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Majesty Fund Stock Track Portfolio Project 09-10 Funds Managers Hung Pun Ki, Majesty 2008078285 Mak Yin Yan, Wendy 2008299994 Wong Lam Wai, David 2008085991 Yau Tat Kwan, Jacob 2008046921 Presentation Flow Majesty Fund 1 Trading Philosophy and Strategy 2 Behavior Bias 3 Analysis of selected trade 4 Relative and Absolute Performance 5 Future Prospective Trading Philosophy Majesty Fund 1 Market is NOT efficient! 2 Believe in Value Investing 3 Believe in Momentum Investing Trading strategy • Primarily in Hong Kong Stock Market – Easily to obtain information via Internet – With a deeper understanding – Can catch the market sentiment easier • Asset allocation – At the beginning as outlined, 10% spots and future, 20% cash, remaining contributed to HK stocks Majesty Fund Behavior Bias Majesty Fund • Ignorance of short-term game • emphasize on long term investment • Only 3 months • Neglect short-term volatility • Selection of unfamiliar market • Buying of derivatives • Asymmetric information Adjustments Majesty Fund Focus on stock-specific news events, with reference to macroeconomic news and financial markets Paying more attention to Hong Kong and China Stocks Short-term day trading Majesty Fund 0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED Majesty Fund • 1st reason: On 31/3, Announcement of 2009 Annual Results show 00363 is bullish. • 2nd reason: On 31/3 – Shanghai Industrial holdings Ltd released its 2009 Annual Financial performance • Overall gross profit rises by 5.8% • Profit in real estate sector rises by 66.2% • Final dividend 60 cents per share – Catch the advantage of Shanghai Expo 0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED Majesty Fund On 31/3, we bought at HK$35.6 On 7/4, we sold at HK$39.9 Margin of safety is not beyond On 8/4, re-invest at HK$40.5 0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED Majesty Fund • However, there is a series of bad news. 09 April 2010 Shanghai is planning to impose value-added tax on real estate Beijing is planning to restrict application of mortgage loan from non-locals 12 April 2010 Strictly investigate the risks of loans provided to real estate producers of China 13 April 2010 Large selling of Mainland real estate stocks due to suppression in real estate market 0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED Majesty Fund Even under the bad news, 00363 was still stable and even increasing while others’ declining. While focusing on the individual performance of 00363, we also pay attention to current news. We sold the stock after the investigating period to stop loss on 14/4. Total profit: $11014.45 - $1762.92 = $9251.53 0005 HSBC Majesty Fund • 4/2 monthly statement, new stocks released • 17/2 announcement of fourth quarter results On 23/2, we bought at the price of HK$84.95 On 1/3, people were unsatisfied with the performance of HSBC in 2009 On 1/3, we sold at the resistant price of HK$86.65 On 8/4, we reinvested at the support price HK$79.55 On 16/4, we sold at the price of HK$84.55 Total Profit: $936.62 + $5158.05 = $6094.67 Majesty Fund Select Trade 3- Speculation (8173.HK) Majesty Fund Use at most 30% of money on speculative trading Ride on moment with the help of technical analysis Cut loss strictly at 15% Bet on stocks with highest beta Selected Trade- Technical Analysis Majesty Fund K line cross from below over the S line Sudden Increase in Turnover => We wait for rising trend Select Trade 3- Speculation Buy at 0.061 Majesty Fund Increase stakes at 0.073 Start profit taking at 0.091 Lessons learnt When making profit, withdraw part of the money out and let the remaining run for itself. Relative performance Majesty Fund Comparison of weekly return of Majesty Fund and HSI 0.12 0.1 0.08 Majesty Fund 0.06 0.04 0.02 HSI 0 1 -0.02 -0.04 -0.06 2 3 4 5 6 7 8 9 10 11 Relative performance • Benchmark: Hang Seng Index • Outperform the benchmark! Measure Sharpe Ratio Treynor Ratio Return Volatility Portfolio 2.28 2.957 10.92% 12.64 Majesty Fund Benchmark 2.654 0.5437 10.37% 20.64 Market Efficiency Majesty Fund M QM n n 2 k 1 k2 nk ~ M2 k 2 3qn 1 k q n k 1 Z N 0,1 2 2q 1 q 1 q 1 Market Efficiency Majesty Fund • Null hypothesis – The market is in a random walk process hence it is efficient • Result from tests – Test statistics > critical values for both tests • The market is efficient – Reject the null hypothesis Our perspective in 2010 Majesty Fund Late Performance Majesty Fund • Huge return Rate of return in the last month = 15% • Constant return • Highest among all funds • Rate of return of HSI = 7.4% Majesty Fund Majesty Fund • We learned from mistakes • We invest in our strongest • We have good market sentiment Fact!! These make Majesty Fund the best performed PROVEN Majesty Fund • The End • Thank you very much for your attention!