Multi-Asset Perspective – February 2023


Our investment director and head of Multi-Asset, Kelly Chung, shares her latest insights on different asset classes. The Chinese equities market has taken a breather after a strong rebound from late last year, investors are waiting to see further improvement in economic data and company fundamentals.

China / Hong Kong Equities

China’s economic data has shown improvements in January following the country’s reopening measures. After rallying for three consecutive months, the equities market has taken a breather, with some profit-taking pressure from hedge funds since they were early in overweighting China. With some companies already reporting earnings results, investors’ focus is shifting to fundamentals and earnings outlook. Long-only foreign investors are still mostly underweight in China and are waiting to see further improvement in economic data and company fundamentals. There are significant potential inflows to the China/Hong Kong market when long-only investors start to close the gap of their underweight.

While the rest of the world is facing recession risks, China is in a different cycle. The government has accelerated supportive measures for the property sector, aiming to regain people’s confidence. Investors are waiting for the March NPC for clearer policy directions. Sector and company selection is more crucial now as valuations in some sectors have reached the historical average, although some are still undervalued.

In Hong Kong, economic activities are also picking up but still need time to recover. With the full reopening of China, Hong Kong will continue to benefit from China’s economic recovery.

China A-Shares

The reopening rally in China A-shares is lagging behind its offshore peers as valuations were not as extreme as China/Hong Kong equities. Foreign investor participation has been focused on the offshore market. Domestic investor sentiment is positive, albeit with a cautious stance, and sentiment toward the property market has yet to pick up significantly. The recent rising SHIBOR and tighter financial condition added to the cautiousness. Investors anticipate more pro-growth policy announcements from the NPC in March.

Asia ex-Japan Equities

The macro picture is generally improving for Asia ex-Japan. With inflation in Southeast Asia getting better, rate hike pressures have become milder. The softer US dollar and Treasury yields are positive to Asia ex-Japan equities. There are continuous inflows toward the region. On the other hand, with economic growth in the US deteriorating, uncertainties in markets sensitive to global trade, such as Korea, Taiwan, and Singapore, remain high.

Emerging Market ex-Asia Equities

The softer US dollar and Treasury yields are positive to emerging market equities. Foreign investors are starting to narrow the underweight in emerging markets with reallocation from the US.

Japanese Equities

BOJ reaffirmed the yield curve control policy with no further band widening in January.1 There is divided opinion within Japan’s ruling party on a BOJ pivot. As a result, the Japanese yen has stabilized, and investors focus back on company fundamentals as the market enters the earnings season. However, as inflation and wage pressures are still picking up in Japan, the risk of further widening the band of yield curve control remains. The tighter liquidity will be negative on the market.

Asia Investment Grade Bonds

Momentum in Asian credit continues to pick up. New issues are met by very strong demand. Credit spreads in the US investment grade bonds further tightened, making Asian investment grade bonds continue to be attractive. With the market expecting the rate hike cycle closer to the end, investors are extending duration. Therefore, demand remains strong.

Asia High Yield Bonds

Sentiment toward Asia high yield bonds has picked up quickly, especially in the Chinese high yield space, given the 180-degree change in sentiment, driven by the supportive policies in the property sector and the recovery in the consumption and industrial sectors on the back of the country’s reopening. Credit spreads in other Asia ex-China high yield bonds have also tightened due to the improvement in the liquidity and sentiment in the space. Also, with duration risk becoming less of a concern due to the peaking US Treasury yields, investors are extending their appetite to longer-dated bonds in search of more upside.

Emerging Market Debt

The macro outlook in emerging markets is improving, with inflation getting milder. The softer US dollar and downward shift in the US Treasury yield curve are positive for emerging market bonds. The credit spread continues to tighten as it remains attractive vs. US bonds.


Gold has had a good run as the US dollar continues to weaken. China’s gold reserves are rising. Moreover, Gold remains a good hedge against heightened geopolitical risks and stagflation concerns.  


Multi-asset offers lower volatility compared to traditional single-asset or balanced portfolios. However, the correlation between risk assets, such as equities, credits, and commodities, has recently increased dramatically. In an uncertain environment with low yields, income becomes an essential source of return for investors.


  1. Bank of Japan, 18 Jan 2023
January 2023 performance
MSCI AC Asia ex-Japan Index (in USD)8.21%
MSCI China Index (in USD)11.78%
CSI 300 Index (in CNY)7.37%
Hang Seng Index (in HKD)10.42%
Taiwan Stock Exchange Index (in TWD)7.98%
MSCI Taiwan Index (USD)12.67%
JPM ACI China Total Return Index (in USD)3.01%
JPM Asia Credit Total Return Index (in USD)2.98%

Source: J.P. Morgan, MSCI, Morningstar, Data as of 31 January 2023

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The views expressed are the views of Value Partners Hong Kong 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. All materials have been obtained from sources believed to be reliable as of the date of presentation, but their accuracy is not guaranteed. 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.

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This commentary has not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Hong Kong Limited.