In 2014, S&P 500, Hang Seng Index and HS300 rose 11.4%, 1.3%and 51.7% respectively. Asynchronized global economic recovery and "The Fourth Industrial Revolution (All-Intelligent, Low-Carbon)”defined by Midas Research in 2013 are on-going. The market expects Fed to enter the interest-rate hiking cycle as early as June 2015 while China entered interest-rate down-cycle already in 4Q14. Global commodity markets continue to suffer. China's economy is slowing down but expected to land softly on a "new norm". China is still the major power house of global growth. As a result of multiple factors, CNYUSD exchange rate is likely to go back to the track of long-term growth. Mainland Capital Market is now immersed in the atmosphere of high expectations and animal spirits due to huge profits generated from stock uptrend. Leveraged investments in mainland are extremely popular nowadays which concerns traditional value investors. Midas International Group (MIG)'s brother private fund house in mainland, i.e. Midas Investments China (MIC) achieved 116.7% growth in its equity fund and ranked 2nd among Chinese PE Fund houses in the same category. MIC's VC fund Midas Investment Fund (MIF) also invested millions in Qianhai EasyGo in 1Q15.
MIG's equity fund achieved 12.9% growth in 0.58 year and beat S&P500 by 7.7ppts by April 10th 2015. NAV of MIG increased 19.9% including income from advisory services. MIG's equity fund has already covered SEHK, NYSE, NASDAQ, OTCBB markets globally. Our HK holdings outperformed and overall short-term growth was in-line with management's expectations although growth of US assets was tempered by the return of Chinese stocks which were under collective attacks by short-sellers and investigations by US law firms. However, short-term results are insignificant. MIG is solely a long-term asset management fund. MIG's management also invested millions into US startup Luvo Inc. led by Christine Day in March 2014, but the injection of such riskier assets in MIG is subject to the maturity of project. Luvo successfully attracted Goldman Sachs' affiliate company, Broad Street Principal Investments to become its strategic investor and invest US$ 45mn in 1Q15.
Mainland China has been issuing new relaxations on cross-border investment restrictions to Hong Kong since 2014. These policies included but not limited to "Shanghai-Hong Kong Stock Connect program (SHSC)", QDII/QFII quota lifting, relaxations on overseas investment restrictions to mainland insurance companies and public funds. The following schemes are also in talk: 1. Mutual recognition of funds domiciled in either HK or mainland China; 2. "Shenzhen-Hong Kong Stock Connect"; 3. "Bond Connect"; 4. "GEM Connect"; 5. Quota lifting of SHSC. As an early signal, SHSC's daily southbound aggregate quota was used up for the first time on April 8th. The daily turnover in HK stock market then reached a historical high of HK$ 250 billion. The "Barbarians" from the north are increasingly flooding through the "gate", and they are not likely to stop.