under management largely comprise the investment portfolio of China’s second biggest insurance firm by assets, Ping An. However, the spokeswoman declined to comment on how much of its general account assets the group plans to move into quant strategies or a time frame for doing so.
Quant strategies have not been prevalent in China because of a relative lack of such experts in the domestic market, especially as such investing requires very systematic training, said a Beijing-based managing director of asset allocation at a large institutional investor on condition of anonymity.
Moreover, the Chinese stock market is dominated by retail investors, who are less inclined to invest based on company fundamentals, making it harder for quant-based strategies to prosper, the asset allocation executive told AsianInvestor.
However, as China’s stock market is still imperfect and information is asymmetric, quant strategies have opportunities to seek active returns there, he added.
Asia-Pacific quant strategies have returned 0.24% in 2018 as of August 31 and 8.72% last year, according to Eurekahedge data. They outperformed the MSCI Asia-Pacific index and global quant funds, which lost 2.97% and 1.25%, respectively, this year as of end-August. However the MSCI Asia Pacific gained 32% last year.