Financials

Report by Your Weekend Reading

Ping An trades at record low valuations, offers a 6% dividend yield, is highly innovative and growing, but Erik@YWR notes that there is another kicker. Chinese pension reform. Individual retirement plans. This started as a pilot scheme in 2022, but in Dec last year the plan was officially rolled out nationwide. Erik thinks this is going to turn into a big story and will give Ping An a new growth driver which will rerate the P/E from 5.5x to over 10x. He targets a total return over the next 2 years of more than 130%.

Report by Copley Fund Research

The spread between India and China weights in active Asia Ex-Japan funds has narrowed to the lowest levels in Copley’s 13-year history and now stands at 16.17% vs. a peak of 45.3% in Aug 20. China’s decline over this period has been dominated by Consumer Discretionary, Communication Services and Financials. 3 companies standout as key drivers of the move lower: Alibaba, Tencent and Ping An Insurance. Increases in fund weight have been minimal with PDD, BYD and Trip.com seeing moderate upticks. India’s rise has been driven by the Financials sector. Specifically, 3 banks: ICICI Bank, HDFC Bank and Axis Bank.

Report by Copley Fund Research

Global Funds Positioning Analysis - allocations in China & HK among Global active managers have fallen to below pre-2017 levels. This allocation drop is in stark contrast to what is occurring in the US, with allocations powering to all-time highs. If Global managers are to increase weights in China, Steven Copley believes they will have to broaden their investment horizons. He compares Global stock holdings in China with their GEM peers - the rapid rise in investment by GEM Funds in Ping An Insurance, Meituan and JD.com suggests they can take a greater share in Global Fund portfolios in the future.