Author: Quanshang China Xu Nuo
Editor: C
Securities Times ยท Quanshang China reporters noticed that the year-to-date return rate of the Bitcoin fund operated by a leading public offering subsidiary company is high enough to surpass 99% of domestic fund products, possibly influenced by the high returns of the company’s alternative investment products. This large-scale public offering’s Hong Kong stock thematic fund also holds significant positions in Bitcoin-related stocks, as indicated by the latest financial report, which shows that the performance surge is mainly contributed by Bitcoin. It is worth mentioning that as the influence of Bitcoin assets continues to grow, there are more and more connections between public offering backgrounds and Bitcoin. In addition to the layout of the aforementioned leading public offering products, former public offering leader Xiao Feng and top streamer Wang Yawei have also entered related investments.
Public Offering’s Layout of Bitcoin ETF is Highly Profitable
Wind data shows that the highest return rate of fund products this year is 55.32%, with the second-ranked fund product having a year-to-date return rate of 47.5%. The fund with the highest loss has already lost 40% of its net value during the year, and this data does not include alternative products operated by overseas subsidiaries of public offering funds. Taking Southern Fund as an example, the year-to-date return rate of a Bitcoin ETF fund operated by its Hong Kong subsidiary has reached 54.63%. This performance is high enough to surpass 99% of domestic public offering products, whose main investment target is stock assets.
Although domestic stock and fund investors have always held the lowest level of awareness regarding Bitcoin investments in the “despise chain”, leading public offerings consider Bitcoin assets as a serious matter. Quanshang China reporters noticed that in December last year, the Hong Kong subsidiary of Southern Fund officially launched the first batch of virtual asset ETFs in Asia: Southern Dongying Bitcoin Futures ETF, Southern Dongying Ethereum Futures ETF. These related ETFs were officially listed and traded on the Hong Kong Stock Exchange, making Southern Fund the first domestic public offering to lay out Bitcoin fund business.
In terms of specific strategies, taking the Bitcoin Futures ETF as an example, according to the introduction by the Hong Kong subsidiary of Southern Fund, this is an exchange-traded fund based on futures trading, which is different from traditional exchange-traded funds and is affected by the risks of related derivatives. The investment objective of the sub-fund is to achieve long-term capital growth by mainly investing in Bitcoin futures on the Chicago Mercantile Exchange (CME), and the Bitcoin futures prices on the CME may deviate significantly from the spot price of Bitcoin. The sub-fund does not seek to provide returns based on the spot price of Bitcoin. In addition, the sub-fund’s investment in Bitcoin futures on the CME faces major risks, such as potential large-scale transfer costs and operational risks (such as margin risks and risks related to mandatory measures implemented by relevant parties). The sub-fund adopts an actively managed investment strategy. The sub-fund does not seek to track any index or benchmark, nor does the fund manager engage in replication or representative sampling.
Several Public Fund Leaders Enter the Cryptocurrency Field
In contrast to the stock market, the price of Bitcoin has been outstanding this year.
The Chinese Securities Journal noticed that as of October 2nd, the price of Bitcoin has risen by 70% this year, with each Bitcoin surpassing 200,000 yuan, and the total market value reaching 3.89 trillion yuan. In addition, the market value of Ethereum has also exceeded 1.48 trillion yuan, and its price has risen by more than 40% this year.
The strong performance of Bitcoin and Ethereum may benefit star fund managers who are venturing into alternative investments, including former public fund leaders Xiao Feng and Wang Yawei. Wang Yawei’s portfolio suddenly included digital currency assets that were heavily abandoned by the market in the fourth quarter of last year. Bill Miller, a well-known American fund manager who has consistently outperformed the S&P 500 index for 15 years, publicly stated last year that 50% of his personal investment portfolio is Bitcoin, and the other 50% is Amazon stocks. Miller stated that he has been buying and holding Bitcoin since its price was $200.
Former public fund leader Xiao Feng has also shown great interest in virtual assets such as Bitcoin. Xiao Feng stated at an event at the end of September that the virtual asset policy in the Hong Kong Special Administrative Region is not for speculation or trading of encrypted tokens, but to support technological innovation and upgrade the financial center through tokenized services for the real economy. He stated that the Hong Kong International Virtual Asset Center needs to have a four-layer structure: an active secondary market (trading), an effective primary market (issuance), concentrated industry services, and a rich industrial ecosystem (Web3.0). Based on this foundation, Hong Kong can upgrade to version 2.0 of the Hong Kong International Financial Center.
Fund Managers Take Advantage of the Coin Market through Stocks
It is worth noting that Southern Fund not only has a layout in Bitcoin funds, but also actively buys stocks with Bitcoin concepts in the stock market.
According to the semi-annual report of the fund, the Southern Hong Kong Growth Fund managed by Wang Shicong significantly bought shares of Meitu during the second quarter of this year and included Meitu in the top ten major holdings. Meitu is one of the few stocks in the Hong Kong stock market that has shown an increase in value since 2023. In the past four months alone, Meitu’s stock price has increased by as much as 60%.
Why did Southern Fund’s Hong Kong-themed fund buy Meitu, which was previously despised by the market? Industry insiders believe that considering Southern Fund’s positive layout in Bitcoin ETFs and the decent rise in Bitcoin prices this year, the implied value generated by Meitu’s large amount of Bitcoin assets may be easier for fund managers to understand.
After Southern Fund heavily invested in Meitu, the mid-term financial report released by Meitu demonstrated the impact of Bitcoin assets on the company’s performance. The financial report data released by Meitu shows that the company achieved a total revenue of 1.261 billion yuan in the first half of the year, a year-on-year growth of 29.8%. The net profit attributable to the parent company was 228 million yuan, turning losses into profits compared to 2022. The adjusted net profit attributable to the parent company was 151.5 million yuan, a year-on-year increase of 320.4%.
This astonishing performance growth is largely thanks to Bitcoin. The report shows that the depreciation rollback of cryptocurrencies reached 186 million yuan. According to Meitu’s semi-annual report, as of June 30, 2023, Meitu Group valued its holdings of cryptocurrencies at the then market prices. The fair value of purchased Ethereum units was approximately $57.41 million, and the fair value of Bitcoin units was approximately $28.28 million. According to relevant accounting regulations of international financial reporting standards, Meitu Group classifies purchased cryptocurrencies as intangible assets and uses the cost model for measurement. With the volatility of the cryptocurrency market, as of June 30, 2023, the market prices of purchased cryptocurrencies have increased compared to December 31, 2022. Therefore, Meitu Group has reversed a depreciation loss of approximately 185.6 million yuan for cryptocurrencies. Based on this, Meitu Group reversed depreciation losses of approximately 90.8 million yuan and 94.8 million yuan for purchased Bitcoin and Ethereum, respectively, within the six months ended June 30, 2023.
Like what you're reading? Subscribe to our top stories.
We will continue to update Gambling Chain; if you have any questions or suggestions, please contact us!
