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. At MAXIN ADVISORS, we manage FULLY TRANSPARENTLY and publish the transactions on a DAILY basis and the details of the portfolio on a WEEKLY basis.
MAXIN GLOBAL FUND / MODEL PORTFOLIO
Gross Performance
+ 11.40 % Last Week
+ 11.40 % Month to Date
+ 43.83 % Year to Date
+ 761.92 % Since Inception Jan 1 2014
+ 27.32 % CAGR Per Annum 8.92 years
NAV 861.92
MAXIN GLOBAL FUND – USD
Net Performance
+ 11.40 % Last Week
+ 11.40 % Month To Date
+ 5.93 % Since Inception 22 Feb 2022
+ 7.25 % CAGR Per Annum 9 Months
Estimated NAV USD 1053.9 105.39
Manager’s Comments
As expected, October 2022 wild downdraft marked the secular bottom of Chinese equities, driven down by irrational liquidations and hedge funds pushing the index down at the close for their monthly valuations.
In the first four days of November, Chinese equities rebounded sharply with the HSCEI rising by +9 % and the CSI 300 + 6,3 %, a strong reversal that finally marks the end of the bear market in place since February 2021.
We were right not to move and live the volatility at such low valuations and our portfolio rose by + 11.40 % in the first 4 days of the month, recouping a sizeable chunk of its unrealised losses. Almost all our Chinese positions rebounded sharply with some individual positions rising by 20 or more, especially in the technology and real estate sectors while our largest ETF position rose by 32 % on the week.
Investors are realising that China is not going to disappear, hedge funds have started covering their shorts and local domestic investors are coming back to the markets with sins that the Zero COVID policy is going to be eased ahead, with Hong Kong leading the move.
The visit of German Chancellor to Beijing with a strong delegation of German industrialists and his meeting with Xi Jing Ping are a turning point in the perception of China internationally and a clear message to the US that Europe and probably other countries will not support the US in its confrontational attitude vis a vis China. America has no choice but to do with Xi Jing Ping’s China and we would not be surprised to see a change of attitude following the upcoming meeting in person between Xi Jing pin and Joe Biden scheduled at the next G20 meeting.
With a bottom firmly in place on a significant long term support, there is significant room to the upside, especially if, as we expect, more announcements are made on market and economy friendly measures in the weeks to come.
It haa clearly been a wild and irrational ride in the past four months but we are at the end of it and have taken advantage of the unsustainable decline to add to positions and increase our exposure to China to 117 % of our portfolio. We have not sold anything, did nit realise losses and some of our most recent investments are already yielding positive returns while most of the others will come back to our purchasing cost very soon.
Last week, we added to our Chinese positions by averaging down in BAOZUN, BILIBILI, KUAISHOU, COUNTRY GARDENS and ALI BABA.
The week was also marked by strong volatility in the US, where our expected pul back unfolded and the SP500 tested our target support at 1710. We took advantage of the move to take our profits on our trading short positions in the SP500 and Nasdaq Future and averaged down on some of the tech mega caps.
Bond markets and the US dollar were undecided with the labor market data sending mixed signals and the FED hiking rates by another 75 basis points and Jeremy Powell sending a hawkish signal to the markets with a target of 5 % Fed funds before the tightening is over, a level that we articulated months ago.
However, the earnings reporting season has been good and we expect inflation data to ease ahead, giving room to the Fed to slow the pace of interest rates hikes. The Bank of England also hiked rates by 75 basis points but Andrew Bailey was clear on the fact that this would probably be the last of the jumbo hikes.
Monetary tightening takes time to filter through the economy and it is only right for Central banks to observe the effects of previous hikes before going too far. Moreover, the extreme inversion of the yield curve, at levels not seen since the 1980s, posts too a sharp economic slowdown in the beginning of 2023, something that will support the bind markets.
US bond yields were volatile last week, tentatively marking a lower top. The inflation data is due next week and, in our views, the risks are tilted to the downside considering the sharp fall in real estate prices and the sharply lower ISM Prices Paid index for October released last week. This series measures the rupees paid by corporations for their supply, or input cost, and its sharp decline to 46 instead of 53 indicates that price pressures are decreasing sharply already.
Lower inflation data may surpass the markets send bonds rallying the US Dollar falling and equities engaging into our expected year-end rally. We are long bonds, equities and have re-instated our long GOLD position on Friday while adding to the Gold Miner position that we have traded successfully over the past few months.
We also went long Crypto-currencies on the significant break of Ethereum to the upside.
Finally, we were stopped out of our short position in Oil.
On the week, Silver and Gold were positive contributors, bonds are still dragging our portfolio down for now, our long portfolio of US equities was affected by the results of corporations and the non-execution of some of our stop-losses overnight, but we are trading the space actively.
Our European Portfolio was Aston positive contributor with TELECOM ITALIA rising by 11 % as our break up scenario seems to be materialising, we added to ADIDAS and are now back in profits after its 14 % rise last week, GRIFOLS and MERLIn Properties also did well and we added a new position in the UK as a play on the breakout in Copper. ANTIFAGASAT is the purest play on Copper as it is Chile’s largest copper miner and the comopyn is particularly cheap.
Copper’s breakout is particularly significant as it anticipates a better Chinese economy and and end of the real estate crisis there.
Our only negative contributor in Europe is TOTAL ENERGIES, where we still expect the French Government to impose a special tax on its profits as well as curb on petrol prices at the pump.
In China, our EV plays rebounded extremely sharply together with most technology stocks. Our ETS on the US listed Chinese tech stocks rose by 19 % as did our ETF on China’s domestic index. The sharp turn in the value of the Yuan bodes well for further economic momentum ahead.
The sharp reversal in the HXC Golden dragon index marks a turning point and we expect some positive developments on the front of China see corporations listed in the US.As the chart below shows, there is plenty of upside ahead is the bottom is confirmed.
The set-up in Gold and Silver is extremely positive as we have predicted and be supported by a weaker US dollar and lower bond yields.
Looking ahead, our road map is playing out at expected and we have been extracting alpha from the winkled volatility of US stocks in the past weeks and months. With easing inflationary pressures, bond yields and the US dollar should ease further ahead with a target of 3.5 % on the US 10 year Government bond by year-end. That should provide the set -up for our equity bear market rally extending towards 4’150 into the beginning of the year, after some marginal weakness into next week up till the inflation data on November 10.
The only caveat could come from the US mega tech complex which is technically raising question marks. If they do not rebound next week or the inflation figures come worse than expected, then we could resume the downdraft further, but we put a low probability win this outcome.
As always, we stand ready to go short again if any of the above negatives were to materialize.
Portfolio Details
Asset Allocation
Transaction List
Week ending 5th Nov 2022
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