China market has taken a pause after a strong rally in the past few months. The renewed hawkish tone from the US Fed may be the main reason behind the consolidation. Some critics are suggesting that the China reopening trade is done, or has become overcrowded already with not much immediate upside as a tactical trade. In this article, our Partner & Co-CIO David Lai addresses this topic from various aspects ranging from macro economies, investors’ positioning, to policy agenda and market valuation. He would also share why we believe it’s onshore A-shares that are picking up the baton for the second act of the rally - as the China reopening play evolves from short term tactical, to fundamental strategic opportunities driven by positive earnings growth and restoration of business and consumer confidence.

Mar 02, 2023

Chinese stocks took a rollercoaster ride in Q4, as the immediate lacklustre reaction to October’s National Congress gave way to a rally on the back of policy support in November. Investors finally cheered Beijing’s abrupt dismantling of its restrictive zero-COVID policies, as the year came to a close. By the end of December, the CSI 300 Index was up 2% on the quarter. Below in this article, Dr. Philip Wool, Managing Director and Head of Investment Solutions of Rayliant Global Advisors, would explore critical developments in the macro picture at the turn of the year, discuss fourth-quarter performance and factor rotation pattern through the period, and also provide our thoughts as to what reopening has in store for Chinese stocks in 2023.

Feb 04, 2023

In 2022, our Premia CSI Caixin China Bedrock Economy ETF (“the Bedrock ETF”) outperformed most of the market benchmarks, such as FTSE A50, CSI 300, CSI 500 and ChiNext, by around 10-24% points. In a backdrop of weak equity performance, investors favored low beta and volatility stocks with significant economic value and good financial health, which coincided with the Bedrock ETF’s underlying index methodology and broadly explained why the ETF outperformed in 2022. In this article, we would have a more in-depth look at the portfolio holdings’ companies and decipher drivers of the outperformance and whether this multi-factor approach of low volatility, value, quality and size tilts would continue to power outperformance in 2023.

Feb 03, 2023

Big, long-term trends could drive Developed Market bond yields much higher than the cyclical peaks that the market is currently pricing in. There are cycles and there are secular trends. If the super cycle of rates and yields has turned – off deep negative inflation-adjusted levels – then the lesser cycles could mean- revert a lot higher around long-term uptrends. And we are at this juncture at the moment, as the negative yielding bonds have literally disappeared - the global stock of negative yielding bonds had gone from a peak of US$18.4 trillion late in 2020 to zero recently. What are the true implications behind this abrupt turn of tides? In this article, our Senior Advisor Say Boon Lim discusses the big drivers for potentially much higher rates and yields for this year, and areas we are spending a lot more time monitoring, as the longer-term outlook could be far worse than just a mean reversion in nominal rates and yields as we may also be in the midst of a secular mean reversion in real government bond yields and corporate credit yields.

Jan 17, 2023

If we agree China may offer outperformance in 2023, then the next step is to figure out the right positioning to capture the alphas. Investors are now at a crossroad to decide whether China tech is still investible. On one hand, the Internet platforms, used to be the market leaders, may no longer be the high-growth candidates in future as shown by the recent sluggish financial results. On the other hand, technological advancement remains one of the government’s key agendas that should help support the sector. In this article, we would like to share how to identify the “right” tech exposure to capture the opportunities in China market.

Dec 13, 2022

2023 will likely present investors with a stark economic divergence – between a West in recession and an East where growth will be boosted by recovery in China. ASEAN-5, which already enjoyed its own reopening rebound in 2022, will likely ride the tailwinds of China’s turn at a reopening recovery in the coming year. In this article, we would discuss how ASEAN-5 will likely continue to be in a sweet spot in 2023, offering some of the highest economic growth rates with relatively moderate inflation.

Dec 12, 2022

With the more positive sentiments from the G20 meetings and market expectations of earlier pivot for China’s zero covid policy, growth including technology strategies also started to see varying degree of positive swings and rallies along more sustained upward trajectory. Contrary to the US tech peers, Asia innovative technology and metaverse leaders having started massive corrections earlier also appear to be first in first out and are emerging to resume growth on the back of multiple tailwinds. As investors revisit the investment case for the metaverse and innovative technology space, how would we configure for the opportunities in Asia and fill the gaps that the US oriented global tech strategies typically miss? In this video, we would recap the construct of Premia Asia Innovative Technology & Metaverse Theme ETF (3181/ 9181 HK), which is designed to capture opportunities in Digital transformation, Robotics & Automation, Innovative Green Technology as well as Metaverse which have been transforming the enterprise and consumer space (including with virtual influencers). The strategy was first introduced in 2018, and given the sector and geographic diversification has been outperforming other global, US and China focused peers in 2-year, 3-year and 5-year periods. It was also able to hold at -7% last year after the strong rally of 40% and 60% in 2019 and 2020 outperforming in both bull and bear market cycles. For investors looking for strategic growth opportunities in this space, this would be a good, balanced tool for implementation.

Dec 09, 2022

It was challenging for global investors to find a market that could offer a positive return in 2022. China market can’t escape from the selloff, with H-shares, A-shares and ADRs down by 20% to 29% in dollar return in the first eleven months of the year. The market turnover was shrinking whilst foreign investors were net selling. Internally, the frequent COVID-lockdowns, a property market slump, an ongoing Internet scrutiny, and the deteriorating bilateral relationship between China and the US all contributed to the bearish sentiment in Chinese equities. Externally, the Ukraine-Russia war, high inflationary pressure, an accelerated rate hike cycle, and strengthening dollar have further weakened investors’ confidence towards risky assets.

Dec 06, 2022

In a discordant world, there are no overarching investment themes. The different parts of the world are marching to different drums – their economies and markets are driven by different cycles, different prior policy choices and factors beyond their control. The US economy and market are paying back for the extreme policy stimulus of 2020-2021. Europeans are paying back for the same, with the added pain of a war outside their control. Japan is battling a chronic ailment – extreme debt – made acute by sharply higher cost of US funds. China is at the bottom of its policy cycle, at the beginning of a path out of COVID health controls.

Dec 05, 2022