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.
Diversifying our Chinese Equity Portfolio
2022 was a turning point for China and for Chinese assets.
After a secular bear market that started in 2015 in the global Chinese equity markets and in February 2021 in Chinese technology, education, real estate and consumer goods stocks, after a period where Xi Jing Ping’s second term was about containing the excesses developing in the Chinese economy and society, the October 2022’s 20th Congress of the Chinese Communist Party marked the beginning of a new phase of development of China’s economic and political might that will see its financial markets outperform global equity markets significantly and in a lasting way in the future.
Xi Jing Ping’s third term at the helm of China has seen a considerable change in the internal dynamics of the Communist Party with the silencing of the dissenting factions inherited from the past. But, at the same time, the social and economic hardship of strict COVID policies, the seclusion of China from the rest of the world and the attempts to bridle individual freedom have also led to a seismic change in the attitude of the Chinese vis a vis the rule of the Communist Party.
The speed at which Xi Jing Ping’s administration is unwinding the COVID restrictive policies, opening its borders, stimulating its economy by supporting the real estate sector and easing monetary policy and normalising its international relationships with the US, Europe and Japan while developing an intense bi-lateral and multi-lateral activity to create a multi-polar world that is less dependent on and less influenced by the US is staggering.
It testifies of the urgency felt within the Party to achieve its two strategic priorities : Keep the Chinese Communist Party at the helm and lead China to world economic dominance through economic growth and incremental affluence for the masses and not a handful of billionaires.
A SECULAR bottom IN CHINESE EQUITIES was RECORDED on OCT 31st 2022.
The next few years will see a powerful rise in Chinese equities as China’s economic growth will propel its economy to word dominance. This secular bull market will take them from the historical extremes of undervaluation reached in October 2022 to a quick reversion to the mean first, and then to extremes of overvaluation in the next decade as Chinese households pour their savings into financial products and foreign investors shift their perception from China being “Un-Investable” to China being the best performing economy in a western world mired in economic contraction, debt deflation and public finances travails.
Today, Chinese assets represent barely 5 % of the global pool of financial investments against 63 % for the USA.
The next decade will see those metrics evolve in the opposite direction, closing the abnormal gap that has developed following the excessive monetary policies pursued by Western democracies since 2008 and the restrictive policies implemented by China since 2020. We also see significant structural developments happening when it comes to the further opening up and integration of China’s various equity markets, including Hong-Kong.
Now that the impulsive reaction rally compensating the irrational downdraft of October 2022 is completed, time has come to shift the management of the portfolio of Chinese assets from a block, indexed, asset allocation logic to a more dynamic, sectorial and company-dependent management, still within the context of an agile and dynamic asset allocation.
2023 will see a strong outperformance of Chinese equities and the Chinese currencies, and we feel the time is right to perform below a brief overview of our existing positions ahead of what we see happening in 2023 through charts as we are doing for other segments of our portfolio. We have been managing in full transparency for years and will continue to do so in the future.
We have now started increasing our individual positions in the domestic A -Share market, re-investing in China’s education, tourism, and consumer goods sectors, and in Hong Kong real estate for the first time in many years. The financial sector is still one of our favourites as are EVs and automobiles or renewable energies. State Owned enterprises should be favoured and China’s technology and social media giants are embarking on a lasting path of appreciation.
Coming into the end of a highly volatile year with strong performances and MAXIN GLOBAL FUND – USD ranking # 1 in the HFR peer group rankings for the second time this year, we have de-risked our portfolio and privilege a lower volatility to additional alpha.
MAXIN GLOBAL FUND – USD
Transaction Update 8 December 2022
New Asset Allocation
Chinese Equity Portfolio Overview
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