MAXIN GLOBAL FUND - USD is a Long / Short Directional hedge Fund incorporated in Luxembourg. It started trading on February,22 2022 and replaces MAXIN ADVISORS' MODEL PORTFOLIO which has been trading since January 1st 2014.
China’s Economic Data Points to Policy Action
The release of China’s April economic data paints a picture of a two-tier economy where the consumption leads with strong year on year comparison while manufacturing is growing at a weaker pace than expected.
Overall, China’s consumer spending and industrial activity grew at a slower pace than expected in April, adding to
signs the recovery in the world’s second-largest economy is losing some momentum after the strong catch-up phase of the first quarter.
China’s Retail sales climbed 18.4%, helped by a low base of comparison from last year, slightly missing the 21 % increase expected by economists.
Since the beginning of 2023, Retail sales have been growing at + 8.5 % when compared to the first fourth month of 2022, now regaining the pace of the pre-pandemic average.
On the other hand, Industrial production rose 5.6% from a year earlier, the National Bureau of Statistics said Tuesday, much lower than the 10.9% median estimate in a Bloomberg survey of economists. Manufacturing is being held back by the weakness in exports and the slow recovery in construction activity.
Growth in fixed-asset investment slowed to 4.7% in the first four months of the year.
But the true issue for the Chinese Government is unemployment
The urban jobless rate eased to 5.2%, but unemployment among young people reached a record high of 20.4%.
The headline figures were boosted by comparisons with Aprilv2022, when Shanghai was in lockdown, resulting in a plunge invbusiness and consumer activity at the time. Even so, the numbers were disappointing and suggest policymakers may need to step up support for growth.
The PBOC might cut interest rates in the second half of the year to support growth, The People’s Bank of China hinted Monday it will keep policy supportive, pledging “appropriate” levels in money supply and credit.
On Monday, it injected more long-term liquidity into the financial system, while keeping the rate on its one-
year policy loans unchanged.
Consumption remained solid, yet the spike in youth unemployment to a record high raises questions about how
evenly distributed that recovery can be, The key remains to boost confidence in the private sector and among households.
The housing market is turning. Growth in property sales accelerated to 13.2% year-on-year in April, investment in the sector contracted 16.2%, according to Bloomberg calculations based on official data,
Overall, China’s recovery is under way and led by the consumer as we always expected.
Manufacturing is rebounding but will remain dependent on exports and the health of the Western economies in the coming quarters.
We expect the Government to take action in May and June to ease financial conditions further and direct investments into the sectors that are priorities, with a strong focus on Youth labor.
When it comes to equity markets, the recent leadership in state owned enterprises and financials indicates that the Chinese savings will be further directed towards the financial markets.
We expect the Chinese indexes to start the second leg of their secular bill marks by June / July.
In the mean time, we shall take opportunity of any weakening in May to increase our exposure as we are doing now with the tech sector.
MAXIN GLOBAL FUND – USD
Transaction Update 15 May 2023
With China’s economy humming on domestic consumption, we are gearing our portfolio particularly on the consumer sector and the time has come to get back into retailers and the large Chinese technology companies.
Today, we added to out long position in POP MART, a retail chain of convenience stores and re-entered BAIDU, ALI BABA and WEIBO after having added JD.COM in the past few days. Conversely, we were stopped out of our position in COUNTRY GARDEN as our stop losses were executed.
On the Macro front we were stopped out of our long GOLD position and reduced our LONG Treasury bond positions as US yields are teetering on the brink of a major technical level. We cannot exclude a temporary break out in US bond yields as the tense negotiations on the US Debt ceiling are developing ahead of a potential US default in June.
This would obviously be negative for equity markets and send the US dollar higher, taking a temporary toll on Gold
Finally, we added a new position in the US, in Generator and power equipment maker GENERAC HOLDINGS, a strong earnings and free-cash flow recovery story where the short interest amounts to 7.42 % of the float.
New Asset Allocation
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