After a stellar third quarter on renewed hopes of powerful fiscal stimulus, Chinese stocks followed shares in other emerging markets down in Q4, giving back some of those gains as the CSI 300 Index slipped 1.7% (CNY). Weighing on mainland stocks were investors’ fears that Trump 2.0 tariffs, along with a lack of follow-through by Chinese policymakers, might hinder the country’s growth revival. In this article, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors, discusses what will spur Beijing to inject more stimulus, where it might go, and what Trump’s trade war and the DeepSeek saga might tell us about where A shares outperformance could come from in 2025.

Feb 24, 2025

China’s financial markets stand on the cusp of resilience and opportunity, buoyed by proactive government interventions and structural reforms. Beijing’s commitment to fostering innovation in artificial intelligence, semiconductors, and renewable energy highlights its strategic pivot towards self-reliance. Meanwhile, reforms aimed at enhancing corporate governance and shareholder returns signal a shift toward greater efficiency and market appeal. While challenges persist, including heightened US tariffs and soft domestic demand, the leadership’s “all-in” growth strategy and flexible policy framework highlight a clear long-term vision for sustainable development. For investors, China in 2025 presents a wealth of opportunities across a range of sectors—from cutting-edge technology and dividend-focused equities to stable government bonds and a recovering real estate market. In this article, our Partner & Co-CIO David Lai suggests that this year could be one of the strategic investments for China with potential for substantial returns.

Jan 07, 2025

The third quarter ended with a bang for mainland Chinese stocks, as twin announcements from China’s central bank and top fiscal policymakers gave both foreign and domestic investors plenty to think about over an extended market holiday during China’s October Golden Week. In this insight, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors, explores the shift in sentiment that sent the onshore China markets higher for the quarter, breaking down the economic implications of a renewed and forceful stimulus push, the factor drivers of Q3 equity performance, and the data investors should be looking forward to as 2024 draws to a close.

Nov 15, 2024

Going into a July meeting of top party officials at China’s Third Plenum, held once every five years, first-quarter hopes of a 2024 recovery in China’s economy had given way to macro uncertainty, as strength in manufacturing and exports served for many to highlight just how weak domestic sentiment and consumption remain. In this article, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors, digs into such challenges and potential paths forward for Beijing, including our thoughts on a Third Plenum meeting that didn’t yield any policy bombshells, but still offers clues as to where investors might focus as we enter the second half ready for bargain hunting.

Jul 30, 2024

While Artificial Intelligence Generated Content (AIGC) has been dominating media and market attention, the “next big thing” has been developing rapidly in the background in China, in the form of super-scale AI infrastructure. It involves, among other things, a national computing power network; data centre clusters from Guangdong to Inner Mongolia and from Gansu in the West to Anhui in the East; centres for the development/training of large language models; and abundant green energy integrated with massive energy storage facilities. What is rapidly emerging is a gigantic national network connecting smart grids, intelligent network routing and energy storage – one that has no parallel anywhere else in the world. The pay off will be lower cost execution of computing processes and high-end manufacturing/AI-based industrial automation. The current media focus has been on the speed of the microchip as the key factor in the AI race. The following insight details the elements of the AI-infrastructure that are likely to prove critical in the next phase of AI development.

Jun 19, 2024

China’s household consumption appears to have been massively underestimated in international comparisons, because of differences in data definitions and valuation methodologies. The two big areas of differences in international comparisons are: 1) Social transfers in kind, which could be worth some 6% of GDP; and 2) The value of housing services provided by owner-occupied homes, which could be worth another 5% of GDP. In this article, our Senior Advisor Say Boon Lim discusses why the criticisms of China’s growth model and "underconsumption" look flawed.

May 09, 2024

Despite mainland stocks putting up a solid Q1—the CSI 300 Index gained 3.1% for the quarter—and although macro fundamentals appeared as if they might be turning a corner at the start of 2024, bullish sentiment toward China equities had yet to materialize, with many questioning whether a first-quarter rebound would sustain. In the commentary below, Dr. Phillip Wool, Global Head of Research of Rayliant Global Advisors, delves into the details of China’s economy and market action during Q1, discussing how Beijing’s plan to nurture high-quality growth might translate to macro conditions and investors’ portfolios.

May 09, 2024

While investors would look at it as a period of crackdown on for profit tutoring businesses, since the “Double Reduction” policy (to reduce the pressures of homework and after-school tutoring) in 2021, young students indeed are able to spend more time on extracurricular activities that they enjoy. Given the size of addressable market, there has been a proliferation of various STEM (Science, Technology, Engineering, and Mathematics) learning, traditional culture and art-jamming activities in China, including many well-equipped new establishments fitted out with the latest digital technologies such as AI, 3D exhibitions and robotic guides, catering to various developmental needs and interests of children who now have more free time at hand they can deploy for more fun activities. Take the Guangdong province for example, there are 150 public libraries, 144 cultural centers, 352 museums, and 141 art museums built as of 2023 – and many of these are free of charge or charge very affordable fees available for both locals and visitors. In this article we share some of the popular ones that you may find of interest for your next trip to the region.

Mar 26, 2024

Consumer spending in China continues to grow strongly by international standards, even as the pattern of that spending evolves. The image of weak consumerism in China – as portrayed by the media – is misleading in two ways. For starters, the growth in retail sales in China is only “low” relative to the very high (mostly double digit) rates recorded in the 2010s. However, at 7.2% y/y growth in the full year 2023, China’s retail sales growth compares very well internationally. Beyond that, there are also changing social trends which are driving different forms of consumption in China, which then support investments that are more reflective of the transformation in China. In this article, we discuss more about how young Chinese are the main driving force in China’s consumer market and identify the winners of this quiet but significant sea change in consumer behaviour.

