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Kevin Gin: 2 Reasons Why You Should Still Invest In China
Aspire, Thought Leaders | 23 September 2015
By: Vance Wong
Articles (74) Profile

Kevin Gin at SIC2015 Mid-Year Review earlier in May

Noting that the Shanghai Composite Index (SHCOMP) took a nosedive in June earlier this year, investors are afraid and unsure when it will start trailing up again. In a recent interview with Chinese equities expert, Kevin Gin (CFA) talked about the Chinese economic slowdown and his outlook of the stock market next year.

With more than 25 years of experience, he thinks that the SHCOMP plunge is merely a retracement back to reality for the Chinese stock market. Kevin will be speaking at our annual Shares Investment Conference (SIC) 2015.

China Still Has Leeway For Monetary Easing

First of all, China’s economy is still growing at a faster rate than the world’s average growth rate. Therefore, its recent slowdown should not be a major cause of concern, though of course it has not been performing up to expectations.

In the event if China’s economy were to really head for a hard landing, the Chinese government still has the option to adjust monetary policies to stimulate the economy. This can be observed in the recent months where rates have been reduced, devaluation of the Renminbi and so on.

China still has a lot of leeway for monetary easing policies as compared to other countries like the US and Europe, where interest rates are close to zero. Furthermore, China’s banks reserve ratio is relatively higher than the rest of the world, giving China even more room.

Noting this, investors should look at China or China-related stocks.

Consider Pollution-related Companies, Chinese Government Putting Emphasis

If one were to look at the SHCOMP over the past six months in isolation, it might seem worrying. However, if you look at the bigger picture, noting that the SHCOMP started at around 2,000 before the bull run started, you will realise that the SHCOMP is still 50 to 55 percent above (3,000~ points now) its initial levels.

Basically, what happened was the stock market ran up ahead of earnings expectations, perhaps a bit too fast. Right now, we have to see earnings catch up with valuations, to justify valuations. Thus, if we were to look at China over a 12-month or 24-month period, yes, we would definitely still want to put our money in China.

Investors’ Takeaway

The China stock market will most probably trend higher in 2016 than its current levels now, but only specific industries and sectors would prove to have value. Investors should keep a look out for the industries that are being supported by upcoming policies put forth by the Chinese government. In short, know the industries that the government will be supporting.

One example would be to look at pollution. The Chinese government is putting emphasis in coal fire stations and wastewater treatment in the near term. Valuations in companies involved in those businesses would be richer relative to other opportunities in the market in the near-term.

Still worried about when and how much would the US Federal Reserve hike interest rates? Do you have burning questions that you want to ask regarding the China economic slowdown and SHCOMP nosedive in June? Are you confused if any of the external factors from other countries in Asia will affect your Singapore stocks portfolio?

Catch renowned investors and speakers with rich experience in the stock markets, who have had witnessed multiple stock market crashes and global recessions over the years at Shares Investment Conference 2015!

Speaker profiles

1. Dr Chan Yan Chong, a renowned investor with more than 25 years of experience and the MBA programme director & associate professor of business school at the City University of Hong Kong.

2. Kevin Gin (CFA), the Founder and Principal of Alpha Capital. He was the former COO for CITIC Securities, Head of Singapore and Regional Real Estate Research for Kleinwort Benson Securities Asia (now part of Credit Suisse) and Head of Greater China Property Research with Yuanta Securities (Hong Kong)

3. Louis Wong, one of the most experienced fund managers in Hong Kong. He has over 25-years of solid experience and track record in the financial market. He was awarded Best Financial Analyst for 3 years by the Putonghua Channel of Radio Television Hong Kong and is also a part-time instructor of several investment courses in various Hong Kong universities.

4. Daniel Loh, an investment coach that specialises in equities and derivatives trading, he appears regularly on local TV financial programmes like “Good morning Singapore” and “Hello Singapore”.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

Please click here for more information about this author.

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