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Our perspectives on trends & issues that are reshaping the industry and the investment community

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2025 Market Outlook Part 1 - US Outlook: Cyclical peak valuations amidst heightened secular risks
insight2025 Market Outlook Part 1 - US Outlook: Cyclical peak valuations amidst heightened secular risks

US equities sentiment is now maximum bullish despite great policy uncertainties – altogether posing considerable risk to late-cycle momentum chasers. The US economy had barely cooled down before it was stimulated by 100 basis points in rate cuts in just three months from September 2024. The cuts started just when the US economy was rebounding. More importantly, they came after US inflation started picking up again. In fact, the US stock market is now in the grip of “Trumpian euphoria” because market expects the incoming administration will likely be supportive of even stronger growth, through more debt and deficits and extreme economic nationalism. The imminent risk now is that the US will have to pay more for its borrowings despite its dominance of the global debt market. This is not about other countries bypassing the Dollar in trade. It is about inflation – which will likely be worsened by President-elect Trump’s inflationary policies – and the term premia. In this article, our Senior Advisor Say Boon Lim discusses why US equities are in a bubble, drivers behind the Trumpian Euphoria 2.0, and that the stubborn or even revived inflation are credible risks in 2025.

Dec 24, 2024

How strong EV sales growth and battery technology advances strengthen dominance by Chinese battery makers
insightHow strong EV sales growth and battery technology advances strengthen dominance by Chinese battery makers

The latest developments in the battery industry continue to favour the world’s biggest players. Apart from their gains from the robust growth in EV sales, the latest developments in battery technology also work in their favour, given their significant investments in R&D spending. Over the next five years or so, lithium iron phosphate (LFP) and ternary (NCM) lithium batteries will remain the mainstream products in the mass and high-end segments respectively. These are the products that CATL and BYD lead globally. Beyond that, CATL and BYD are already moving rapidly in the area of solid-state batteries (SSBs), a potentially disruptive technology. In this article, we discuss about why the Chinese battery makers will continue to dominant the global market and benefit from their technological advancements that revolutionize the energy storage landscape.

Nov 15, 2024

China A-shares Q3 2024 factor review
insightChina A-shares Q3 2024 factor review

The third quarter ended with a bang for mainland Chinese stocks, as twin announcements from China’s central bank and top fiscal policymakers gave both foreign and domestic investors plenty to think about over an extended market holiday during China’s October Golden Week. In this insight, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors, explores the shift in sentiment that sent the onshore China markets higher for the quarter, breaking down the economic implications of a renewed and forceful stimulus push, the factor drivers of Q3 equity performance, and the data investors should be looking forward to as 2024 draws to a close.

Nov 15, 2024

The case for Taiwan: Premia FTSE TWSE Taiwan 50 ETF as efficient implementation tool for allocators
insightThe case for Taiwan: Premia FTSE TWSE Taiwan 50 ETF as efficient implementation tool for allocators

Further to the insight piece on “Taiwan: The Quiet World-Beater” shared by our Senior Advisor Say Boon Lim, in this article we share more about our new ETF Premia FTSE TWSE Taiwan 50 ETF, which covers the 50 largest flagship companies in Taiwan by market capitalization. The strategy aims to capture the strong market performance from the robust growth in demand for semiconductors and the broader economic growth activities in Taiwan in the coming years. It is designed as a low-cost, tax efficient access tool, with versatility of having both HKD (distributing) and USD (accumulating) unit classes.

Oct 09, 2024

Asian investment grade bonds: the overlooked sweet spot for allocators
insightAsian investment grade bonds: the overlooked sweet spot for allocators

As the US Fed rate cut gets imminent, the liquid Asia credit market also is set to benefit from a number of strong tailwinds. In addition to favourable macroeconomic fundamentals, the heterogenous region also offers benefits of broad geographic diversification benefits and positive reinforcement from continued market liberalization and more investor friendly reforms. Within this space, Asian investment grade (IG) bonds also enter a favourable “Goldilocks” scenario in particular, represent a sweet spot that international allocators sometimes overlook, offering meaningfully higher yields, better credit ratings, and shorter duration than their peer IG cohorts from the US and Europe.

Sep 16, 2024

China’s East Data West Computing Initiative (II) – Energy Storage Systems and Smart Grids as the Final Mile in AI-Race
insightChina’s East Data West Computing Initiative (II) – Energy Storage Systems and Smart Grids as the Final Mile in AI-Race

Given the inextricable links between energy-hungry Artificial Intelligence and renewables, energy storage and smart grids are a necessary “final mile solution” in the intensifying AI race. They provide the critical capability to store and dispatch huge quantities of uninterrupted renewable energy/power on demand without compromising emission reduction targets. In this regard, China is uniquely positioned to tackle the related challenges of AI and renewable energy with its rapid development and upgrades of energy storage systems and smart grids. In fact the country has long been studying intertwined strategic relationship between AI, technology and energy, and studiously incorporate such thinking into its Five Year Plans, and which are subsequently being rolled out as China’s East Data West Computing initiative. Further to our recent insight on China’s “power infrastructure” as the critical enabler for AI-development, in this article, we zoom in on China’s capabilities and investment opportunities in energy storage as the linchpin that holds the last mile solution, and matches renewable energy production with industrial demand in China’s journey to a high-tech, modern society.

