For those investing in HK market, does value investing works in HK market?

Update: The reason I asked this question was that I did some back testing and for the last 2 to 3 years, value investing especially in the form of NCAV did not seem to work in Hongkong Market. Thus, my question to you all since many of u are also into value investing.

In addition, I understand that value investing probably need to hold the company for 2 to 3 years. Then if it does not work for the last 2 to 3 years, will it mean that it is not a good method to use.

However, many of you also pointed out the liquidity and sentiments are the issues in HK market. It is driven by the retail investors. Therefore more volatile.

As must as I still believe in value investing, I feel in HK market, there is something more than value investing (in terms of NCAV) that works there.

Hmm.... I actually found out some criteria that is relevant. But I am still uncomfortable to use it in the HK market. So probably, I will continue in search of the special important criteria to ensure value investing works in HK market.

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TUBInvesting

@jeremyowtaip @DareDevil @marginofsafety @AvgJoe @EmmaTeo @Master_GongJiaowei

The reason I asked this question was that I did some back testing and for the last 2 to 3 years, value investing especially in the form of NCAV did not seem to work in Hongkong Market. Thus, my question to you all since many of u are also into value investing.

In addition, I understand that value investing probably need to hold the company for 2 to 3 years. Then if it does not work for the last 2 to 3 years, will it mean that it is not a good method to use.

However, many of you also pointed out the liquidity and sentiments are the issues in HK market. It is driven by the retail investors. Therefore more volatile.

As must as I still believe in value investing, I feel in HK market, there is something more than value investing (in terms of NCAV) that works there.

Hmm.... I actually found out some criteria that is relevant. But I am still uncomfortable to use it in the HK market. So probably, I will continue in search of the special important criteria to ensure value investing works in HK market.

TUBInvesting

Reply to @marginofsafety : Thanks for your comments. What you said make sense and I do understand.

But that is probably in the area of me being an investor. Nevertheless, in my investing journey, I realise value are realised after 2 years and maximum 3 years. So that is why I have this view.

However, when the back-testing results comes out, this didn't happen. So I was surprised.

On the other hand, in the area of an educator and a trainer, I understand everyone do not have the patience and understanding to wait so long. Furthermore, to find value from other criteria, these students may find it a hassle. Thus, I felt it should be better for them if I were able to find a simpler way of finding value companies.

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jeremyowtaip

Value investing works by allowing the investor to identify and pick promising fundamentally good HK listed companies to invest at their attractive bargain prices. But HK market because of it's huge trading liquidity there especially for many stocks is still primarily short term sentiment driven. So, I will think using a technical point of view to buy and sell at suitable price points have to be factored in. If not, even buying cheap can still get cheaper for a very long time if the trading sentiment goes against the direction the investor is vested or wanes.

And the volatility is higher in the HK market as compared to Singapore market. So, the investor must be able to position himself/herself to make good use of the high volatility to his/her advantage and not be instead emotionally overcome by it and make wrong investment decisions. In terms of temperament, I would think an investor needs a strong temperament to handle the high volatility there in the HK market.

TUBInvesting

Reply to @jeremyowtaip : Precisely it is not for the faint hearted

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DareDevil

When China sneezes, HK is the first to catch a cold

TUBInvesting

Reply to @DareDevil : That is one of the considerations

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marginofsafety

Lol. There's no place where it doesn't work. It all depends on the user. An example would be when given a financial statement of the same company, some might see a gem while others might see red flags all over.

Go read up on David Webb. That guy is very prominent in HK. Some of the stuff he did includes:

"In December 2009, he announced an end to the "Christmas Pick" after a 10-year run in which they returned a cumulative 1118%, compared with an 87% return in the Hang Seng Index over that period.,[20] saying that the success of the picks "has become something of a distraction" to the main goal of raising the standards of Hong Kong's corporate and economic governance."

And: "Webb’s earlier sleuthing led him to write in May 2017 about links between some 50 companies that he dubbed the Enigma Network. Shares in many of the firms named in that report fell in the ensuing days, and tumbled further in the following month, some by more than 90 percent. Several stocks remain suspended amid an investigation by Hong Kong authorities."

TUBInvesting

Reply to @marginofsafety : I read about him already. Thanks.

AvgJoe

There is a plethora of counters to choose from and also they are more MNC there than SG

Master_GongJiaowei

For those investing does value investing actually work?

TUBInvesting

Reply to @Master_GongJiaowei : Yes. I have a reason for asking the questions

EmmaTeo

I think value investing is good to apply in any market. For HK, have to factor in the fact that the market is very much driven by retail investors, and prices can fluctuate wildly depending on news which means value investors have to 1. check again why they went in initially, that the reasons are still valid. and 2. be patient, there's always a chance to buy at lower price, which only makes the value deeper lol.

TUBInvesting

Reply to @EmmaTeo : thanks for replying

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