Young Investor Makes Killing In Hong Kong Stocks

Main reference: Story in Sinafinance

WHAT IS THE secret of a 26-year-young investor who managed to increase his 200,000 hkd original capital tenfold in just four years.

Property developer Emperor Intl is a key component of investor Victor Wong's portfolio   Photo: CompanyVictor Wong’s educational background seems to have little to do with his uncanny ability to pick winners in Hong Kong’s capital market.

He graduated with a Master’s in chemical engineering from Anhui Province-based University of Science & Technology of China four years ago.

He jumped headfirst into the Special Administrative Region’s bourse as a still-wet-behind-the-ears retail investor with 200,000 hkd borrowed from family members in his pocket.

His day job is as a refurbishing contractor -- a position he says has given him unique insight into the intrinsic value of a whole variety of things.

Victor says his investment success is largely based on what he says is his personal motto for succeeding at both his day job and his investing activities.

“Stay curious and always pay attention to what’s going on around you at all times. This will help give you immunity from rash, rumor-based investment decisions,” he said.

The self-described “repairman”  began playing the Hong Kong bourse in 2009 for the first time and considered his novice status as an advantage as it allowed him to have an open mind to all variety of strategies, coming in free of bias.

He added that working for his father’s refurbishing business left him with the flexibility to study the market and pick bigger and better winners over time.

And having turned 200,000 hkd into two million in just four short years surely kept his parents from complaining if he wasn’t always available 24-7 for the family business.

In fact, his investment earnings easily outstripped his salary by several multiples.

“Sometimes, I admit that buying and selling shares is not much different than a night at the casino... or at least it feels that way sometimes.

“Even if you are well-prepared and know the rules of the game inside out, you can still lose your shirt in an instant if you aren’t careful,” he said.

Victor added that he sees each trading day as a test of sorts, and getting up early to study yesterday’s events and that day’s forecasts was akin to cramming for an exam each morning.

“The early bird gets the worm,” he said.

Emperor International's share price performance over past nine months

He said he was not immune from a bit of discouragement in the first half of last year when the benchmark Hang Seng Composite Index was wallowing in negative territory most of the time and fluctuated pell-mell within a 4,200 point range.

But that didn’t stop him from searching even harder for diamonds in the rough and those counters which he felt were being unjustifiably chastised by the market.

He said the sudden reversal in fortunes for the Hang Seng on the upside in the second half of 2012 took many investors by surprise.

But Victor was prepared well in advance.

“I felt a rebound was imminent, so I bought heavy into a few stocks as early as April. They soon came crashing down to earth in a wave of selloffs.

“Luckily, I quickly stocked up on a listed PRC utility firm as well as an infant supply play which quickly caught fire and kept me from really having a dire situation,” he said.

When the second half of 2012 rolled around, a single stock pick – property developer Emperor International Holdings Ltd (HK: 163) – helped make up for his underperforming first half, rising nearly five-fold and helping him net over one million hkd last year.


Hong Kong shares recent performance. Investor Victor Wong is confident his portfolio can beat the benchmark Hang Seng Index again this year.   Source: Yahoo Finance

“Some time ago, after looking closely at the sector, I felt that the Hong Kong’s property market had nowhere to go but up, and the authorities were giving little indication that they would step in anytime soon to slow things down.

“So it was really the perfect time to get into the real estate game as an investor.”

He did say that his original market entry did involve a bit of luck – at least in terms of timing – as Victor began buying stocks not long after the 2008 financial crisis gutted markets worldwide.

However, his first big buy was nothing to write home about.

On the advice of a friend, he was persuaded to buy into legendary Chinese film production house Media China Corp Ltd (HK: 419).

The stock fell sharply, then stagnated, and it was only after several months that it crept back to the buy-in price at which point Victor quickly sold off his shares and broke even.

Investor Victor Wong is paying attention to textile firms like Texhong Photos: TexhongOther decisions which made a major difference for Victor include some well-known retail brands.

“In late 2010, I.T. Ltd (HK: 999) enjoyed a share price spike, but fellow retailers Joyce (HK: 647) and Hang Ten Group Hldgs (HK: 494) were lagging far behind pricewise despite quite respectable sales (Hang Ten was acquired by Li & Fung Ltd shortly thereafter).

“So I spent 60,000 hkd at the time and bought in, and within two weeks I was enjoying 70-80% returns on this investment. This really charged me up, and I have since then made a point of taking both share price performance and sales figures very seriously.”

He also made a pretty penny by betting that smartphones would be the way forward in China – often at the expense of laptops -- and cashed in returns of around 40% from shares he bought in SmarTone Telecom (HK: 315).

He said that Hong Kong’s property market couldn’t defy physics and achieve perpetual motion.

“The real estate sector is overheated. I will diversify away to hedge myself better and am confident I can outdo the Hang Seng Index again this year.”

He said investors should switch to rental-focused property plays like Hysan Development (HK: 14) and Soundwill Holdings (HK: 878).

Victor added that the best time to make money in 2013 may already be over, though he’s already seen his portfolio rise 25% so far this year.

“I will be paying more attention to more traditional, cyclical plays, including textile counters like Texhong (HK: 2678)."

And what sector themes did he expect to make the most money for investors this year?

“Rental properties, textiles and handheld device components are my top choices.”