Beijing's late-September stimulus efforts spurred global inflows into Chinese stocks, with the SSE Composite and Hang Seng Indexes surging over 29% in two weeks. This came at the expense of other markets, including a 5-6% drop in the JCI. However, following China’s Golden Week holiday, investor expectations for further stimulus were unmet, leading to a 6% drop in the SSE index.

Simpan Views

We believe Beijing's decision to hold off on more stimulus was prudent. Previous measures have yet to fully take effect, and further stimulus might have limited immediate impact. While many expect more action to boost consumer demand, it’s likely the PBOC will focus on rate cuts before introducing additional consumption-related measures.

With the U.S. Fed cutting rates by 50bps, the PBOC can ease conditions without excessive pressure on the yuan. Although it’s too early to gauge the full impact of the stimulus, we believe it will improve China’s economic outlook. Simpan portfolios are well positioned to benefit by holding equities that double as China trade proxies, such as Metal Commodities. 

Portfolio Positioning

While headlines around China have been driving global fund flows, we see the JCI dip as a buying opportunity, particularly in blue chip stocks. We continue to position our funds in Metal Commodities, which should benefit from both China’s recovery and U.S. rate cuts.

Simpan Sustainable Equity Fund is well-positioned to capitalize on these sectors, offering long-term growth opportunities. Invest now to grow your wealth and support your financial goals.