Investing require time, patience and diversification with the Chinese market

Despite market volatility, the country's underlying economy is relatively sanguine. Investing requires time, patience and diversification is the advice that a financial veteran offers to investors whose eyes are fixed on China's equity market.

Because of the A-share's inclusion into the MSCI Emerging Market index, more capital with long-term commitment will enter the market. However China's stock market has gone through a volatile year, which also had a ripple effect on the global market.

China has sent a clear message that its growth will decline, but in aggregate the economy is still very strong and with high quality of growth compared to other countries. If you look deeper, there's some overcapacity in the manufacturing sector. But what has taken place is a transition towards much stronger service economy with better quality of growth and much of that being built by private enterprises and long-term sustainable business development.

Rani Jarkas, Chairman of Cedrus Investments, an investment pioneer with years of financial experience in Asia,  added, “In terms of market valuation and whenever investors see this kind of volatility, clients with diversified portfolios that include fixed income, equities, commodities and other alternative asset classes will outperform the market. Moments like this remind clients of the importance of diversification.”

中国精准医疗的未来

自美国总统奥巴马2015年初宣布启动新的医疗研究努力——精准医疗计划以来，中国也在指定自己更大的精准医疗项目。中国一些领先研究机构包括清华大学、复旦大学以及中国医学科学院都纷纷建立精准医学中心。例如四川大学华西医院计划完成一百万个人体基因序列，与整个美国的计划目标相同。

中国政府有望在今年3月份批准下一个五年计划，尽管目前还不清楚将会投入多少资金，但几乎可以肯定的是， 会比美国2.15亿美元的计划规模更大，投入的资金更多。

今年1月9日，中国科学院宣布启动“中国人群精准医学研究计划”，将在4年内完成4,000名志愿者的基因信息采集。

当前中国一些基因测序公司已相继竞争提供测序服务，中国多年以来为超高的基因测序能力而引以为傲。2010年，总部位于深圳的基因研究院华大基因估测其测序能力超过了整个美国。但这也要感谢其从加州圣迭戈的Illumina公司购买的设备，这些设备在当时代表着最为尖端的技术。但中国的其他基因公司随后也从Illumina公司购买了升级后的产品，包括来自上海的药明康德和云健康基因，以及来自北京的诺禾致源。

美国国立卫生研究院院长弗朗西斯•柯林斯于2015年大连夏季达沃斯论坛上表示，他希望在未来看到中美双方在精准医疗上更多的合作。

我认为，中国在基因序列和识别突变基因这些与个性化治疗相关的方面发展会比美国迅速，这是因为中国每种疾病都有庞大的病患数量，使得研究拥有足够的样本，加之中国政府对成功的决心。然而，中国能否将这些发现都应用到患者的个性化治疗上面，仍然有待观察。

The future of precision medicine in China

Since US President Barack Obama unveiled the new medical research effort called Precision Medicine Initiative at early 2015, China has been finalizing plans for its own, much larger project. China’s leading institutes — including Tsinghua University, Fudan University and the Chinese Academy of Medical Sciences — are scrambling to set up precision-medicine centres. Sichuan University’s West China Hospital, for instance, plans to sequence 1 million human genomes itself — the same goal as the entire US initiative.

The Chinese government is expected to officially announce the initiative after it approves its next five-year plan in March. Just how much the effort will cost is unclear — but it will almost certainly be larger and more expensive than the US$215-million US initiative.

On January 9^th, the Chinese Academy of Science (CAS) announced its precision medicine research plan targeting Chinese people, which will spend four years colleting genetic information of 4,000 volunteers.

Genome-sequencing companies are already competing to provide services to deal with the anticipated demand. For several years, China has boasted high genome-sequencing capacity. In 2010, the genomics institute BGI in Shenzhen was estimated to host more sequencing capacity than the entire United States. This was thanks to its equipment, purchased from Illumina of San Diego, California, which at the time represented state-of-the-art technology. But Illumina has since sold upgraded machines to at least three other genomics firms — WuXi PharmaTech and Cloud Health, both in Shanghai, and the Beijing-based firm Novogene.

Francis S. Collins, the director of the US National Institutes for Health, spoke at Summer Davos in Dalian in September 2015 that someday he would like to see the United States and China cooperate more on precision medicine.

As far as I’m concerned, China will be faster than the United States at sequencing genomes and identifying mutations that are relevant to personalized medicine because China’s larger populations of patients for each disease will make it easier to find sufficient numbers to study, combined with the Chinese government’s determination to succeed. Still, it remains to be seen whether China has the resources to apply these insights to the individualized care of patients due to the dearth of doctors.

Diversified Capital Enters Into China Market Where is the “tailwind” for China’s biotechnology industry?

