PREMIA POINT OF VIEW

PREMIA POINT OF VIEW

ETF Flows in June 2020

  • Alex Chu

    Director and Portfolio Manager

In June, the equity market performance remained buoyed as the central banks kept the quantitative easing and low-interest rate in place. Some laggards in May, such as Hong Kong and China, had outperformed in June. The inflows to the Equity ETF also picked up from the low in May to more than 10 billion USD in June. As the Fed expanded its bond purchase program to individual corporate bonds in addition to the ETFs, the inflows to the Fixed Income ETF continued the uptrend since April, and recorded more than 40 billion USD in June, the highest year-to-date. However, the inflows to the Commodity ETFs were slowing down, as investors lost appetite for the crude oil ETFs, even though the inflows to the gold ETFs remained resilient.


Jul 14, 2020


Vietnam’s economy still had positive growth in 2Q amid coronavirus

  • Alex Chu

    Director and Portfolio Manager

Vietnam’s General Statistics Office has just disclosed the country’s economic growth in the second quarter, which has increased by 0.36% from a year earlier, beating the median estimate in a Bloomberg survey. That made Vietnam one of the few countries which still managed to grow amid the coronavirus. According to the economic forecasts in Bloomberg, Vietnam is the only country in ASEAN that may still have a modest growth of around 3% in 2020. Albeit its robust growth, Vietnam equity had the cheapest valuation in terms of forward PE among the emerging peers. If you would like to capture Vietnam’s growth story, you may have a look at our Premia MSCI Vietnam ETF.


Jul 2, 2020


Strong rebound in China property market

  • David Lai , CFA

    Partner, Co-CIO

One of the important indicators to gauge if Chinese economy is on track of its recovering post-pandemic is to monitor the housing market.  The national property sales accelerated to a growth of 14% in value in May versus -5% in April and -14.6% in the first quarter, showing the pent-up demand began to release immediately once the threat of COVID-19 receded domestically in the past couple of months.  Currently the analysts expect the industry sales will remain decent in June and should rebound further in the third quarter with more project launches and loosening credit.  While most easing measures did not target the property sector directly, buyers expect mortgage costs to decline further as the benchmark lending rate has been reduced twice this year.  Developers also revealed stronger confidence with the recent floor space of newly started returned to a positive level of 2.5%, reversing the negative trend in the first four months. 


Jun 26, 2020


Foreign interests rise alongside the strong A-share performance

  • David Lai , CFA

    Partner, Co-CIO

Foreigner investors seem to gain more confidence in investing in China A-share through the stock connect program.  The accumulative flows climbed up from RMB 724 billion a year ago to the latest RMB 1,091 billion.  The global equity sell-off earlier this year led to a mild outflow in the Northbound trade, but the net selling only lasted for a few weeks until late March.  Indeed, the inflow has accelerated in June, witnessing an amount of RMB 29 billion coming in the first 12 trading days, as compared with a total RMB 30 billion recorded in May.  FTSE has just finished the final tranche for the initial China A-share inclusion by increasing the investability weight from 17.5% to 25%.  It might partly explain the resilient performance of the overall A-share market, as shown by the CSI All Share Index which went up by 13.6% in the past 12 months.  China New Economy segment performed even stronger by going up 41.5%, as shown by the CSI Caixin Rayliant New Economic Engine Index, outperforming the board market by 27.8% points.  


Jun 22, 2020


Gold as a risk-related trade, not a hedge

  • Alex Chu

    Director and Portfolio Manager

Investors who bought gold as a portfolio hedge against risk aversion must be more than a little perplexed. Gold has been trading more in line with risk appetites rather than inversely as a hedge against volatility. This may have been driven in part by its inverse relationship with the US Dollar Index DXY. That is, when risk appetites are up, equities rise and DXY declines. And gold trading in US Dollars, rises. But if we are to see renewed equities weakness in coming weeks and maybe even months, be prepared for XAUUSD to weaken along with it. As a hedge against US inflation and US Dollar weakness, gold has a place in all portfolios. But this is not quite the time for gold to shine, financially. 

