The East is Red! - Thomas Ng's Memo 13 May 2024

Insights from the Inside - with CUAM Portfolio Manager Ms Coco Le on 17 April 2024

After discussing my views on US Equities & Bond markets last week, I would like to share some exciting updates and insights regarding recent developments in the Chinese / HK stock market and the corresponding investment opportunities available on SGX.

On March 20th, I am honored to be invited to the opening bell ceremony for the launch of Phillip-China Universal MSCI China A50 Connect ETF, held at the Singapore Exchange (SGX). The event marked a significant milestone in the accessibility and diversification opportunities within the Chinese market for global investors.

Successful launch of Phillip-China Universal MSCI China A50 Connect ETF, held at the Singapore Exchange (SGX) on 20 March 2024.

In addition, on April 17th, I had the pleasure of attending a forum titled 'Investing in China: an Index Perspective' hosted by Phillip Capital Management (S) Ltd (PCM) & China Universal Asset Management (CUAM). At this event, I had a fruitful discussion with CUAM Portfolio Manager Ms Coco Le and her insights provided invaluable perspectives on navigating the Chinese equites landscape.

Key takeaways is that China A-share market historically exhibits low correlation with other markets. Next, the release of China State Council's Nine-Point Guideline which is the 3rd of its kind in the past two decades may serve to be that major catalyst for a potential stock market rally.

It's noteworthy that the launch of our China A50 ETF and my discussion with Ms Le coincided timely with the upside breakout of the Hang Seng Index (HSI) and Shanghai Composite Index (SSECOMP) in late April. This breakout signals potential bullish momentum and opens up new avenues for strategic investment decisions & allocation.

Using classical Technical Analysis, with the Inverse Head & Shoulders breakout of HSI at 17,200 level, the minimum upside target from this bullish reversal pattern is at 19,600+/-. Simiarly for SSECOMP, the minimum upside target from this bullish pattern is at 3,540+/-.

Now as we navigate these bullish developments, it's essential to explore the many stocks & ETFs already available in the SGX Group to capitalize on the HK/Shanghai rally, without the need to tread into the HK or China A-share stock market. One of them is the Lion-OCBC Hang Seng Tech Index ETF, priced in both SGD & USD (ticker HST & HSS respectively). However, this ETF invests only in China Tech leaders which IMHO, is a narrow representation of the current rally.

A better option will be the above-mentioned Phillip-CUAM China A50 Connect ETF which by design, has a well-balanced sector exposure and invests into the best in class large-cap China A-shares equities of each sector. This ETF is priced in SGD & USD with ticker code MCN & MCS respectively.