The Tale of A Chinese-Australian Investor Achieves Over 40% Annual Rate of Return

High inflation has swept developed countries around the world and Australia has not been spared. The cost of living for households has soared and purchasing power has rapidly declined. To resist inflation, potential investment channels are narrowing.

Real estate has long been the first choice of wealth investments for more than 1.2 million Chinese-Australians. According to ASX data, the main investment channel for Chinese-Australians is real estate, which accounts for nearly 50% of the total household wealth on average.

However, the Australian real estate market, which has continued to rise for several years, has experienced the largest yearly decline in history. According to the latest data from the real estate consulting company CoreLogic, Australian house prices have fallen by 7.9% in one year, and the median value of dwellings in more than 200 regions has dropped to less than one million Australian dollars. Meanwhile, accompanied by high inflation, the market generally expects that the RBA will further raise interest rates, and house prices are expected to further decline.

For families who want to protect their wealth, they urgently need to find new investment channels.

Sydney-based investor, Mr. L*, is one of the investors that caught the recent rising opportunities of the Hong Kong stock market.

Mr. L is a senior professional in the Australian real estate industry. Born in China, he relocated to Australia to study and has been living here for the past 10 years. Just over a year ago, Mr. L began investing in the stock market for the first time and invested in Hong Kong and US stocks through the technology brokerage company, Futu.

Mr. L began by putting away a small amount of money and increased the amount as he became more confident. Now he has advanced to being an investor with a comprehensive understanding of stock investing. In the past year, Mr. L's return rate on Hong Kong stocks exceeded 40% and the size of Hong Kong stock assets in his account is already considerable.

Although Mr. L had never tried stock trading before, he had a basic understanding of stocks and was eager to enter the market.

Mr. L had tried twice to open stock accounts with Australian local banks, but due to the cumbersome procedures, unfriendly software, high costs and language barriers, he never placed any trades with these accounts.

Since then, Mr. L's stock investment journey has continued. In March 2022, after learning that moomoo, the sister brand of Futubull, had officially launched in Australia, Mr. L immediately opened an account with moomoo and made a deposit.

"Because stock investing can be short-term, cash flow and liquidity will be better, so I have always had this idea of trying stocks," Mr. L said.

"It just so happens that moomoo's software is easier to use, so it is a relatively smooth process, and I entered the stock market at a good time."

In the early stage of entering the market, Mr. L caught a wave of market bonuses from the general rise of Hong Kong stocks and made some profit. Today, the industries he is most focused on are real estate and technology stocks.

As a real estate veteran, Mr. L has inherent advantages in investing in real estate stocks. Mr. L's most successful investment in Hong Kong stocks came from a real estate stock. This stock once brought Mr. L a rate of return of more than 200%. Even though the stock price fell later, his rate of return on this stock is still over 100%.

Mr. L pays special attention to stocks of property management companies listed on the Hong Kong stock market.

"Property management companies are relatively mature in Western countries, and China will definitely keep up in this regard in the future," he said.

Making the most of this development difference between the markets, Mr. L seized opportunities for Hong Kong stocks.

Mr. L invested in US stocks because of his interest in US tehnology companies. The stock market is one of the best channels for ordinary people to seize the bonus of technological progress. Since the beginning of this year, affected by the interest rate hike made by the US Federal Reserve, the overall trend of US stocks has been sluggish. Yet, by the end of the first quarter of 2023, the top 10 US technology companies' market value had collectively added $2.3 trillion.

Due to the time difference between the opening time of the US stock market and Australia, Mr. L cannot keep an eye on the US stock market during the day. This is where moomoo's automatic market tracking function comes handy. It allows him to set stop loss points and expected return rates in advance, allowing him to invest in US stocks more conveniently.

Recently, ChatGPT has gained popularity, and the prices of related stocks have fluctuated greatly. Mr. L saw an opportunity: he bought two related stocks, which had a relatively high floating profit at first, but this kind of popular concept stocks fluctuated greatly. So there was a loss at one time, and the current stock price rebounds gave him a slight profit.

Therefore, he also warns that some stocks in the US stock market may fluctuate greatly in the short term. As a non-professional investor, you need to be cautious when entering the market.

Mr. L's stock investment is mainly in Hong Kong stocks. In his view, "Hong Kong stocks represent not only Hong Kong, but also the radiation point for Chinese people to gain a foothold in the world."

The Asia-Pacific region, especially China, is still the main engine of global economic growth. Investing in Hong Kong stocks can capture the development dividends of the entire Chinese region, especially the economic development of mainland China.

According to the data of Wind and Niu Niu Classroom, among the companies listed in Hong Kong, there are more than 500 local stocks whose main business is in Hong Kong and China, which accounts for only 20% of the total number of listed companies. And more than 1,200 stocks in mainland China, accounting for about half of the total number of listed companies, and the other 30% of listed companies are distributed in Europe, America, Southeast Asia and other parts of the world.