SHANGHAI, 15 January (Xinhua) – Genome sequencing, protein-structure analysis, and large-scale cell culture……With China’s growing leadership in global biotechnology industry, biotechnology is regarded as an emerging industry in China’s 13^th “Five-year Plan”, attracting both domestic and global investors to rush into this “tornado”. Where is the “tailwind” for biotechnology industry with a market size of 10 trillion yuan? Rani Jarkas, Chairman of Cedrus Investments, a well-known global boutique investment firm in biotechnology industry, accepted the interview with the reporters from Xinhua.

Gap between basic research and clinical application

Xinhua: As one of the foreign investors, what do you think about the development of biotechnology industry in China?

Rani Jarkas: China’s potential to influence and eventually take a leadership role in the global biotechnology market became apparent. Recently, China has begun investing vast sums of money into the domestic biotechnology industry, including the development of translational sciences centers, to draw top talent from around the world and apply findings from fundamental research into medical and nursing practice with beneficial health outcomes.

Although China has made tremendous progress in fields like genome sequencing and protein-structure analysis, it has produced relatively few drugs and other medical products. Hence, the Chinese government is keen to bridge the gap between basic research and clinical application, and the construction of translational sciences centers, for instance, is part of the effort to push domestic innovations in terms of developing medical treatments. Given the momentum underway, the sheer scale of the effort expended and its immense market size, China will ultimately be able to make a significant impact on the biotechnology industry globally.

The high-risk and high-cost nature of biotechnology industry requires entrepreneurship and patience from the participants

Xinhua: What lessons can China learn from the development of biotechnology in the West?

Rani Jarkas: The biotechnology industry was founded in the U.S. in the 1970s, and the U.S. has always been the global leader in research and development (R&D) spending in this field and currently has the largest biotechnology market of the world. In the West, the biotechnology industry could best be described as a venture involving trial and error, high risk, entrepreneurship, high costs, patience, and likely failure.

The following lessons have been learned by those entrepreneurs and investors participating in the biotechnology industry in the West over decades: First, participants must either know what they are doing, or be aligned with those who do in order to be successful. Second, biotechnology is unlike other sectors that can benefit from broader industry trends. In biotechnology, a company succeeds or fails on its own merits. Third, very few investors possess the relevant expertise to adequately evaluate the unknowns and manage the risk inherent in biotechnology investing. Therefore, having a broad network of knowledgeable industry participants, including regulators, clinical professionals, executives of companies and experienced investors, is critical for market intelligence before making investment decisions.

The dramatic growth in the number of cross-border deals in China’s biotechnology industry may help China eventually take a leadership role in the global biotechnology market

Xinhua：What will be the opportunities for China’s biotechnology industry?

Rani Jarkas: A very interesting and unique aspect of China’s biotechnology industry is the dramatic growth in the number of cross-border deals completed in recent years. Domestic and Western venture capital firms have contributed notable funding to China’s life sciences start-ups. For example, the country’s top-10 market players are mainly multinational or their joint ventures with foreign companies. For many years, collaboration between multinational pharmaceutical companies and their Chinese peers (including private Chinese companies) has been critical in generating mutual benefits together with driving the industry growing at a faster pace, and most industry experts believe this will continue.

China has been tremendously influenced by how the U.S. has wisely funded R&D innovations in the past, according to The National Bureau of Asian Research. During the process of global collaboration and cross-fertilization, on one hand, the flow of Chinese scientists returning to China provides the talent and know-how  as well as the expertise to facilitating cross-border licensing and acquisitions, among others and positions China’s domestic biotechnology industry to compete internationally as well in the future. On the other hand, given that the biotechnology industry’s profiles have similarities in many dimensions, including regulatory, financing, liquidity, execution, reimbursement and safety, China’s approach, is both efficient and effective and has the potential of developing the global biotechnology industry further and faster.

Cedrus’ team has been involved in the investment banking business of the life sciences industry for over 15 years. Cedrus Investments is a trusted partner and advisor in promoting the flow of cross-border innovations, business and capital in the life sciences industry between China and the U.S., Europe and Australia. Cedrus currently advises and manages over US$1.5 billion in assets in multiple funds, including one solely on life sciences. In 2016, Cedrus will host an exclusive life sciences investor conference in Shanghai.

News Background:

Cedrus Investments, a global boutique investment firm, is at the forefront of serving as a trusted partner and advisor in promoting the flow of cross-border innovations, business and capital in the life sciences industry between China and the U.S., Europe and Australia. Cedrus has a local presence, with offices in Beijing, Hong Kong, Shanghai, Jakarta and the Cayman Islands and a team of multi-disciplinary experts. The company has been doing business in the Greater China region for over a decade.  The firm has the advantage of understanding both the Western and Eastern cultures and interests, and it knows how to build trust to cement win-win partnerships and facilitate deal executions.

Cedrus’ team has been involved in the investment banking business of the life sciences industry for over 15 years, primarily in the U.S. and Europe. Moreover, it has unparalleled relationships within the venture capital community, with global institutional investors, life sciences companies and academic experts from leading institutions in the U.S. and Europe, such as MD Anderson in Texas, the leading cancer research center in the world.  Its team of advisors and investment bankers is comprised of graduates from Harvard and Stanford Universities, all of whom are actively participating in sourcing and evaluating unique investment opportunities. Cedrus currently advises and manages over US$1.5 billion in assets in multiple funds, including one solely on life sciences.

