Insight on Mandatory Provident Fund – November 2018

China’s economy moderated in the third quarter due to softer economic activities and domestic demand. The latest statistics showed the Chinese economy growing by 6.5%1 in 3Q, down from the 6.7% increase in 2Q. In its bid to support the economy and maintain market confidence, China continued to push out more supporting policies in October, including RRR cuts, additional special deductions of personal income tax, VAT rebates and other tax reliefs.

Additionally, the Politburo meeting held on 31 October gave a strong indication of China’s shift in policy stance. Unlike previous meetings, which pledged to push through its deleveraging campaign, the term “deleveraging” was completely omitted this time around. The State Council also guided on stepping up infrastructure spending, emphasizing investments in the three biggest city clusters and announcing favourable policies for infrastructure financing.

As expected, the market sentiment turned south in October due to concerns over a weakening Chinese economy and an escalating Sino-US trade dispute.  In light of the volatile environment and uncertain market outlook, Value Partners will continue to maintain an adequate amount of cash and hopes to take advantage of the potential value opportunities emerging and gradually accumulate quality names in the coming quarters.


1. Source: National Bureau of Statistics of China

Performance data is net of all fees. 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 their own mandate for details. Individual stock performance is not indicative of fund performance.

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 material has been obtained from sources believed to be reliable, but its 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.