Sep 11, 2024

Taiwan: The Quiet World-Beater
insightTaiwan: The Quiet World-Beater

In the midst of the AI-driven excitement surrounding major US tech giants, Taiwan has been quietly positioning itself as a significant player in the global technology sector. Over the past two years, Taiwan’s stock market has outperformed all major Asian markets and even surpassed the S&P 500 and Nasdaq 100 in returns. This success can largely be attributed to Taiwan's critical role in the semiconductor industry, which continues to drive its economic growth and investment appeal. In this article, our Senior Advisor Say Boon Lim discusses drivers supporting the unique, strategic moat Taiwan has built over the years, and why it will likely remain an attractive investment destination going forwards, on the expected continued robust growth in demand for semiconductors and its broader economic growth activities over coming years.

Sep 05, 2024

Thoughts on the fed rate cut, inverted yield curve and floating rate US treasury
insightThoughts on the fed rate cut, inverted yield curve and floating rate US treasury

The time has come – Federal Reserve chair Jerome Powell finally signalled that rate cuts will likely start in Sep at Jackson Hole, though his remarks offered few clues as to how the Fed might proceed after its Sep gathering. On the surface, extending duration in US Treasuries appears to be a straightforward decision given the assumption that falling interest rates will lead to rising bond prices. However, it is not without risks and complexity as we are entering the rate cut cycle against very different backdrop from previous cycles. In this article, we discuss the intricacies of the upcoming rate cut trajectory, and why US Treasury Floating Rate Notes (FRNs) remains a relevant strategy for investors seeking diversification and stability as a result of the very much inverted yield curve, and market uncertainties in this journey.

Aug 28, 2024

China A-shares Q2 2024 factor review
insightChina A-shares Q2 2024 factor review

Going into a July meeting of top party officials at China’s Third Plenum, held once every five years, first-quarter hopes of a 2024 recovery in China’s economy had given way to macro uncertainty, as strength in manufacturing and exports served for many to highlight just how weak domestic sentiment and consumption remain. In this article, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors, digs into such challenges and potential paths forward for Beijing, including our thoughts on a Third Plenum meeting that didn’t yield any policy bombshells, but still offers clues as to where investors might focus as we enter the second half ready for bargain hunting.

Jul 30, 2024

China’s East Data West Computing Initiative – Power Infrastructure as the Next Big Thing in the Global AI Race
insightChina’s East Data West Computing Initiative – Power Infrastructure as the Next Big Thing in the Global AI Race

While Artificial Intelligence Generated Content (AIGC) has been dominating media and market attention, the “next big thing” has been developing rapidly in the background in China, in the form of super-scale AI infrastructure. It involves, among other things, a national computing power network; data centre clusters from Guangdong to Inner Mongolia and from Gansu in the West to Anhui in the East; centres for the development/training of large language models; and abundant green energy integrated with massive energy storage facilities. What is rapidly emerging is a gigantic national network connecting smart grids, intelligent network routing and energy storage – one that has no parallel anywhere else in the world. The pay off will be lower cost execution of computing processes and high-end manufacturing/AI-based industrial automation. The current media focus has been on the speed of the microchip as the key factor in the AI race. The following insight details the elements of the AI-infrastructure that are likely to prove critical in the next phase of AI development.

Jun 19, 2024

Chart Of the Week

Asian USD IG bonds show superiority over the US Treasuries
  • Alex Chu

    Alex Chu

Asia Investment Grade (IG) USD bonds continued to demonstrate more resilience performance compared to US Treasury bonds, which have not shown a significant rebound even as the MOVE index has substantially declined back to its year-low levels after the US presidential election. This trend may be attributed to ongoing investor concerns regarding the uncertainties that President-elect Trump may bring starting in January. In contrast, investors increasingly view Asia IG bonds as a safe choice, as evidenced by the narrowing spread against US Treasury bonds, which has reached the lowest level in the last decade. The spread may have room to tighten further as China shifts to a “moderately loose” monetary policy and expands fiscal spending, likely leading to lower local bond yields. This environment enhances the attractiveness of Asia IG USD bond yields. Diversifying a bond portfolio with Asia IG USD bonds may not only reduce volatility but also enhance returns. For those interested in including Asia IG bonds in their portfolios, our Premia J.P. Morgan Asia Credit Investment Grade Bond ETF, featuring a low expense ratio of just 0.23% per annum, stands out as a viable investment vehicle.

Dec 19, 2024

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