The Opportunities Within New China

Investing in Chinese companies have not been easy over the past 3 months amidst the unresolved trade tension and the on-going protest in Hong Kong. The New China Economy which are made up of sectors such as technology, consumer discretionary, healthcare, are outperforming China of old (sectors such as financials, utilities, manufacturing).

Investors have been favouring sectors that could potentially benefit from the economic reform where government initiatives are focused around boosting domestic consumption. Such policies are meant to battle trade war. Instead of focusing on trade tariffs and finding ways to defend the export sectors, China has turned their attention towards growing their domestic consumption sectors to ensure that the impact of trade war is lessened going forward.

While it has been a bumpy few months for China, this fast-growing nation – which is the world’s second largest economy – still has plenty to offer over the longer term. The opportunity is far greater within the New China than the Old China.

Here, we present 3 reasons why you should consider investing in the New China now.

1. China’s economic development in the past 5 years have been driven mainly by consumption, and it would only maintain or grow  with reform initiatives by the Government.
   
2. There has been an increase in Chinese people’s disposable income and its middle-class population is growing fast.
   According to a research by McKinsey, they expect that more than 75% of China’s urban consumers will earn RMB 60,000 to RMB 229,000 a year by 2022. In the next decade, the growth of the middle class will be fuelled by:
   1. labour-market and policy initiatives that will push wages higher;
   2. financial reforms that would stimulate employment and income growth; and
   3. rising role of the private sectors that encourage productivity.
3. China is pursuing its tech ambition to be a world leader in Artificial Intelligence by 2030.
   While the US has always looked down on China and claimed that it has been merely copying, many did not realise that China is innovating fast and is getting ahead in certain areas. The country has made some good progress in industries such as artificial intelligence and chips-making.
   
   Thanks to the rapid rise in internet penetration across China, China’s digital economy now accounts for over 34% of the country’s GDP.

If the government can successfully implement what it had planned, we see an enormous opportunity up ahead for the New China sectors. We prefer to stay focus on the long term potential while ignoring the short-term market noise. If you want a smoother ride, you may want to consider making regular investments in smaller amounts.

So what’s a convenient way to gain exposure to New China sectors? Check out the TradePlus S&P New China Tracker ETF listed on Bursa Malaysia. Visit www.tradeplus.com.my for more information.

Disclaimer: This article has been prepared by AHAM Asset Management Berhad (“AHAM Capital”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. AHAM Capital is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. AHAM Capital and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither AHAM Capital nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.

Warning Statement: A Prospectus is available for the TradePlus S&P New China Tracker and investors have the right to request a copy of it. Investors are advised to read and understand the contents of the Prospectus dated 15 January 2019 and Supplementary Prospectus dated 2 July 2019 before investing. The Prospectus and Supplementary Prospectus have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. A copy of the Prospectus and Supplementary Prospectus can be obtained at Affin Hwang Asset Management Berhad’s sales offices. As with any forms of financial products, the financial product mentioned herein carries with it various risks. Investors are advised to consider the general and specific risks involved as stipulated in its Prospectus before investing. There are also fees and charges involved when investing in the fund, and investors are advised to consider the fees and charges carefully before investing. The price of units and distribution payable, if any, may go down as well as up and past performance of the fund should not be taken as indicative of its future performance.

Licensing Disclosure Statement & Conditions: The "S&P New China Ex A-Shares Index" is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and has been licensed for use by Affin Hwang Asset Management Bhd. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Affin Hwang Asset Management Bhd. TradePlus S&P New China Tracker is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P New China Ex A-Shares Index.

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