Hi Charlie Awdry here. Co-manager of Chinese equities and I thought that as China prepares to go off for their Spring Festival holiday, it might be a good time to give you an update on what we're seeing in the economy and on the equity markets.
Well we've had a fillip of course from the resolution between the US and China on trade. They've managed to agree on the things that are simple to agree on and delay some of the more controversial issues until later this year. That could be good news for the economy, maybe a little bit of a boost from inventory restocking. We're also seeing actually already a little bit of an economic recovery as shown by manufacturing surveys seeing a little bit of an increase in fixed asset investment. So there's a nice little cyclical momentum as China goes into this holiday.
We'll see of course, how this virus outbreak plays and whether that has an impact on the economy. We don't have anything to add, or any edge on that other than to say that we hope it's not as bad as previous episodes, and we continue to watch the World Health Organization website for updates.
From a portfolio point of view, we're still very active. There are certainly areas of the market that we like, particularly focused around the consumer: consumer services, tourism, retail, internet. But there are also areas we don't like. We still don't own any Chinese bank shares despite the cyclical recovery. We see that there's quite a lot of regulatory issues there, potentially some capital raisings to fill some balance sheets as well. So we'd be highly selective in what we invest in but it’s nice to see a little bit of a cyclical recovery and some appreciation for that from investors.
So with that thank you very much and we wish you “Gong Xi Fa Cai”, and all the best for the Year of the Rat.
*References made to individual securities or sectors should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security. Past performance is not a guide to future performance.
Inventory restocking: increasing purchase of goods used in the production process eg. in manufacturing.
Fixed asset: a long-term tangible piece of property or equipment owned by a company used in its operations to generate income.
Cyclical recovery: economic growth that is driven by cyclical sectors ie. those that tend to rise and fall with the economic cycle. Companies in cyclical sectors usually sell discretionary items that consumers buy more of during a booming economy and less in a weakening economy.
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
The Janus Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985, managed by Henderson Management S.A.
Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
Emerging markets expose the Fund to higher volatility and greater risk of loss than developed markets; they are susceptible to adverse political and economic events, and may be less well regulated with less robust custody and settlement procedures.
The Fund may invest in China A shares via a Stock Connect programme. This may introduce additional risks including operational, regulatory, liquidy and settlement risks.
If a Fund has a high exposure to a particular country or geographical region it carries a higher level of risk than a Fund which is more broadly diversified.
This Fund may have a particularly concentrated portfolio relative to its investment universe or other funds in its sector. An adverse event impacting even a small number of holdings could create significant volatility or losses for the Fund.
The Fund may use derivatives with the aim of reducing risk or managing the portfolio more efficiently. However this introduces other risks, in particular, that a derivative counterparty may not meet its contractual obligations.
If the Fund holds assets in currencies other than the base currency of the Fund or you invest in a share class of a different currency to the Fund (unless 'hedged'), the value of your investment may be impacted by changes in exchange rates.
Securities within the Fund could become hard to value or to sell at a desired time and price, especially in extreme market conditions when asset prices may be falling, increasing the risk of investment losses.
The Fund may incur a higher level of transaction costs as a result of investing in less actively traded or less developed markets compared to a fund that invests in more active/developed markets. These transaction costs are in addition to the Fund's Ongoing Charges.
The Fund could lose money if a counterparty with which the Fund trades becomes unwilling or unable to meet its obligations, or as a result of failure or delay in operational processes or the failure of a third party provider.