Fund manager’s views on US Presidential Election result
The US election has turned out to be a neck-to-neck race between Republican Donald Trump and Democrat Hillary Clinton, which is no less dramatic than Brexit and far off from the scenario priced-in by the market. Value Partners’ investment management team would like to share its views about the election result.
In longer term, we are not too worried about Trump being the US President because at heart he is a dealmaker. Trump will cut deals with China and everyone else that should result in win-win solutions. This applies to the political and economic relationships between the US and the rest of the world. This may cause renewed investment interest in China, which has the advantage of social stability and an economy that is still growing at the 6% to 6.5% level. There is a good case for China-related stocks to be re-rated positively.
On fixed income front, there would likely be a selloff in the global markets, which may put a December rate hike in question. The US Federal Reserve may pause as a result to assess the damage and formulate its next move. After all the dusts are settled, we think it will be beneficial to Chinese credits as heightened political and economic risks in US, Europe, Japan and selected part of Asia (e.g. Philippines, Korea) would draw money away from these less stable markets. On a relative basis, China’s political and economic landscape seems to be more stable than many of those countries.
While our equity portfolios would be impacted by the pick up in market volatility driven by the U.S. presidential result, our strategies and holdings are not directly linked to the U.S. elections. The market’s flight to quality in the near term could generate interesting investment opportunities for value investor like us, and our bottom-up approach will continue to focus on companies with strong fundamentals trading at discount to their fair value. We remain constructive in Asia ex Japan, and China in particular as there have been signs of improvements in earnings momentum, corporate profits and balance sheets healthiness.
In terms of our bond portfolio, as we always try to position it at the optimal point on a risk-adjusted basis, we do not see any direct impact.
The views expressed are the views of Value Partners Limited only and are subject to change based on market and other conditions. The information provided does not constitute investment advice and it should not be relied on as such. This material contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Investors should note that investment involves risk. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. This commentary has not been reviewed by the SFC.
Issuer: Value Partners Limited.