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Premia 觀點洞察
Premia 觀點洞察
分享投資見解、洞察行業熱點、探討學術研究

精選觀點 & Webinar

How strong EV sales growth and battery technology advances strengthen dominance by Chinese battery makers
insightHow strong EV sales growth and battery technology advances strengthen dominance by Chinese battery makers

The latest developments in the battery industry continue to favour the world’s biggest players. Apart from their gains from the robust growth in EV sales, the latest developments in battery technology also work in their favour, given their significant investments in R&D spending. Over the next five years or so, lithium iron phosphate (LFP) and ternary (NCM) lithium batteries will remain the mainstream products in the mass and high-end segments respectively. These are the products that CATL and BYD lead globally. Beyond that, CATL and BYD are already moving rapidly in the area of solid-state batteries (SSBs), a potentially disruptive technology. In this article, we discuss about why the Chinese battery makers will continue to dominant the global market and benefit from their technological advancements that revolutionize the energy storage landscape.

Nov 15, 2024

China A-shares Q3 2024 factor review
insightChina A-shares Q3 2024 factor review

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

The case for Taiwan: Premia FTSE TWSE Taiwan 50 ETF as efficient implementation tool for allocators
insightThe case for Taiwan: Premia FTSE TWSE Taiwan 50 ETF as efficient implementation tool for allocators

Further to the insight piece on “Taiwan: The Quiet World-Beater” shared by our Senior Advisor Say Boon Lim, in this article we share more about our new ETF Premia FTSE TWSE Taiwan 50 ETF, which covers the 50 largest flagship companies in Taiwan by market capitalization. The strategy aims to capture the strong market performance from the robust growth in demand for semiconductors and the broader economic growth activities in Taiwan in the coming years. It is designed as a low-cost, tax efficient access tool, with versatility of having both HKD (distributing) and USD (accumulating) unit classes.

Oct 09, 2024

Asian investment grade bonds: the overlooked sweet spot for allocators
insightAsian investment grade bonds: the overlooked sweet spot for allocators

As the US Fed rate cut gets imminent, the liquid Asia credit market also is set to benefit from a number of strong tailwinds. In addition to favourable macroeconomic fundamentals, the heterogenous region also offers benefits of broad geographic diversification benefits and positive reinforcement from continued market liberalization and more investor friendly reforms. Within this space, Asian investment grade (IG) bonds also enter a favourable “Goldilocks” scenario in particular, represent a sweet spot that international allocators sometimes overlook, offering meaningfully higher yields, better credit ratings, and shorter duration than their peer IG cohorts from the US and Europe.

Sep 16, 2024

China’s East Data West Computing Initiative (II) – Energy Storage Systems and Smart Grids as the Final Mile in AI-Race
insightChina’s East Data West Computing Initiative (II) – Energy Storage Systems and Smart Grids as the Final Mile in AI-Race

Given the inextricable links between energy-hungry Artificial Intelligence and renewables, energy storage and smart grids are a necessary “final mile solution” in the intensifying AI race. They provide the critical capability to store and dispatch huge quantities of uninterrupted renewable energy/power on demand without compromising emission reduction targets. In this regard, China is uniquely positioned to tackle the related challenges of AI and renewable energy with its rapid development and upgrades of energy storage systems and smart grids. In fact the country has long been studying intertwined strategic relationship between AI, technology and energy, and studiously incorporate such thinking into its Five Year Plans, and which are subsequently being rolled out as China’s East Data West Computing initiative. Further to our recent insight on China’s “power infrastructure” as the critical enabler for AI-development, in this article, we zoom in on China’s capabilities and investment opportunities in energy storage as the linchpin that holds the last mile solution, and matches renewable energy production with industrial demand in China’s journey to a high-tech, modern society.

Sep 11, 2024

Taiwan: The Quiet World-Beater
insightTaiwan: The Quiet World-Beater

In the midst of the AI-driven excitement surrounding major US tech giants, Taiwan has been quietly positioning itself as a significant player in the global technology sector. Over the past two years, Taiwan’s stock market has outperformed all major Asian markets and even surpassed the S&P 500 and Nasdaq 100 in returns. This success can largely be attributed to Taiwan's critical role in the semiconductor industry, which continues to drive its economic growth and investment appeal. In this article, our Senior Advisor Say Boon Lim discusses drivers supporting the unique, strategic moat Taiwan has built over the years, and why it will likely remain an attractive investment destination going forwards, on the expected continued robust growth in demand for semiconductors and its broader economic growth activities over coming years.

Sep 05, 2024

Thoughts on the fed rate cut, inverted yield curve and floating rate US treasury
insightThoughts on the fed rate cut, inverted yield curve and floating rate US treasury

The time has come – Federal Reserve chair Jerome Powell finally signalled that rate cuts will likely start in Sep at Jackson Hole, though his remarks offered few clues as to how the Fed might proceed after its Sep gathering. On the surface, extending duration in US Treasuries appears to be a straightforward decision given the assumption that falling interest rates will lead to rising bond prices. However, it is not without risks and complexity as we are entering the rate cut cycle against very different backdrop from previous cycles. In this article, we discuss the intricacies of the upcoming rate cut trajectory, and why US Treasury Floating Rate Notes (FRNs) remains a relevant strategy for investors seeking diversification and stability as a result of the very much inverted yield curve, and market uncertainties in this journey.

