Navigating the Turbulent Waters of Global Markets:

In the ever-changing landscape of global finance, understanding the nuances of regional markets is paramount. One area that has consistently garnered attention is the Chinese equity market, a dynamic arena influenced by various factors, both local and international. Today, let's delve into the intricacies of the Chinese equity market and its position in the broader global context.

Chinese Equities: A Haven of Opportunities Amidst Challenges

1. Attractive Valuations vs. Developed Markets: One of the compelling aspects of Chinese equities lies in their attractive valuations compared to developed markets. Despite challenges, Chinese stocks have shown resilience, making them an enticing prospect for investors seeking growth potential.

2. Earnings Expectations Bottoming Out: Chinese companies are experiencing a gradual recovery, with earnings expectations stabilizing. This trend signals a potential upswing, aligning with the nation's rebounding economic activities, particularly in the manufacturing sector.

3. Fiscal Stimulus and Policy Adjustments: China's fiscal policies, including interest rate cuts and strategic bond issuances, are indicative of a proactive government approach. These measures aim to bolster economic growth, enhance financial stability, and offer support to local businesses.

Global Market Outlook: A Balancing Act Amidst Uncertainty

1. Volatility Across Asset Classes: The global market outlook remains uncertain, with volatility persisting across asset classes. Factors such as geopolitical tensions, fluctuating corporate earnings, and inflationary pressures contribute to this uncertainty.

2. The Importance of Diversification: Amidst these challenges, diversification emerges as a prudent strategy. As Chinese equity valuations remain promising, strategic investments in this market can provide stability and balance to a diversified portfolio.

Looking Ahead: Informed Decision-making and Strategic Investments

As we move forward, staying informed and making data-driven decisions are pivotal. The Chinese equity market, with its evolving landscape, presents both opportunities and challenges. By understanding the intricacies and aligning investments with expert insights, investors can optimize their strategies for long-term success.

Here's what I do as a personal investor:

I would continue to DCA into US and Chinese Equities without buying any further dips into these markets. The US market would potentially face a slower rate cut in 2024, which while will provide essential stimulus to the US markets, might drag out the price momentum of the US equities. There is limited downside to Chinese equities, and we are accumulating them in the event of further policy stimulus that would catalyze rallies.

Bond yields are very attractive now, and I would accumulate Singapore Savings Bonds, locking in high long-term yields. Short-term risk-free instruments such as T bills or Fixed Deposits are not as preferred, as I expect interest rates to decline from 2024 onwards. Tbills should only then be relegated to CPF Funds to make use of the current interest rate difference.

Within Equities, I would refocus on relevant growth stocks and reduce exposure to value-based equities. Small Cap Stocks might have good opportunities as previously much of the rally was brought by the Magnificient 7.

Remember, the world of finance is ever-changing. By staying engaged, informed, and adaptable, we empower ourselves to make sound financial decisions even in the face of uncertainty.

Here's to wise investing and a prosperous financial future for all!

Warm regards,

Ngooi Zhi Cheng