Jun 19, 2020


Premia Asia Innovative Technology ETF performance boosted by M&A activities

  • Alex Chu

    Director and Portfolio Manager

Conventional wisdom is that share prices will grow with the earnings, so the best way to invest in the growth stocks is to buy-and-hold; however, that may not be the only way if there are mergers and acquisitions. Two holdings in our Premia Asia Innovative Technology ETF have been under the spotlight of such kind of activities in this week. 58.com was acquired by a consortium of investors including Warburg Pincus Asia at a premium to the market price, while Tencent was considering buying iQiyi’s shares from Baidu, according to Reuters. The market reacted positively to the news, and both 58.com and iQiyi’s performance have outperformed their peers since June. Considering our ETF is holding only 50 companies, the hit-rate is rather impressive.

Jun 18, 2020


Vietnam's foreign direct investment stays buoyant in 2020

  • David Lai , CFA

    Partner, Co-CIO

COVID-19 spreading did not stop the rising trend of foreign direct investment pouring heavily into Vietnam in 2020.  A total of 1,212 projects were granted investment licenses with a total registered capital of USD 7.4 billion.  In terms of the newly registered capital, 53.8% went to production and distribution of electricity, gas, steam and air-conditioner, while 37% went to industrial processing and manufacturing industry.  Among the source of funding origin, Singapore topped the league with the highest investment capital of nearly USD 4.4 billion among 58 countries and territories investing in Vietnam, followed by Taiwan, China, Hong Kong, South Korea and Japan.  Bac Lieu LNG-to-power construction owned by Singapore-based Delta Offshore Energy become this year’s first billion-dollar project.  The buoyant interests from foreign investors in Vietnam may partly help explain the strong rally of its equities since late March.  In fact, Vietnam market was the best performing market in Asia two months in a row with MSCI Vietnam Index up by 30.2% from the beginning of April to the end of May.  

Jun 12, 2020


In-flows into gold ETF losing momentum

  • Alex Chu

    Director and Portfolio Manager

The U.S. equity market has fully recovered after reaching a bottom on 23 March. Yet, some investors may be sceptical about whether it is a real recovery or a bear-market bounce. Some may turn to the gold price to confirm the risk-on sentiment in the equity market. The in-flows into the gold reached its highest point year-to-date in the week the equity market hit bottom, and the gold price shot up. The in-flows remained strong afterwards, even though the equity market has stabilised. Started in May, however, the in-flows were losing momentum, and so is the price. Not showing in the chart is that the total holdings in the gold ETF have been decreasing for three consecutive days as of 8 June, and likely have the first weekly outflow since March by the end of this week.

Jun 10, 2020


ETF Flows in May 2020

  • Alex Chu

    Director and Portfolio Manager

In May, the global equity markets extended their rally as investors bet on the economy to reopen. Still, the flows to the Equity ETF didn’t follow the momentum and dropped to around 2 billion USD, the weakest flow in this year. One narrative to explain this phenomenon is that retail investors tend to buy at the top and sell at the bottom, and similar patterns have been observed in previous crises. In contrast, the flows to the Fixed Income ETF remained strong in May, and recorded the largest in-flows in this year, as the Fed had started its liquidity program on buying the corporate bonds and the related ETFs. Since the flows to the crude oil ETFs were running out of steam, the in-flows to the Commodity ETFs have slowed down from the previous month but were still sizeable relative to the other months, as the in-flows to the gold ETFs remained strong. Although the market is optimistic, it is not without risk, as the tension between the U.S. and China is escalating on the issue of Hong Kong’s autonomy. 

Jun 8, 2020


Healthcare & technology equities outperformed in Japan

  • David Lai , CFA

    Partner, Co-CIO

Japanese equities were still in a negative-return territory year-to-date, but some stocks bucked the trend and managed to go up decently.  Among the top 10 best runners in TOPIX 100 Index, Chugai Pharma led the pack with an impressive gain of 60.0%.  Investors chased the name as it began phase 3 trials of rheumatoid arthritis drug Actemra for treatment of severe COVID-19 patients.  Healthcare names such as Daiichi Sankyo and Ono Pharma also went up by over 20% since their upcoming drugs look rather promising, leading the companies into a new growth phase.  Keyence, one of the leaders in robotics and industrial automation, ranked the fourth with a return of 18.7%.  Coincidentally all four of them belong to the key holdings of Premia Asia Innovative Technology ETF (3181 for HKD and 9181 for USD).  Indeed this strategy outperformed MSCI Asia by more than 11% year-to-date.

Jun 5, 2020