Is there a momentum emerging from the Chinese economy? – Investment Insights
We wrote about high growth opportunities on Tuesday, outlining the exposure in our High Growth Multi Asset portfolio. We also discussed the possibility – although very slight in nature – that there could be some Chinese stimulus following last week’s decision by the PBOC (People’s Bank of China) to loosen monetary policy. It might be a little too late for the recent move, but it is stimulus nevertheless. Markets will be watching very closely to see if China’s recent action does have a direct impact on consumers and economic growth.
Our focus today is on Chinese stocks and exposures which come via the China Consumer Hong Kong portfolio. These are basically a basket of Chinese consumer stocks, listed on the Hong Kong market. The portfolio has had a tough year, down around 20% over the year ending 4 March but up in recent weeks as there is a sense of growing optimism that maybe, just maybe, there could be some upside to the Chinese consumer.* Keep in mind that China has been slowing for some time now, we’re well and truly in 2016 and at some point, things should start to nudge higher.
Among the better performers in the portfolio have been China Resources Bear and Galaxy Entertainment. Both of these stocks started March strongly, although they have been some of the weakest performances over the past year.* This sends a signal that perhaps the weakness is starting to reverse. Keep in mind that these are stocks listed in Hong Kong, so they aren’t necessarily prone to movements on the Shanghai exchange. Correlation though can be strong at times.
This is a portfolio to have on your watch list if you feel that Chinese, at some stage over the next few weeks, is about to loosen further and encourage spending among the general population. The seeds are there, we just need to see some more momentum before the green shoots start sprouting.
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Invast Investment Committee
These are our initial impressions only, please make sure you always read all disclaimers on this website and individual reports very carefully. The Invast team of advisors are happy to answer any questions you may have, so give us a call today on 1800 468 278 or email firstname.lastname@example.org. Alternatively, use our live chat facility on invast.com.au.
*Past performance is not indicative of future performance. The calculation of the returns is based on the performance of the actual underlying securities, in accordance with the weighting envisaged by the portfolio. These performances exclude financing and commission costs.
The Invast PortfolioInvestor platform offers a collection of Strategic Investment Portfolios (SIPs). SIPs are professionally researched and constructed portfolios of CFDs over underlying stocks and ETFs, which reflect popular market themes or strategies. You can buy SIPs across local and international stock exchanges in one click.
Invast High Growth Multi-Asset
This portfolio has the highest exposure to equities and the lowest weighting of fixed income and cash like securities.
China Consumer Hong Kong
The furious growth in China’s middle class will be a dominant theme driving consumption of goods and services in Hong Kong.