Cedrus’ life sciences team is focused on: a) advising Chinese companies on a variety of cross-border transactions, including accessing technology and business partners in the West and Australia that are of interest to them; b) working closely with domestic investors to identify promising life sciences investment opportunities locally and abroad, and c) bringing life sciences companies from the West and Australia with technologies and products that would be valuable in addressing crucial healthcare issues in China to meet with relevant Chinese companies and investors. In the end, it is Cedrus’ primary objective to become a trustworthy business partner and advisor to Chinese companies and investors alike looking to conduct productive and valuable cross-border business.

In 2016, Cedrus will host an exclusive life sciences investor conference in Shanghai that will focus on bringing leaders in the biotechnology industry from the U.S., Europe, and Australia, to Shanghai to meet with their Chinese counterparts from various parts of China to explore partnership, merger and acquisition, and financing opportunities. By hosting this conference annually, Cedrus is committing to bringing together the right mix of international players from a variety of disciplines to help Chinese companies and local investment managers achieve their goals and lend momentum to Shanghai becoming one of the world’s most important biotechnology centers.

[多元资本竞入 生物技术新兴产业“风口”何在？-新华网]

http://sh.xinhuanet.com/2016-01/15/c_135013470.htm?from=singlemessage&isappinstalled=0

投资组合管理对中国投资者的重要性日益增加

自从30年前中国开始实施改革开放政策以来，中国投资者已经在这段不长的时间里体验了各种经验教训。最近的一次，就是今年实施熔断机制以来的第一周。中国股市充斥着大量散户，一直以来都是投机交易。大多数投资者蜂拥购买一支上涨的股票，全然不顾高股价，又或者集中抛售一支下跌的股票，使得中国股市成为了世界上波动最大的股权市场。

贝恩咨询的一份研究报告表明截止2014年底，中国的私有财产已达112万亿人民币（约合17万亿美元），中国成为仅次于美国的全球第二大私人财富管理市场，人均可投资产约为8.2万元。然而，储蓄和银行理财产品仍然是最主要的方式，占到66.5%，股票占到16.1%。

本周早些时候，中国最大的投资银行和研究服务公司之一——中国国际金融股份有限公司（CICC），敦促中国投资者将他们的投资策略从单一地押在一类资产的升值和紧盯风云变幻的股票市场，转变成采取投资组合策略，融合例如债券这样不与股票市场同步的投资，从而分散风险，降低投资的波动性。

根据汇丰银行的报告，中国境内债券作为后起之秀，按美元价值计算回报率为2.5%。汇丰全球资产管理亚太固定收益产品首席投资官陈宝枝说：“越来越多的中国大陆投资者今年正在进入美元投资的离岸债券市场。”

在我看来，中国投资者是时候开始转变采取投资组合策略了，不仅是指那些传统的投资产品，例如股票和债券，也包括其他非传统产品，例如大宗商品、货币、私募股权基金、房地产和海外资产。一个多样化的投资组合能帮助分散因某一项投资未达预期而可能产生损失的风险。

Portfolio Management Becomes Increasingly Important for Chinese Investors

Since China’s Economic Reform and Opening-up policy that started some 30 years ago, Chinese investors have learnt abundant lessons within this relatively short timeframe, most recently, the plunge in the first week after the launch of circuit breaker mechanism. China's stock market, crowded with retailer investors, has been historically filled with speculative speculation as most investors flocked to one rallying stock, regardless of its already high-valuation, and sell off a plunging stock in herds, causing one of the most volatile equity markets in the world.

A Bain’s research report showing that by the end of 2014, Chinese private wealth had hit 112 trillion yuan ($17 trillion)——the second largest private wealth management market next to the US -- with per capita investing wealth of 82,000 yuan. However, deposit and banks' wealth management products still take up the majority (66.5%), while securities take up 16.1%.

Early this week, China International Capital Corp (CICC), one if China’s largest investment banking and research services companies, urged Chinese investors to shift their investment strategy away from betting on appreciation of a single asset class and relentlessly go after a surging stock, to take a portfolio strategy, blending, for example, bonds, an asset class that does not in sync with stocks, with stocks that could diversify risks and reduce the volatility of the investment.

According to HSBC, Chinese onshore bonds was a rising star, with a 2.5-percent total return in US-dollar terms. “More Chinese mainland investors are entering the offshore bonds market with US dollars this year”, said Cecilia Chan, Asia Pacific fixed-income chief investment officer at HSBC Global Asset Management (HK).

In my opinion, it is time for Chinese investors to shift to portfolio investment, not only the traditional investment products like stocks and bonds, but also unconventional products such as commodities, currencies, private equity funds, real estate, and overseas assets. A diversified portfolio can help spread the risk of possible loss because of below-expectations performance of one or a few of them.