FSMOne SG - Research Highlights

2021-10-01 03:31:09 Stock Idea

After the fall of China Fortune Land and Evergrande, what’s next for Ping An Insurance?

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• Ping An Insurance has written off the majority of its investments in China Fortune Land in 1H21. However, the market continued to punish Ping An Insurance for its exposure to other real estate developers.

• We believe that the three developers Ping An Insurance is invested in have stronger balance sheets than China Fortune Land and Evergrande, giving them a better chance to tide through the real estate market slowdown.

• Ping An has also shared that its real estate exposure is only 4.8% of its insurance investment portfolio, translating to about RMB 186 billion out of its RMB 3.8 trillion investment portfolio. Furthermore, Ping An has disclosed that it is not holding any Evergrande’s equity or debt.

• We continue to hold a positive view of the Chinese insurance market as we still see plenty of room for growth in this space.

• For investors who can stomach and look past the short-term volatility, we believe Ping An Insurance is trading at attractive valuations. Not only it has the potential to double, but it is also offering an average dividend yield of about 6% in the next two years.

: Read the full article here
: Ping An Insurance (HKEX:2318) Open / Comment

2021-09-30 12:43:10 ETF Idea

ETF Insights: On the hunt for future tech leaders? Check out Goldman’s latest active ETF (Sep 2021)

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• Goldman Sachs is on the hunt for future FAANGs with their new Future Tech Leaders Equity ETF.

• Global X broadens its renewable energy offerings with the launch of two ETFs covering the solar and wind energy space.

• Japan’s flagship index, the Nikkei 225, is undergoing a huge revamp.

• Amplify ETFs launches a new Digital & Online Trading ETF to capture the retail trading boom. Discover the latest happenings in the ETF industry.

: Read the full article here Open / Comment

2021-09-29 03:31:02 Thematic Portfolio

Embrace sustainable investing with our new Environment Sustainability thematic portfolio

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• In light of the worsening climate crisis, it has never been more important for us to redefine our way of life and consumption by integrating more responsible and sustainable actions into our daily lives.

• Investors who wish to ride on this megatrend can take a look at our latest thematic portfolio on Environmental Sustainability.

• The portfolio identifies crucial sectors set to benefit from themes like clean energy, green transportation, green buildings, waste management and food sustainability.

• As of 27 September 2021, this portfolio is trading a forward PE of 12.2X, PB of 1.3X, while offering a dividend yield of 1.8%.

: Read the full article here Open / Comment

2021-09-28 12:51:07 Macro Research

Why China Deserves a Spot in Your Portfolio: A Long-Term View

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• Chinese equities are transitioning to ‘new economy’ industries, and are seeing greater investments into long-term growth through R&D. We are already observing long-term earnings growth as a result of this.

• A-shares are similarly transitioning to ‘new economy’ industries, led by the IT sector. Companies in this sector tend to be high-tech manufacturing companies, and their development is in line with government initiatives.

• Long-term growth story remains attractive, with a growing middle class consumer base. Domestic consumption has room to grow, and current consumption and income growth look to remain robust, supported by governmental policies. This will benefit Chinese companies, which derive almost 90% of their revenue domestically.

• Short-term volatilities like Evergrande do not affect our long-term view, as the probability of collapse is low, and this saga helps to clear players with poor fundamentals.

• Overall, we think Chinese equities remain attractive in the long-term as they are anchored by secular drivers highlighted in the article. These articles will need time to develop and will gradually be more evident as time passes.

: Read the full article here Open / Comment

2021-09-28 03:39:48 In this week’s Bond Market Monitor, tough times remain for Chinese real estate developers – Evergrande remains silent on its $83.5 million interest payment, and rating downgrades for both Fantasia and Sinic: https://bit.ly/3zIdTrt Open / Comment

2021-09-27 13:16:52 ETF Idea

Q&A Series: Why choose the Nikko AM SGD Investment Grade Corporate Bond ETF?

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Over the years, Singapore corporate bonds have typically given investors better returns compared to other instruments such as government bonds and fixed deposits. But due to the inaccessible nature of corporate bonds – which trade in blocks of SGD 250,000 per issue, these bonds are not within the reach of most retail investors.

Worry not as with the Nikko AM SGD Investment Grade Corporate Bond ETF, retail investors now have easy access to corporate bonds with a minimum investment of as low as SGD 100.

: Read the full article here
: Nikko AM SGD Investment Grade Corporate Bond ETF (SGX:MBH) Open / Comment

2021-09-27 03:33:28 ETF Idea

As the Evergrande crisis deepens, what's next for the Chinese real estate sector?

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• Supported by demand driven by population influx, we expect housing prices in higher-tier cities to maintain some growth even as regulations stay in place.

• With the lowering of land premium caps, land prices could be kept under control. This would help to stabilise the gross margins of developers.

• 57% of developers in the MSCI China Real Estate Index have met all the requirements under the Three Red Lines, enjoying the maximum debt growth of 15% per annum. Due to their strong balance sheets, they are likely to achieve a brighter growth outlook.

• In view of the near-term headwinds, we downgraded our fair PB ratio for the sector to 0.9X from 1.0X. This translates to an upside potential of 73%. Despite the attractive upside potential, we see a lack of share price catalysts in the near-term.

: Read the full article here
: Global X MSCI China Real Estate ETF (NYSE:CHIR) Open / Comment

2021-09-24 03:23:32 While construction engineering company WCT Bhd was badly hit by the pandemic, their substantial order book, well spread debt maturity profile and robust financials should help them weather the storm: https://bit.ly/2XVrleF Open / Comment

2021-09-23 13:08:15 Fund Idea

China’s Common Prosperity – What does that mean for investors?

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• Rather than anti-capitalism, China’s recent regulatory crackdown was due to its lack of progress in transitioning its economy into a consumption-driven one.

• Moving forward, we see sectors part of the country’s “Three Big Mountains” – education, healthcare, and housing – will continue to be at risk of further regulatory tightening, given their significance in influencing the cost of living.

• We believe that the domestic A-share market is better positioned for the Common Prosperity theme, particularly in the short term, and doesn’t lose out in terms of long-term prospects either.

•While we acknowledge that China equities may be volatile during this period given the fluidity of the Evergrande situation, we approach investing in China based on its massive long-term growth prospects.

• The profile of the A-share market, with its inefficiencies, advocate for an active approach, and we recommend the Allianz China A-shares Fund for value-seeking investors brave enough to take the plunge.

: Read the full article here
: Allianz China A Shares AT ACC SGD Open / Comment

2021-09-23 03:39:51 ETF Idea

Long-term growth intact despite China’s Big Tech crackdown

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• A series of regulations on the tech sector has sent many Chinese tech stocks tumbling to their year-to-date lows. We think that the fears of the regulations are overblown and this is a good opportunity for investors to add some China tech exposure to their investment portfolios.

• China has legitimate reasons to regulate the Big Tech companies, as they have grown significantly over the years and wield immense power.

• Moves to rein in Big Tech are not contained in China alone, as the Western countries are also calling for greater regulatory oversight.

• Additionally, the impact of the regulation is uneven and we like companies who demonstrate continued earnings strength.

• The long-term growth story of China’s tech sector remains intact on the back of megatrends, such as rising internet penetration rates and the digitalisation of consumption.

• Investors should use this opportunity to gain exposure to China’s tech sector, through the iShares Hang Seng TECH ETF (HKEX:3067). Our target price for this ETF is HKD 19.40, which represents an upside of approximately 50%.

: Read the full article here
: iShares Hang Seng Tech ETF (HKEX:3067) Open / Comment