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A View from Asia

This is a liquidity-driven bull market which central banks might not derail. However, could this wild exuberance lead to a financial accident?

  • Samir Mehta
12 Feb 2021
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View PDF   Download PDF  
  • In an ongoing effort to liberalise financial markets, Chinese authorities have made two significant moves related to equities. The first led to MSCI’s inclusion of China ‘A’ shares into their indices. The second was the linkage between Hong Kong and China’s capital markets through northbound-southbound quota flows.
  • Currently, there is real excitement around Chinese companies listed in Hong Kong. A discount on valuation multiples for some of the duallisted China “A” shares quoted in Hong Kong draws attention. Add to that “the homecoming” of several shares from their ADR listing status to dual listing on the Hong Kong Stock Exchange.
  • This environment requires a degree of prudence. This is a liquidity-driven bull market which central banks might not derail. However, could this wild exuberance lead to a financial accident?

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Past performance is no guarantee of future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Investing in companies in emerging markets involves higher risk than investing in established economies or securities markets. Emerging Markets may have less stable legal and political systems, which could affect the safe-keeping or value of assets. The Fund’s investments may include shares in small-cap companies and these tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile. The information contained herein including any expression of opinion is for information purposes only and is given on the understanding that it is not a recommendation.

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