UVA Darden’s 2016 Shanghai Investing Summit Explores Opportunities in China

Volatility in the Chinese economy was a major topic during the third annual Shanghai Investing Summit.

To better understand what’s next for China’s volatile investing environment, the University of Virginia Darden School of Business and the Pudong Institute of Finance on 13 May convened industry experts and practitioners for the third annual Shanghai Investing Summit. The summit took place at the Pudong Institute of Finance in Shanghai and explored the theme, China: Finding Opportunities in an Uncertain Global Market.

Within an increasingly connected global financial system, the Chinese market continues to gain in impact. What happens in China, whether record-setting initial public offerings or declining sales of Apple’s iPhone, sends ripple effects across the globe. Two key financial events of the last 18 months — dramatic devaluation of China’s currency and a plunge on the Shanghai Stock Exchange — sent shockwaves across the global capital markets.

“China continues to drive the global economic narrative, but the landscape is complex and difficult to predict,” said Darden’s Dean Scott Beardsley, who welcomed to the summit over 100 professional investors, executives, professors and students — including students from Darden’s Global MBA for Executives. “There’s no silver bullet to stop the volatility, but through sharing actionable insights, we can help identify and develop new opportunities.”

Darden Professor Dennis Yang, who is academic director of the Asia Initiative at Darden, led a discussion of the serious challenges facing China’s financial market today. The government and companies want to achieve stability in the equity market, but it has been over a year since the boom and bust of the stock market, and growth has tapered. Risk is omnipresent.

Yin Lei, CEO of Chongyang International Asset Management Co., reminded the audience that with danger comes opportunity. “If you look at Chinese history, all of the major reforms were pushed through because of a crisis. The current crisis could push forward reforms that have been log-jammed for years.”

Liu Haiying, founder of the Haiying Shanghai Investment Co., pointed out that overcapacity is an obstacle that needs to be overcome, as it will deter foreign investment. Channeling capital to innovation in high-end manufacturing and to high-potential firms could help sustain Chinese growth.

“Markets move, but money flows. You need to understand where the money’s coming from,” said longtime value investor Richard Mayo (MBA ’68), chairman of Mayo Capital Partners. He believes investors the world over are still risk averse after the 2008 recession and, referencing strategist James Paulsen, asked, “Is this a bull market, a bear market or a bunny market? Like a bunny, it’s bouncing all over the place and going nowhere.”

Mayo pointed to gold and Google as promising investments, and on the energy front, he predicted that the oil industry is bottoming out. Scott Williams, vice president of the American Chamber of Commerce in Shanghai, highlighted ecommerce in China as an important opportunity. Galaxy Resources CEO Anthony Tse touted lithium, the natural resource that is increasingly powering batteries and driving the global electrification of transportation, from Tesla cars to electric bikes and forklifts.

While the energy revolution revs up and the Chinese market slows down, M&A deal flow is robust. James Liu, partner at Jinchang Tongda & Neal said the volume of deals in the first quarter of 2016 already matched that for the entire previous year.

Darden Professor Ken Eades, academic director of the Mayo Center for Asset Management, concluded, “Today, we heard a number of insights about opportunities and challenges in the East and the West. The ideas that surfaced were as a result of bringing together the Pudong Institute of Finance from China and the University of Virginia Darden School of Business from the U.S. These organizations are both about sharing ideas and developing leaders, and the Shanghai Investing Summit accomplished those goals.”

The summit was presented by the Darden School’s Center for Global Initiatives and Richard A. Mayo Center for Asset Management. The event’s official media partner was Shanghai United Media Group.

In 2015, UVA opened an office in Shanghai to strengthen its academic programs, research, internships, alumni engagement and recruitment of students.