Webinar: Investing in the future of China and emerging markets

00:00 Introduction

‍04:20 Introduction to Endowus

‍05:56 Why the recent concerns in investing in China and emerging markets?

‍07:06 Q1 market updates for global equities and fixed income

‍16:08 Thoughts on a looming recession

‍19:37 Why investing in China ticks the boxes for investors

‍21:50 How the 2022 Party Congress can impact valuations

‍26:53 China’s regulatory climate for technology and investing

‍31:13 Debunking misunderstandings of China’s ‘Common Prosperity’ philosophy

‍40:01 Geopolitics is a bump, not a fundamental shift in market direction

‍45:20 What should investors pay attention to?

Why the recent concerns in investing in China and emerging markets? (05:56)

‍Sam: Touching upon the backdrop which we have decided to hold this webinar, starting from looking at the global markets and macro environment. There have been a lot of macro and geopolitical headlines dominating our mind space. The Fed, inflation and concerns about growth are on the top of investors’ minds. China and the emerging markets have been talked less about in recent weeks, but it is still something important to talk about to understand the future opportunities that lie ahead. China is the epicentre of the emerging market space. 

‍Sam: Looking back at the last quarter, it was a truly unprecedented and very rare quarter where both equities and fixed income were actually down. This has only happened a few times in history and it was actually one of the worst quarters in the history of financial markets. Growth stocks took a massive hit and if you look at the relative performance of value it's actually held up really well. 

Why investing in China ticks the boxes for investors (19:37)

Kelvin: You want to invest when investors are bearish because when investors are bearish. Whenever you want to invest right you have to ask yourself, do you wanna invest in a market when the earnings growth are at a peak and when the policymakers are tightening? You want to instead invest when the market is basically at the bottom of earnings growth. You want to invest when investors are bearish because when investors are bearish, the market is not overcrowded.

How the 2022 Party Congress can impact valuations (21:50)

‍Kelvin: Towards the end of this year in November there will be a political transition right so the national party congress will be held. The party will come together in Beijing and they will choose the members of the central committee, after which, they will choose members of the politburo and from there, they will elect standing members of the committee, which will be headed by President Xi. It is unlikely that they will relax the COVID-19 policy until then. 

‍Kelvin: For the Chinese market to rebound, you have to be patient, but you are getting in at very attractive valuations right now and the key about China is this - the RMB denominated assets as a percentage of global portfolios right now is at two percent, and we estimate that that will increase to ten percent by the end of this decade. For example, Israel just announced recently that they want to increase the assets denominated in RMB to two percent over the next three months. Flows are starting to come and by the end of this decade China has the biggest economy in the world. You cannot have zero to two percent allocation to the biggest economy in the world. 

China’s regulatory climate for technology and investing (26:53)

‍Jamie: There have been questions about the regulatory climate that we are seeing today, and I don’t think it’s just about big tech in itself, but I think the political transition weighs heavily on people’s minds. What should investors think about that? 

‍Kelvin: I think that most of the regulatory developments on the tech side is actually more or less over. What you'll get in the future is basically fine-tuning of some of the measures but not a complete overhaul of what you had like last year like what they did with the school tutoring sector. Also about six weeks ago they started to issue mobile gaming licences a day again so that's a very clear signal. A lot of the moves that they made last year was to reign in some of the over exuberance in the tech sector and some of these guys were basically like cowboys um and there was no bigger cowboy than Ant Financial.If they did not step in then, it would have built into a huge systemic problem three to five years down the road. It is actually quite a solid move from a medium to longer term perspective.

About the event

China’s equity market opened 2022 to wild swings, as government crackdowns and geopolitical tensions between US and China continue to dominate concerns in the market. For investors seeking exposure to a rising giant on the global stage, how should they position their portfolios to take part in China's growth?

At the same time, the disruption in the world order by the Russia-Ukraine war accelerates a retreat back to divisive lines between economic superpowers. As the geopolitical tensions remain rife, can emerging markets still be a part of investors’ portfolios?

Join our speakers, Samuel Rhee, Chairman and Chief Investment Officer of Endowus and special guest Kelvin Tay, Regional Chief Investment Officer, UBS Wealth Management, as they discuss: 

• The global geopolitical climate, and the macro environment in China
• Tensions in the Chinese technology sector
• Concerns over China's property market
• Distinctions and choices between A-share vs H-share exposure
• What the future holds and what are the next frontiers for emerging markets

About the speakers

Samuel Rhee is Chairman of Endowus, a leading digital wealth platform in Asia. He is the former CEO and CIO of Morgan Stanley Investment Management in Asia, with 27 years of institutional investing experience in Singapore, Hong Kong and London.

As Endowus’ Chief Investment Officer, Sam heads the Investment Office and ensures holistic portfolios for every investor, including the Endowus ESG Portfolios — the first of its kind in Asia. He is also responsible for the company’s asset allocation and investment selection across all offerings.

He is a firm believer that individuals should have access to the same knowledge and resources that are made available to institutional investors. With this vision, Sam passionately advocates digital adoption in wealth services by creating an interactive and seamless user experience, and making investing and smart financial planning easy and painless.

Endowus solves the biggest problems of wealth and investing, and retirement adequacy, leading to the firm becoming the first and only digital advisor for CPF investing in Singapore.

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Kelvin Tay is the Regional Chief Investment Officer at UBS Global Wealth Management. Kelvin is a member of the UBS Global Emerging Markets Investment Committee, as well as the Asia-Pacific Investment Committee where he provides strategic research to the asset allocation process.

Kelvin is a bi-monthly guest host on CNBC Asia, and a regular commentator on international broadcast media such as Bloomberg TV, CNA, and BBC World. He also contributes byline articles frequently to The Business Times, South China Morning Post and many other top-tier publications.

Kelvin is also an Adjunct Associate Professor at Nanyang Technological University's Wealth Management Institute, where he's the Lead Faculty for Investment Products, Advisory & Strategy. NTU is ranked 11th in the world by Quacquarelli Symonds (QS) World University Rankings 2020.

Kelvin joined UBS Wealth Management Asia in April 2006 and was deputy head of P&S Consulting (Southeast Asia), where he helped clients structure investment portfolios based on asset allocation.

Prior to joining UBS, Kelvin held numerous responsibilities at Deutsche Bank Private Wealth Management (Asia). As the Asian Equities Strategist, he was responsible for equity allocation and managed an Asian equities portfolio. He was also responsible for selecting underlying equities for the private bank’s structured products and for conducting funds research.

Kelvin received his MBA from Imperial College, University of London 1999. He also holds a Bachelor of Social Science and Bachelor of Arts degree from the National University of Singapore.

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Jamie Lee is Head of Editorial and Content at Endowus, where she oversees financial literacy curation, as well as content strategy and execution. At the heart of her job is the purpose of demystifying investing so it becomes a more inclusive conversation for all.

Jamie also works with the content team to articulate effectively what Endowus stands for in its fee-only mission. She was previously deputy editor at The Business Times, where she spent close to 14 years managing editorial coverage of two major sectors in Singapore: banking & finance, and property.

She holds a Master of Arts (Business and Economic Reporting) from New York University’s Stern School of Business and the Arthur L. Carter Journalism Institute.

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