[INVESTMENT] MEMO - 09.07.2021

Welcome to July 2021.

I have gotten my covid vaccination last month and I had two (2) days of fever due to its side effect. Apart from that, I also had sore arm (vaccinated area) and body fatigue for two (2) days.

I sincerely hope everyone has gotten your vaccination done.

CHINESE STOCK MARKET CRASH?

Once again, the Chinese stock has taken a setback today. Many believe that Chinese regulators have embarked on a wide-ranging crackdown on Chinese tech companies, based on the reasons from anti-monopoly to data-privacy/national security.

Since last year, $BABA (Alibaba) ’s Ant Financial IPO has been halted by regulator. In April 2021, ALIBABA received a $2.8 billion fine on charges of suppressing competition. Just recently, Chinese authorities order Didi Global to taken down its application just days after its U.S. IPO, essentially preventing the company from adding new users (but existing users can still continue to use its application) to its platform.

However, the current pessimism sentiment could be a good opportunity to increase exposure to the best Chinese tech stocks, such as $0700.HK (Tencent) , $03690.HK (Meituan Class B) $BZUN (Baozun Inc) . If you look back on history, China has been through all kinds of pessimism sentiment due to the government regulation before, such as the gaming rules imposed on minors and anticorruption campaign launched a decade ago. During Trump administration, Chinese stocks also took a hit on the trade war in 2018, but then eventually not only they recovered but also make new all-time highs.

Having said that, the risk of investing in Chinese tech companies cannot be ignored completely. We do not know what are the new regulations to be imposed on the tech companies and its implication for now. Further to that, the fast-spreading Delta variant of Covid-19 may hurt global recovery and sent stocks sliding. I strongly that believe that some of the regulations are necessary to control the fast-growing technology sector such are big data and artificial intelligence (AI). Though all these technology sector have in a way disrupted the way we live, but I believe the China government would not want to kill their own technology companies by imposing harsh regulations on them. Do not forget that China is catching up very fast in technology sector to win the 21st century. PORTFOLIO PERFORMANCE Since my last Memo on 29.06.2021, there is no investment from me. However, I am still thinking of whether or not to take the advantage of the current pessimism sentiment in Chinese stocks by increasing my position in them. Since the inception of our fund in May 2020, we have been up close to 43.51%. We are still able to maintain our risk level at 4 as can be seen from the “average risk score”. Stay safe. Norman Liew

09.07.2021