OakTree capital founder, co-Chairman and co-huohuade·makesi. Photo: CFP
On September 9, 2015, the opportunities and risks in the capital market insight into the prestigious oak tree capital management company (hereinafter referred to as OakTree) Co-Chairman and co-founder-Mr-huohuade·makesi officially brought its investment to Chinese readers of the works of the most important things the new upgrade version. Take this occasion he interface news readers and to share his observations on the global market.
Interface News: recently, is experiencing a period of volatility in global markets, could you share your opinion?
Huohuade·makesi: I think the current investment environment is mixed, in the past few years, a very important development was the interest rate. Central banks around the world would force the interest rate close to zero, borrowers receive subsidies, but lenders or depositors have suffered losses, they have very low return on investment, allowing investors to evacuate, in the United States or other countries interest rates close to zero. So macroeconomic stimulus, high-risk investment pay off, until recently our capital markets more easily, even if it is not too good of a project to obtain financing, all these facts together drive investors away from the risk curve to the pursuit of high returns, no one wants to pursue rate close to zero, so most investment in United States prices are not too cheap or between high.
In the last 1-3 years, no good projects to talk about rising share prices, the current valuation levels are slightly higher than the historical average. Sharp rise in core real estate, leveraged buyouts return, companies purchase prices and debt levels at record highs. We believe that cheap assets in the current market environment has been difficult to find, the current market is a seller's market, cautious buyers more difficult to take the initiative. Many buyers can tolerate great risks, no guard had deviated from the risk curve, they were tempted, the pursuit of high returns, especially in the emerging markets.
So we concluded that since the summer of 2011, we have to take some of the risk on the one hand, because in this environment, if you don't take risks, get a zero return; but on the other hand, we must also be prudent risk control. Investors should often reflection Buffett by said of word "other investors more not caution of for investment, so we more to caution of for investment, dang other people no fear, and full has greed Shi, we must sounded alarm, because they pursuit more high profit Shi, price will raised, then we must to carefully, dang other people was scared has, to clearance of when, we will opposite. "
Interface News: How do you see China's stock markets? OakTree Co-Chairman tell you the cheapest assets are now hard to find
Huohuade·makesi: up to 5000多 points, and I think this is too much, but now it is 3100多, should have a certain appeal.
Interface News: accompanied by a drop in China's stock market, venture capital financing we observed environmental changes that are taking place. That investors increasingly tighten "money bags", and entrepreneurs are more and more difficult to get financing, can you talk about Chinese venture capital financing environment changing?
Huohuade·makesi: first a points is capital markets unrest on like "seesaw" as, sometimes market full with capital, sometimes capital and is scarce, products quality also has level of points, if capital markets full open words, is easy get venture of capital; on the, situation bad Shi, people will caution lending, everyone on project of judge more strictly, funds will scarce, but market is full many caution of mechanism in inside, capital markets of pendulum has he of advantages and disadvantages, this is life, is economics.
If capital markets are fully open, inclusive, money, everyone will obtain financing, no one will be disappointed, but in this case it is difficult to obtain high-return projects, because they do not lack money. I've written an article, if full of money, a lot of people want to find a good project, and it is very difficult; but on the other hand, when you make less money, entrepreneurs will be very eager to find funds, investors can get an opportunity to bargain.
Interface information: in such case, OakTree capital, what kind of projects are still being loved? What kind of projects will be cautious?
Huohuade·makesi: we are willing to increase investment in China, we are not a venture capital fund, less investment in this new company, may also have others like to do. But if this project will bring a high return, we will go to the judge, as the case may be.
Interface News: we know that not long ago you bought bad loans in China, it is understood that the investment you made in China the bad loans on a large scale, why do it?
Huohuade·makesi: the plight of debt, we started investing since 1988, and launched a Fund, that's the first dilemma bond fund returns are very positive, dilemma has always been debt brings good returns, what I'm not so sure, but how do distress debt assets? Usually people don't want to touch the assets, also tends to make people feel pessimistic, people often sought after what? If this is beauty, that prices will rise, but the plight of bonds are less attractive to people, so usually it valuation is too low, if we can buy at the right time, so obviously the earnings will be good, the acquisition of bad loans business in China will do very well.