The Multi-Asset Perspective: March 2019


As capital continues to flock towards risk assets globally, our Senior Fund Manager Kelly Chung shares her outlook on a number of key asset classes across Asia.

China / Hong Kong Equities

High expectations of a positive US-China trade deal and bigger economic stimulus from China meant liquidity was strong, which drove the market to rally. China/ Hong Kong equities are now trading at their historical average following the recent rise. Macro data and earnings continue to be suppressed and there is some disconnect between pricing momentum and fundamentals. We are cautiously optimistic on the asset class given that investor positioning is still not very high.

China A-Shares

MSCI’s increased inclusion factor and the pick-up in retail participation have fueled a market rally. We remain positive on the asset class given both strong foreign and domestic inflows although a stabilising RMB, rising SHIBOR and normalised sector rotation behavior have dampened our previously very bullish outlook.

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. Indonesia, Taiwan and China are the top-ranked countries.

Emerging Market ex-Asia Equities

Strong inflows and the strength of EM currencies have been key performance catalysts. Higher commodity prices and tighter EM credit spreads are supportive of EM equities. However, the global economic slowdown would hinder any further rally.

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 “lowflation” environment do not bode well for equities.

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 slowing credit spread tightening and an ending defensive to cyclical sector rotation are both negative 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 credit spreads. However, the correlation with EM equities is getting higher.


Gold remains a good hedge, especially in the political front. However, valuations have become less attractive following a rally in recent months. The risk-on sentiment is likely to cause outflows from gold to other risk 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 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.