Interesting signs emerging from Chinese market

Let’s start with the second quarter GDP. Having received a boost from continual growth in export volume this June that was up 11.3 per cent compared to June of last year, some 6.9 per cent higher than forecasted (YoY).
Breaking it down, industrial output in June was 7.6 per cent higher than in June last year, and the same figure is 11 per cent for retail. These signify intensified domestic consumption. The Purchasing Manager’s Index (PMI) of the manufacturing sector (Caixin China Manufacturing PMI) can be considered good, being at 51.1 in July, the best in four months.
These factors continually helped prop China’s economy back up, according to the IMF, which sees China as the main global economic driver. They forecast in June that the Chinese economy would grow 6.7 per cent this year, as opposed to the forecast of 6.6 per cent made in April. They also believed that the Chinese economy would in 2018 grow at 6.4 per cent instead of the previously believed 6.2 per cent, and that the Yuan will move according to the Chinese government’s economic stimulus program.
These positive signals from the Chinese economy demonstrate constant progress, contrary to what many analysts have predicted. They argued that the economy could experience a slow-down after the government imposed strict measures to curb the boom in real estate, and subsequent debt.
There’s also good news in the securities market. Back in June, A-Share received approval to be a part of MSCI emerging market. It will be factored into calculations starting next May. This could be considered an important step toward internationalisation for the Chinese securities market. In combination with Shanghai-Hong Kong Stock Exchange policy, the A-Share, we believe, would even grow stronger.
In terms of valuation, Chinese securities are proving of interest compared to those in developed markets. The A-Share is bought and sold at Forward P/E 13.6, while it is 16.9 in developed markets. Asset Plus Fund Management sees opportunities for securities to benefit from the “New Economy” especially among the “Consumer Discretionary”, which gains from economic recovery and increasing purchasing power. 
Plus, technology-based securities such as those of Alibaba or Tencent can boast constant and distinguished growth based on rapid technological advancement.
However, from the start of 2017, MSCI China securities have already gained about 35 per cent, so investors looking for some long-term return from the Chinese market might need to closely monitor the market and economic factors before choosing the right moment to invest. One factor could be the 19th National Congress of the Chinese Communist Party in November, which many expect to bring about changes in power relations.
Choosing professionally managed FIF fund investing in Chinese equity is highly recommended for Investors with a high-risk appetite who are interested in equity investment in China, but may lack either time to closely monitor the market or expertise in strategy timing strategy.
Investment entails risk. Investors should thoroughly study prospectus, fund features, return conditions and investment risk before investing. 

Contributed by Asset Plus Fund Management.