The Multi-Asset Perspective: April 2019


In this edition of the Multi-Asset Perspective, our Senior Fund Manager Kelly Chung shares her latest thoughts on a number of key asset classes and why she thinks A-shares are going to stand out.

China / Hong Kong Equities

With the YTD rally, China/ Hong Kong equities are currently trading at a valuation slightly above its historical average.  With lower price volatility and large trading volume, the positive sentiment should be maintainable.  On the other hand, macro data and earnings continue to be suppressed although there are signs of the figures bottoming out.  However, the rally seems to be running too fast and has shot ahead of fundamentals.  We are cautiously optimistic on the asset class given that investor positioning is still not too high.

China A-shares

We are positive on the asset class given both strong foreign and domestic inflows, as evidenced by rising trading volume.  The drop in overnight SHIBOR was also a positive factor.  We expect a gradual rally as the regulators do not want to see a surge in margin financing.

Asia ex-Japan Equities

We remain neutral on Asia ex-Japan equities due to the global economic slowdown and further earnings downgrades.  However, strong Asian currencies and supportive monetary policies have been contributing to its strong momentum.

Emerging Market ex-Asia Equities

Momentum and sentiment in EM ex-Asia have weakened, as reflected by weaker industrial performance.  Volatility has also jumped, which is why we prefer Asia over non-Asia EM.

Japanese Equities

Valuations in Japan are the most attractive within Asia.  Rescinding global risk aversion has prompted the JPY to weaken, which is supportive of the asset class.  However, the longer-lasting economic slowdown and no inflation environment do not bode well for equity performance.

Asia Investment Grade Bonds

The asset class is benefitting from expectations of a more dovish Fed.  However, after the YTD rally, valuations are less attractive as the spread over U.S. investment grade bonds and Asian equity dividend yields have narrowed significantly.

Asia High Yield Bonds

The combination of a slower tightening of credit spreads and a defensive to cyclical sector rotation are not particularly positive developments for the asset class.  However, with risk sentiment improving and demand for new issues getting stronger, we remain cautiously optimistic.

Emerging Market Debt

Macro conditions remain favorable for EM bonds due to lower yields and tighter EM credit spreads.  However, implied volatility in EM ex-Asia is getting higher, with the CDS spreads of Brazil and Mexico widening, which calls for some caution in the asset class.


Gold remains a good hedge, especially in the political front.  The flattening yield curve is also favorable for precious metals.  However, the risk-on sentiment would cause outflows from gold to risky assets.


Multi-Assets offer lower volatility over a traditional single-asset or balanced portfolio.  With monetary policies around the world becoming more supportive, Multi-Asset income strategies, which explore income streams from various sources, have become attractive as the low rate environment is likely to last longer.

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.

Investors should note that investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you.

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