The Multi-Asset Perspective: February 2019


In this edition of the Multi-Asset Perspective, our Senior Fund Manager Kelly Chung shares her latest thoughts on the outlook of a number of key asset classes.

China / Hong Kong Equities

Expectations of a more dovish Fed, positive US-China trade talks, and further economic stimulus from China have turned investor sentiment around. However, macro data and earnings continue to be suppressed and there is some disconnect between pricing and fundamentals.  We are cautiously optimistic on the asset class given that investor positioning is still not high, while the recent rally was mostly liquidity and sentiment driven.

China A-Shares

Sentiment towards A-shares was extremely bearish previously. More supportive fiscal and monetary policies have, however, prompted investors to become more positive.  Given that the foreign ownership of A-share is increasing, we are quite positive on the asset class.

Asia ex-Japan Equities

We remain cautious on Asia ex-Japan equities due to the global economic slowdown and further earnings downgrades.  However, strong Asian currencies and supportive monetary policies have improved the regional macro picture.  Lower US Treasury yields have also taken some pressure off external-debt-reliant nations. Indonesia, Philippines and Singapore are the top-ranked countries.

Emerging Market ex-Asia Equities

Strong inflows and the strength of EM currencies have been the key performance catalysts. Commodity prices have also stabilised, which is a plus for the asset class. However, some EM ex-Asia markets have rallied significantly in January and conditions might take a step back in the short-term.

Japan 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.

Asia Investment Grade Bonds

The asset class is benefitting from expectations of a more dovish Fed.  Asia IG bonds are trading at a risk premium over comparable US IG notes. With an average yield of over 4%, it remains attractive in a low rate environment.

Asia High Yield Bonds

A global slowdown is still the major risk for Asia HY bonds.  However, with risk sentiment improving and demand for new issues getting stronger, we are becoming more positive.

Emerging Market Debt

Macro conditions are turning more favorable for EM bonds due to lower yields and tighter EM credit spreads.  Inflows into EM debt continue to be strong.


Gold remains a good hedge, especially in the political front.  It also benefits from the possibilities of a Fed pause and a weaker US Dollar.  However, valuations have become less attractive following a strong rally in recent months.


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 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.