Mar 01, 2024

There is a big disconnect between the image of the Chinese economy portrayed by the media and the underlying data. As we start the year, we review key pieces of data from both China and the US. In summary, while the data for China has not been as good as the market may have liked, it was better than what the media would have had us believe. A quick run through the China data for the first nine months of the year, as collated by “China Briefing”: Growth in real GDP 5.2%; industry output 4.0%; services output 6.0%; retail sales 6.8%; fixed asset investment 3.1%. These are very decent growth figures by any international comparison. And China achieved the above figures with a smaller fiscal deficit than the US and while bearing the burden of rebalancing growth away from dependence on the property sector.

Jan 15, 2024

Investors should expect a better return in Chinese equities in 2024 after three consecutive negative yearly return. Indeed, it is the first time that China stock market has recorded an annual loss three times in a row. Slowing economy, heighted China-US bilateral relationship, strong dollar and property market slump all contributed to the disappointing performance in the past twelve months. Looking ahead, the market may offer more upside risks because of (1) stronger supportive policies rolling out to help lift economic activities and particularly the property sector, (2) geopolitical tensions tuning down with increasing dialogues between Chinese and US top government officials, (3) domestic long-term investors’ buying and foreign investors’ current significantly underweight position in Chinese equities, and (4) value emerging from the discounted share prices on both absolute and relative basis. Bamboo is a symbol of longevity in China because of its durability, strength, flexibility, and resilience. It survives in the harshest conditions, persevere and still standing tall and staying green year-round. When the storm comes, bamboo bends with the wind. With business and consumer confidence continue to recover amid the much more accommodating, easing environment, Chinese entrepreneurs and the equities market should finally be in for a year of promising growth ahead.

Dec 18, 2023

China has emerged as the world’s largest consumer and producer for industrial robots and equipment. In fact, the country recorded US$6.6 billion sales of industrial robotics in 2022, most of which were produced domestically, far more than the second largest country Germany which registered US$2 billion sales during the same year. Propelled by its changing demographics and its evolution from low-cost manufacturing to high-value added processes, China will continue to drive the development of a homegrown robotics sector and pursue manufacturing upgrade, as underscored by China’s 14th Five Year Plan which explicitly laid out the national strategic goal of building a modern high tech society. Sector leaders would be natural beneficiaries of support measures for this broad policy. In this article we discuss more about how along with development of a highly integrated ecosystem of high tech processes and smart manufacturing systems, China is also integrating new materials, new energy, smart grids and energy saving systems, etc. to its technology-enabled ecosystem that sits well with China’s 2060 net zero targets, and its national strategic goal towards a modern, high tech society.

Sep 29, 2023

The youth unemployment rate in China has been much talked about, however the phenomenon is often poorly interpreted without addressing the important nuances behind the structural, transformational and societal factors in China. In fact, the elevated unemployment rate is a transitional legacy from COVID and many countries also shared the experience of high youth unemployment. There is a lag in China’s youth unemployment data compared to western countries, given China’s relatively late reopening from the COVID pandemic. In this article, we discuss the structural factors contributing to the youth unemployment rate in China, and explain why the number will likely to decline and why the unemployed youth will be absorbed into workforce as China continues on its path of recovery.

Aug 24, 2023

Premia CSI Caixin China Bedrock Economy ETF (2803.HK), Premia CSI Caixin China New Economy ETF (3173.HK), Premia China STAR50 ETF (3151.HK), and Premia Asia Innovative Technology and Metaverse Theme ETF (3181.HK) recently completed the annual rebalancing exercise after market close on Jun 9th 2023. In this article we highlight the changes and provide a brief analysis of the post-rebalance profiles of each ETF.

Jun 19, 2023

Investors used to prefer privately owned enterprises (POEs) over state owned enterprises (SOEs) in owning Chinese equities in the past. This was under the conventional thinking that the former tends to be more efficient, growth and profit-oriented, and innovation driven, while the latter is often constrained by more bureaucracy and non-profit priorities including social responsibility, support employment and social stability, and traditional DNA that are less conducive to changes and innovations. With strong government backing and all the new government policies promoting the SOE reforms and emphasizing SOEs’ value discovery, it may be time to challenge the stereotype as there emerges a new cohort of SOEs that begs to differ and has full backing of policy makers to reinvent themselves and unlock values to commensurate their contributions to the real economy. In this article we discuss the background behind the SOE re-rating/ revaluation trade that has become popular lately, and identify the optimal way of getting the right exposure of Chinese SOEs.

May 26, 2023

In 2022, our Premia CSI Caixin China Bedrock Economy ETF (“the Bedrock ETF”) outperformed most of the market benchmarks, such as FTSE A50, CSI 300, CSI 500 and ChiNext, by around 10-24% points. In a backdrop of weak equity performance, investors favored low beta and volatility stocks with significant economic value and good financial health, which coincided with the Bedrock ETF’s underlying index methodology and broadly explained why the ETF outperformed in 2022. In this article, we would have a more in-depth look at the portfolio holdings’ companies and decipher drivers of the outperformance and whether this multi-factor approach of low volatility, value, quality and size tilts would continue to power outperformance in 2023.

Feb 03, 2023