Chinese equities benefited from continued strength in the economic recovery, as reflected by better than expected corporate earnings and economic data, optimism over an early COVID-19 vaccine, and the victory of Joe Biden in the US Presidential elections. China offers better visibility on the containment of localised COVID-19 outbreaks versus its global peers, and the first in first out narrative has been validated by a notable resumption of economic activity. The establishment of a China-backed trade bloc, the government’s pledge for continued policy support and the signing of a China-Europe investment deal further boosted sentiment towards Chinese equities. Fifteen Asia-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP) and formed the world’s largest trading bloc, boosting expectations for the pace of future economic growth. However, there were concerns over news flows around the delisting of certain Chinese companies to comply with a US Executive Order. In key developments, the country’s State Council issued plans to further improve the quality of listed companies as part of its efforts to step up supervision and maintain the steady and healthy growth of the capital market. Separately, the fifth plenary session of the 19th Communist Party Central Committee discussed plans for China to become a ‘great modern socialist nation’ within 15 years and outlined plans to focus on technological innovation as a major engine of growth.
The Hong Kong market also advanced, riding the vaccine optimism wave, despite the recent resurgence of the outbreak. All sectors in the region except real estate ended in positive territory. Of note, the information technology (IT), consumer staples and utilities sectors were the notable gainers. The fund returned 12.5%, while the index returned 11.2% over the quarter. Selected consumer, health care and communication services stocks contributed to performance.
Robust growth momentum benefited selected consumption-led holdings Smoore International Holdings and Nongfu Spring advanced in view of their robust growth prospects and ownership of premium products in the consumption space. Nongfu Spring is a leading bottled water manufacturer and enjoys a robust product portfolio with a strong focus on innovation, a high-quality management team and solid execution. In addition, the packaged water industry is likely to benefit from its large market size, above-average market growth, lower penetration and lower product cycle. Nongfu is the only major player in natural water and is well positioned to gain market share from low-end water purifiers. These gains were partially offset by the lack of exposure to e-commerce company Pinduoduo and electric vehicle (EV) manufacturer NIO Inc, which detracted from relative returns as these stocks registered strong gains. Selected health care and communication services stocks enhanced gains Biopharmaceutical company Innovent Biologics is benefiting from sustained policy support by the Chinese government to accelerate innovative drug development. Bilibili, a diversified pan-entertainment platform specialising in Generation Z users in China, rose in light of its better-than-anticipated earnings. It enjoys solid growth prospects, supported by its robust content library, an expansion in its user base due to customer acquisitions and rapid growth momentum across mobile games, live streaming and value-added services (VAS) segments. The manager believes the opportunity to invest in how and what China consumes is significant and continues to impact a broad range of companies beyond traditional consumer sectors. This theme, powered by the twin drivers of urbanisation and a rising middle class, offers a long runway of growth. In China, the innovation of mobile technology, interaction with consumers and mobile payments already surpasses the West. We can expect this trend to accelerate over the next couple of years. In this environment, there is an opportunity to invest in companies that are at the forefront of these shifts. Increased exposure to selected internet companies
Positions in Alibaba Group Holding and Tencent Holdings were increased in light of a share price correction following the State Administration for Market Regulation’s issuance of draft anti-trust rules for the Chinese internet sector. While the companies could be impacted by valuation de-rating, the strength of these platforms comes from the value they provide to consumers which have been proven over time. New positions purchased in selected real estate and consumer stocks A new holding was purchased in Gree Electric Appliances. The company has deep moats in the Chinese air conditioner market, including its vertical integrated value chain and strong mind share among Chinese consumers. The manager also participated in Shimao Services Holdings’ Hong Kong initial public offering. It is the property management subsidiary of Shimao Group, a fast growing developer. It enjoys high growth visibility and a robust track record of growing its business through mergers and acquisitions
La inflación sigue obstinadamente alta, lo que significa que la Fed y el BCE mantienen sus pies presionados en el pedal agresivo por ahora. Sin embargo, los datos de crecimiento se están volviendo marcadamente negativos en los mercados desarrollados a medida que la presión del consumidor y las condiciones financieras más estrictas afectan. Europa también debe hacer frente a una inminente crisis del gas que asestará un fuerte golpe tanto a la industria como a los consumidores.
Las valoraciones se han ajustado a la baja, pero, en nuestra opinión, no lo suficiente como para reflejar completamente la grave perspectiva. Sin embargo, las ganancias aún no se han revisado significativamente a la baja, lo que implica que los activos de riesgo podrían caer aún más si las empresas comienzan a reportar un desempeño débil y una perspectiva que empeora. Estamos infraponderados en renta variable y crédito .
Seguimos sobreponderados en bonos del gobierno como una forma de agregar protección a las carteras y porque los temores sobre la desaceleración del crecimiento comienzan a dominar a los de la inflación. Dentro de los bonos del gobierno, preferimos Gilts y Bunds a los bonos del Tesoro y JGB , ya que creemos que es más probable que la desaceleración del crecimiento convenza al BCE y al BoE de volverse moderados antes.
Dentro de las regiones de renta variable, preferimos los mercados emergentes . China está flexibilizando la política monetaria y fiscal y tiene menos interrupciones de Covid por ahora. Muchos otros mercados emergentes tienen valoraciones atractivas y una perspectiva política menos restrictiva. Seguimos infraponderados en Europa , donde nuevas interrupciones del gas proyectan una larga sombra sobre las ya débiles perspectivas de crecimiento. Nos mantenemos neutrales en los mercados de renta variable de EE. UU., Reino Unido, Japón y Asia Pacífico por ahora.
En crédito, aumentamos la convicción sobre nuestra posición de grado de inversión sobreponderada como un movimiento defensivo. Mantenemos nuestra infraponderación en alto rendimiento y ahora infraponderamos también la deuda en moneda fuerte de los mercados emergentes.
Por último, en divisas, mantenemos nuestra posición larga en USD como refugio seguro. Nos movemos infraponderados en divisas emergentes porque creemos que hay espacio para una devaluación frente al dólar. También tomamos ganancias en una operación de USD GBP de larga data y cerramos una posición de EUR GBP. Seguimos infraponderados en el yen .
