Wednesday 24 Apr 2024
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Lo-hei is a fun, festive activity for the Lunar New Year. This vibrant custom involves the communal tossing of ingredients comprising raw fish slices, shredded vegetables and condiments as one hollers auspicious phrases to welcome good fortune.

In the Year of the Water Rabbit, can China equity investors expect good tidings as they partake in the yearly toss? We draw parallels between the auspicious symbolism in lo-hei and recent developments in China.

[ 年年有余 ] (Nian Nian You Yu), or may you have growing abundance, says the host as the raw fish is tossed in.

We think [ 年年有余 ] (Nian Nian You Yu) is also top of mind for the Chinese government. In the recent past, it has turned its focus on the economy, making important policy adjustments and plans for the next five years. We see a steady recovery in the new year as consumers start spending again and the government rolls out more stimulus.

As the host adds the shredded carrots, he wishes all [ 鸿运当头 ] (Hong Yun Dang Tou), literally may luck be at your doorstep.

China has moved onto a new phase of its pandemic management, with citizens now largely able to venture out. For many Chinese, wishing each other [ 鸿运当头 ] (Hong Yun Dang Tou) has become more personal as they can visit each other freely.

The latest easing moves gave markets hopes that China is at a critical moment and in transition to a more flexible approach despite high caseloads across many cities in recent weeks. While the road ahead may be bumpy, the forward-looking trajectory into the Year of the Rabbit appears to be much more encouraging.

Another ingredient to be sprinkled on is sesame seeds and this is especially favoured by entrepreneurs. The hosts wishes all [ 生意兴隆 ] (Sheng Yi Xing Long), may your business be prosperous.

Will the Year of the Rabbit be [ 生意兴隆 ] (Sheng Yi Xing Long) for property developers in China?

We are optimistic that brighter days lie ahead. The government has announced a comprehensive plan to support the ailing property sector alongside other complementary measures. These include cuts to mortgage down payments, maturity extensions of development and trust loans, among others.

Nonetheless, consumer confidence to buy homes will take time to rebuild. With China’s re-opening, and the expansive support plans, the Chinese’s love for property could again be making headlines.

The host also wishes everyone sweet and loving relationships – [ 甜甜蜜蜜 ] (Tian Tian Mi Mi), as plum sauce is layered onto the dish.

The US-China relationship is watched closely by investors. While the relationship is not likely to be [ 甜甜蜜蜜 ] (Tian Tian Mi Mi) in the near future, there appears to be a softening in rhetoric when US President Joe Biden and President Xi met in late 2022 at the G20 meeting. Given deep economic interdependence between the two countries, tough actions taken by the US on China could end up hurting the US itself.

The US has taken action against advanced semiconductor chips shipments for China, particularly those used in advanced artificial intelligence. This has hurt the stocks of US semiconductor companies as China remains their largest customer. An improvement in the relationship between US and China would likely be mutually beneficial.

The host also drizzles oil around the salad and yet again wishes all prosperity – [ 一本万利 ] (Yi Ben Wan Li), may you get a hundredfold return from your investments!

Despite the recent rebound in China markets, valuations remain very low. With some uncertainties still on the horizon, many investors have remained on the sidelines.

The theme in the Year of the Rabbit is recovery and normalisation and this may give Chinese equities significant room to re-rate. More importantly, China remains one of the largest hunting grounds for active fund managers and we continue to be positive on Chinese equities for the long term.

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[ 发啊 ] “Huat Ah”

After adding a few final ingredients, the Yu Sheng is ready to be tossed. Everyone comes together in an abundance of well wishes, with hopes for a prosperous and smooth sailing year ahead.

We wish you and your loved ones a happy and healthy Year of the Rabbit.

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