We classify the overall environment faced by investors through equity on 4 key issues that have an effect on markets during and after the pandemic. China emerges with its delight from the “first inning, the first to come out,” to be played at this time of year, and stands firm despite geopolitical challenges.
The worst thing about the pandemic is probably us. One of the signals we use to track the effects of the pandemic is the high-frequency knowledge of other channels. Knowledge shows that Asia, especially China, is ahead of the recovery curve, or as we say, a case of “first in, first out.” Figure 1 shows sequential recovery in various sectors in China.
Countries that learned and recovered early from the pandemic, such as China, Taiwan and Korea, have similar percentages of experiences. They have a tendency to (i) administer an active virus tracking system, (ii) adopt a rigorous detection technique, and (iii) track normal neighborhood to prevent the infection chain from spreading. However, we are not happy with the flattened curve and our constant monitoring of recovery progress.
Policy easing is widespread in virtually every country in the world. The U.S. Federal Reserve raised rates to an all-time low twice in the first part of 2020, ahead of its regular committee meeting. Amid an unprecedented lockout, the Fed also promised an unlimited amount and the acquisition of recent fallen angels.
Such a bailout scale can help anchor the economy and inject cash into the formula also involves capital market inflation and asset prices. While economic and fiscal easing policies are implemented globally, unlike Western countries, Asia, specifically China, did not take in a competitive asset acquisition program during the pandemic. Instead, China has focused on relieving credit services to help businesses succeed in such a public fitness crisis. Meanwhile, the Asian economy also has a budget deficit relative to GDP that is already approaching 10%, near the degrees of the global economic crisis.
One of the main points of threat faced by equity investors, namely China-related markets, is the resurgence of tensions between China and the US. From a practical point of view, we believe that neither China nor the United States can break off their long-term relationship.
In our view, the dissociation of China and the United States, possibly a couple of complementary powers, would complicate responses to the world’s problems. In fact, necessity makes it a logical scenario where the United States and China will have to become partners. While headlines are loaded with rhetoric that the Chinese-U.S. dating is failing, we take a puzzling view.
We believe that the long-term direction of your appointments would evolve towards shared need cooperation. On that basis, we would consider that after the U.S. presidential election in November, relations would stabilize. Indeed, it is imaginable to achieve some other facet of history, where tensions between China and the United States will remain tense. In this case, China continues to offer extensive investment opportunities with its national reforms and development.
But if we’re right about renewed or restored relationships, Chinese stock markets will gain advantages from a really extensive review. The resumption of this dating greatly expands the scope of foreign interests in China.
Market liquidity seeks to park in smart assets. Although the balance of global stock earnings has sometimes stagnated, this has led to a less indicative price-to-earnings ratio. We take a look at the book value-price ratio for inventory estimates and this valuation is not very strong despite the uptick in the current quarter. For reference, the MSCI China index is lastly quoted above its long-term average. The same trend is seen in the largest outdoor MSCI Asia index in Japan.
The revisions expressed are those of Value Partners Hong Kong Limited only and are very likely to be replaced according to the market and other conditions. The data provided do not constitute an investment recommendation and should not be considered as such. All curtains were received from resources that were considered reliable at the filing date, but their accuracy is not guaranteed. This curtain includes secure statements that would possibly be considered forward-looking statements. Note that these statements are not promises of long-term functionality and that actual effects or advances may differ dramatically from those projected.
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This article has been reviewed through the Hong Kong Securities and Futures Commission. Issuer: Value Partners Hong Kong Limited.
We have been making a disciplined investment in Asia for 25 years. Founded in 1993 through Cheah Cheng Hye, known as the “Warren Buffett of Asia”,
We have been making a disciplined investment in prices in Asia for 25 years. Founded in 1993 through Cheah Cheng Hye, known as the “Warren Buffett of Asia,” we now manage $15 billion (as of December 31, 2018) across a wide range of stocks, steady income, alternatives, assets and ETFs. We are known for meticulous and insightful studies and for the variety of bottom-up names made through a team of 70 other people of box investment professionals across Asia. Our functionality log speaks for itself. (Not to mention that we have won more than two hundred industry awards since our founding). As Hong Kong’s largest asset manager, we seek to serve as a provider of investment responses for investors in China and a chinese investment capable of investors around the world.