Aug 28, 2024

China A-shares Q2 2024 factor review
insightChina A-shares Q2 2024 factor review

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

China’s East Data West Computing Initiative – Power Infrastructure as the Next Big Thing in the Global AI Race
insightChina’s East Data West Computing Initiative – Power Infrastructure as the Next Big Thing in the Global AI Race

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

Has the World Underestimated China’s Household Consumption by more than 10% of GDP?
insightHas the World Underestimated China’s Household Consumption by more than 10% of GDP?

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

Premia 圖說

Resilience of Asian USD Investment Grade Credit
  • 研究團隊

    研究團隊

Asian US dollar IG credit has been outperforming the US IG and EU IG both year-to-date and over a three-year horizon due to several favourable factors, including attractive yields and a supportive issuance dynamic amongst Asian issuers. With the election settled, among the many policies laid out in Trump 2.0, two key issues that have concerned global investors are the US debt outlook and the impact of tariff to global growth, particularly in European countries.Since election settled in early November the market focus has shifted to the projected debt level of the US government. Back in March 2024, the US Congressional Budget Office (CBO) published a report on the long-term budget outlook for 2024 to 2054, highlighting that the US debt-to-GDP ratio is projected to reach a staggering 200% by 2050. This increase will be driven by rising spending programs, which will require the government to issue more US Treasuries. The rising debt trend, coupled with recently released strong U.S. economic data, has caused major concerns among global investors, pushing U.S. yields higher across the curve recently.In fact, over the last few years when yields increase, it become less appealing for Asian issuers to issue new debt in US dollars. As a result, when yields rise, the supply of Asian dollar credit diminishes, leading to tighter credit spreads and further enhancing the performance of existing bonds. For instance, during mid-November China issued USD denominated government bonds at a very tight spread, which began trading with a negative spread.Currently, the rate cut cycle has begun, and yields have been trending lower, which could enhance the attractiveness of Asian dollar credit even further. However, looking ahead, expectation for future yields are characterised by volatility. While the recent appointment of Scott Bessent as the new US Treasury Secretary is viewed positively for the bond market – suggesting potential fiscal restraint – investors remain concerned about the trajectory of the US fiscal deficit and projections on the Debt-to-GDP. This backdrop creates a climate of uncertainty among investors, who may increasingly prefer the relative stability offered by Asia dollar credit amid these challenges.On the tariff front, the broad tariff would likely erode Eurozone GDP by approximately 1% as the biggest European countries such as Germany and France are also the most exposed to trade. Analysts from Goldman Sachs and JPMorgan are forecasting a fragile recovery in the Euro area, which would lead to further ECB rate cuts. While the duration would benefit EU IG in light of the rate cut, some of the gains may be offset by the heightened downgrade risks with the lower growth outlook and sluggish activity as reported by Fitch Ratings. Return is further eroded for dollar-based investors as a lower ECB policy rate will likely lead to depreciation in the euro and therefore losses due to currency exposures. Recently, we observed some of this trend as the Euro weakened from ~1.10 to ~1.05 against the US dollar in just a month, currency effect detracted almost 4.0% from returns during that period, and more rate cuts are expected to come. Given these dynamics, we believe Premia J.P. Morgan Asia Credit Investment Grade USD Bond ETF (9411 HK) is a better opportunity set and a very cost efficient allocation tool with total expense ratio of only 0.23% p.a. and is not subject to US withholding tax. The ETF consisted of high-quality USD bonds by investment grade sovereign, quasi-sovereign, and corporate issuers from Asia ex-Japan region:-          Comparing to both US IG and EU IG, JACI IG’s lower duration and higher yield presents a better risk trade-off between yield and duration.-          Comparing to US IG, JACI IG’s lower new issuance should provide a better price dynamic while maintaining a higher yield-          Comparing to EU IG, JACI IG provides 2% higher yield and without the currency risks To facilitate investor access primary market liquidity, we have also worked with our business partners to keep the creation/ redemption fee to only US$250 per trade and creation/ redemption size to 50,000 units only (~US$500,000) which are a fraction of typical levels for other USD credit bond ETFs.BBG TickerAbbreviationLong NameJPEIJAIG IndexJACI IGJ.P. Morgan Asia Credit Index -   Investment Grade in USDLBUSTRUU IndexUS IGBloomberg US Aggregate Total Return   Index in USDI02503US Index / LP06TRUU IndexEU IGBloomberg Pan-European Aggregate  Total Return Index in USD (unhedged)SBWGU IndexWGBIFTSE World Government Bond Index USD (unhedged)IDCOT20 IndexUST 20YICE US Treasury 20+ Year Bond Index USDIDCOT7 IndexUST 7-10YICE US Treasury 7-10 Year Bond  Index USD

Nov 27, 2024

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