HONG KONG and SHANGHAI, Jan. 14, 2021 /PRNewswire/ — The Ping An Digital Financial Analysis Middle (PADERC), a member of Ping An Insurance coverage (Group) Firm of China, Ltd. (HKEx:2318; SSE:601318), has created 4 new funding methods for environmental, social and company governance (ESG) investing utilizing Ping An’s proprietary CN-ESG information for China A-shares, in mild of surging demand in China for ESG rankings and information with wider protection and a greater match for China’s market.
Ping An ESG framework aligns with worldwide requirements and Chinese language laws
The funding methods detailed within the report, “Functions of Ping An CN-ESG Information and Framework in Quantitative Funding Technique”, use the proprietary CN-ESG database and scoring framework developed by the Ping An Group. Ping An was the primary asset proprietor in China to signal the United Nations Ideas for Accountable Funding. The framework leverages Ping An’s experience in finance and know-how and aligns with worldwide requirements in addition to pointers from Chinese language regulators to include materials matters for Chinese language firms.
With applied sciences reminiscent of internet crawlers, information mining, machine studying, data graphs, pure language processing (NLP) and satellite tv for pc distant sensing, the CN-ESG system can confirm ESG disclosure-based information in addition to mine non-disclosure-based information to supply buyers with richer multi-dimensional data.
PADERC’s report supplies an in-depth evaluation on the information traits, effectiveness, and technique back-testing outcomes of the CN-ESG database and scoring framework, which covers greater than 3,900 listed firms within the China A-share market with 5 years of historic information (2015-2019). The framework can present quarterly outcomes which might be additional adjusted based mostly on information sentiment scores in real-time – in comparison with annual or semi-annual updates from most ESG score suppliers.
ESG elements unbiased of economic elements
PADERC discovered the Ping An’s CN-ESG scores amongst A-share firms is near a traditional distribution. The issue correlation check outcomes present that scores have notable efficiency of high quality elements. The general correlation between CN-ESG elements and conventional monetary elements is mostly low, displaying excessive ranges of independence of ESG elements, which signifies these can present new information and viewpoints for funding selections.
The outcomes of the issue layered check present that Ping An CN-ESG elements have a comparatively robust optimistic screening impact on the Chinese language Securities Index (CSI) 300 and CSI 800 inventory swimming pools. The monetary window dressing elements constructed by evaluating the standard and authenticity of the corporate’s monetary information yielded 11.61% of long-short good points since 2015.
ESG funding methods that steadiness extra returns with ESG aims
Primarily based on CN-ESG information, PADERC constructed 4 kinds of ESG funding methods that use synthetic intelligence (AI) to steadiness extra funding returns and ESG funding targets:
1) Ping An AI-ESG Chosen 100 Technique: This optimistic screening technique selects firms with the best ESG scores. Primarily based on the broader CSI 800 inventory pool, it could actually higher leverage further data from ESG scores. This technique achieved an annualized extra return of 4.44%. The annual weighted common ESG rating quantile of the portfolio is 94.2% among the many benchmark inventory pool.
2) Ping An AI-ESG Enhancement Technique: On the idea of ESG scores-based optimistic screening, PADERC added ESG elements to its Ping An Digital Financial Analysis Middle 500+ No.1 AI Inventory Choice Technique and there was notable extra return. The AI inventory choice technique relies on linear and non-linear algorithms to seize advanced market constructions to foretell the surplus return of particular person shares. The Ping An AI-ESG Enhancement Technique has an annualized extra return of 16.34%, and the annual weighted common ESG rating quantile of the portfolio is 78.7% among the many benchmark inventory pool.
3) CSI 300 ESG Type Index Sequence: The CSI 300 ESG Development Index explores the expansion worth of the CSI 300 shares, whereas controlling its tail dangers. The CSI 300 ESG Low Volatility Index reinforces the steadiness options of ESG funding in each the quick and long run. The ESG progress index achieved annualized extra returns of 5.67% and the low volatility index achieved 8.61% relative to the benchmark. The annual weighted common ESG rating quantile of the portfolios are 75.1% (ESG progress index) and 73.1% (low volatility index) relative to the benchmark inventory pool.
Additional testing of extra returns reveals that the above lively administration methods have nearly all achieved extra returns in opposed market circumstances, together with bond crises, annual bear market downturns, Sino-US commerce battle, and COVID-19, verifying the effectiveness of ESG elements in difficult environments.
4) AI-ESG MAX Technique: ESG enhancement of mainstream ETFs permits buyers to progressively incorporate ESG ideas into their investing course of with out altering their conventional investing habits. Primarily based on the CSI 300, controlling for sector deviation, this technique units monitoring errors to 1%, 3% and 5%. Beneath completely different monitoring error assumptions, the technique maximizes ESG scores whereas attaining annualized extra returns of 3.61%, 3.40% and 3.43% respectively in opposition to the benchmark. The back-testing outcomes of the technique over the previous 5 years present good efficiency, and extra returns have been secure. One of these index enhancement technique based mostly on ESG elements might assist drive a rise within the scale of ESG investing.
Constructing a richer ESG technique portfolio to fulfill buyers’ various wants
Ping An’s CN-ESG framework will increase to incorporate fastened revenue ESG information and local weather risk-related AI-driven elements. It’s going to allow extra various funding choices, reminiscent of ESG fastened revenue indices and local weather risk-focused indices, to fulfill buyers’ various wants. Ping An additionally developed a sequence of AI-ESG merchandise specializing in company administration, danger monitoring and analytics options for ESG and local weather danger evaluation, together with portfolio sustainability footprint evaluation, a portfolio adjustment device, a sustainable funds screening device, and local weather danger asset pricing fashions to assist ESG funding.
PADERC is an expert establishment specializing in macroeconomics and coverage analysis, utilizing huge information and synthetic intelligence to supply insights on macroeconomic developments, together with developments in ESG disclosures and rankings.
For the complete report, click on right here.
About Ping An Group
Ping An Insurance coverage (Group) Firm of China, Ltd. (“Ping An“) is a world-leading technology-powered retail monetary providers group. With over 210 million retail clients and 560 million Web customers, Ping An is among the largest monetary providers firms on the earth.
Ping An has two over-arching methods, “pan monetary belongings” and “pan well being care”, which give attention to the supply of economic and well being care providers by means of our built-in monetary providers platform and our 5 ecosystems of economic providers, well being care, auto providers, actual property providers and good metropolis providers. Our “finance + know-how” and “finance + ecosystem” methods purpose to supply clients and web customers with modern and easy services utilizing know-how. As China’s first joint inventory insurance coverage firm, Ping An is dedicated to upholding the best requirements of company reporting and company governance. The Group is listed on the inventory exchanges in Hong Kong and Shanghai.
In 2020, Ping An ranked 7th within the Forbes International 2000 record and ranked 21st within the Fortune International 500 record. Ping An additionally ranked 38th within the 2020 WPP Kantar Millward Brown BrandZTM High 100 Most Beneficial International Manufacturers record. For extra data, please go to www.pingan.cn.
About Ping An Digital Financial Analysis Middle
Ping An Digital Financial Analysis Middle makes use of greater than 50 TB excessive frequency information factors, greater than 30 years of historic information and greater than 1.5 billion information factors to drive analysis on the “AI + Macro Forecast” and supply insights and strategies in the direction of exact macroeconomic developments.
SOURCE Ping An Insurance coverage (Group) Firm of China, Ltd.
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