China recovery slower than expected

Investors will need to remain vigilant with respect to China in circumstances where the country’s recovery has been weaker than expected, according to Hong Kong-based co-chief investment officer with Value Partners, Gordon Ip.

Discussing the outlook with Financial Newswire last week, Ip said that the China property market had proven a particular drag on economic recovery noting that property sales had weakened sharply since March.

Value Partners is the portfolio manager for the Premium Asia Income Fund and Ip distinguished himself by making an early call to lower exposure to Chinese property and suggested that a time might be approaching to reconsider the level of exposure.

However, Value Partners approach is currently exemplified by the top 10 holdings in the Premium Asia Fund where there is a balance between companies in Hong Kong and China and those in Indonesia.

In terms of geographic exposure, the fund had around 50% allocated towards China and Hong Kong, 20% towards Indonesia, 11% towards Macao and 8% towards India.

Just as importantly, while exposure to real estate currently sits at 15% this is down from a peak of close to 80% in January, 2019.