The Hong Kong stock market has giant companies in many industries, and these companies have brought super high returns to investors. Since 2018, leading technology companies in mainland China, such as Xiaomi, Meituan, JD.com and NetEase, joined the Hong Kong stock market, making Hong Kong an important market for China's high-quality technology assets. Among the top 500 listed companies in mainland China in 2020, 221 have chosen Hong Kong as their listing location (including Tencent and Alibaba, which rank first and second).

In the real estate industry where Mr. L works, there are also many top mainland real estate companies in the Hong Kong stock market, known as "Mainland Real Estate", such as China Resources, China Overseas Land & Investment, Vanke and Country Garden. Although the business of these stocks mainly comes from mainland China, they raise funds globally through the platform of the Hong Kong market.

Therefore, Hong Kong stocks are the best channel for global individual investors to invest in companies in mainland China and other Chinese regions and enjoy the dividends of economic development in Chinese regions.

Since 2020, the trend of the Hong Kong stock market has been fluctuating. The Hang Seng Index, the most representative of the Hong Kong stock market, once broke through 30,000 points at the highest point, and fell below 13,000 points at the lowest point.

For some investors, market volatility means opportunities to make money.

Hong Kong's Hang Seng Index continued to rise for three months from November last year to January this year, an increase of more than 55%. After a 2-month correction, the Hang Seng Index began to rebound. With the further opening up of mainland China, Hong Kong stocks may be in a new round of rising opportunities. Choose the right time to enter the Hong Kong stock market, and it is still possible to obtain excess returns.

When entering the stock market, Mr. L initially chose to use platforms powered by Australia's biggest banks. However, due to the cumbersome procedures of these institutions, unfriendly software usage, and high learning costs, he never officially started stock trading with them.

On the recommendation of friends, Mr. L chose Futubull App after a careful comparison. Its parent company Futu Holdings (Nasdaq: FUTU) is a leading retail brokerage company that started in Hong Kong and Tencent is its largest institutional shareholder.

After Futubull's sister brand moomoo offically launched in Australia in March 2022, he immediately opened an account and deposited money in moomoo. Because moomoo is specially designed for the Australian market, it is more in line with the local market and adapts to the habits of Chinese users, is easy to operate and has powerful functions. It provides multi-language operating systems such as Simplified Chinese, Traditional Chinese, English and Japanese, and supports Australian currency deposits, which can be exchanged for US dollars and Hong Kong dollars in real time.

According to Futu's latest financial report, as of the end of 2022, Futu has nearly 20 million users worldwide, and its users in Hong Kong and Singapore account for 43% and more than 25% of the local adult population respectively. For the full year of 2022, Futu's total revenue is US$976 million (approximately HK$7.614 billion), and non-GAAP net profit is US$401 million (approximately HK$3.131 billion).

As for the issue of financial security that investors are most concerned about, according to Futu’s latest financial report, as of the end of 2022, Futu’s customer assets has reached US$53.5 billion (approximately HK$417.5 billion), and it is trusted by customers around the world.

Ever since moomoo officially launched in Australia, it has been under the supervision of the Australian Securities and Investments Commission (ASIC), and the funds of moomoo customers are independently deposited in the customer fund account of HSBC Australia, which is completely isolated from moomoo's own funds.

Information content is one of Mr. L's favorite moomoo features. Moomoo provides users with 24/7 real-time updated financial information and financial statement data for free, and has a very active discussion forum. Each stock has a separate information and discussion section, which displays all financial information and all information related to the stock in forum discussions, which provides users with more comprehensive information for helping make investment decisions.

As Mr. L said, "The best thing about moomoo is that you can use your phone to see stocks, and at the same time to check information on your computer. It offers a one-stop platform, with all the functions you need."

Before making investment decisions, Mr. L will combine mathematical models and the more than 100 analysis and line drawing tools available on moomoo to quantitatively analyse the possible future trends of individual stocks. Through these convenient analysis tools, Mr. L can make a judgment on the probability of certain trends and predict the high point and low point of a certain stock to help inform his decisions.

"From a short-term perspective, a certain stock may appear to be at a high point, and so the risk is very high. However, if you look at the long-term dimension and look back on the past one or two years, the current price is at a low point, and therefore, you should consider buying it. I think it is mainly from the perspective of reducing risks.” Mr. L said.

For investors like Mr. L, whose investments are mainly concentrated in certain industries, moomoo's industrial chain function is very convenient. Moomoo is the only app of its kind in Australia that has launched the industrial chain function, which can display the relevant listed companies in the upper, middle and lower stream of an industry, within one graph. In the real estate industry where Mr. L works, there are 1,106 companies, from upstream steel and stone to downstream intermediary services, with a total market value of 1.96 trillion US dollars. The industry chain function of moomoo is also closely following market hotspots. For example, the recently popular ChatGPT industry has a total of 87 related stocks with a total market value of 14.22 trillion US dollars.

After a year investing in the stock market, Mr. L says his journey has been rewarding.

Note:

*Mr. L (pseudonym) is a real customer of moomoo Australia. The content of the article is based on moomoo's real interview with Mr. L and the experience mentioned in the article is his own real experience.