Ride on China growth story but tread cautiously, say experts

S'pore investors can go for diversified portfolio of stocks or China-related plays

- Chor Khieng Yuit

Foreign investors are reconsidering the Chinese share market after recent stimulus measures boosted hopes that the tide has turned positive after lacklustre returns in recent years.

APS Asset Management founder and co-chief investment officer Wong Kok Hoi believes that "this time, it is different".

He added: "Many investors are still very sceptical about this rally. This is not a false dawn."

Mr Wong repositioned the firm as a China investment house and has been focused on investing only in markets there for the past four years.

Experts advise Singapore investors who are looking to ride on the China story to tread cautiously and go for a diversified portfolio of Chinese stocks or China-related plays.

The Sept 24 stimulus measures were the turning point for Mr Wong, who said that they sent a message that China's leaders now have a sense of the crisis.

The measures included cuts to interest rates, including home loans, and two new programmes to support stock markets.

Mr Wong said that in the past, Chinese leaders felt the economy was doing all right, growing at around 5 per cent.

It is now clear that they will do what must be done, he said, adding that "they will come up with more policies, or pull more levers, because they know that, if they do not do so, the economy will continue to decline".

Mr Jeffrey Lee, chief investment officer of Phillip Capital Management, said the stimulus measures focus more on boosting household consumption and stabilising the capital markets, a move that will help stem a deterioration in household balance sheets and, in turn, encourage people to spend again.

For now, the valuations of Chinese equities remain attractive, on the back of compelling earnings growth over the next two years, said Mr Yeang Cheng Ling, DBS Bank's chief investment officer for North Asia.