Chinese stocks saw strong rebound in November on the back of key policy moves from China centred on economic recovery, as well as less hawkish rates expectations in the US. During the month, the CSI 300 Index and FTSE China A50 Index gained 9.5% and 12.4% respectively to reverse four consecutive months of decline, while the Hang Seng Index outperformed major global indices with a 23.2% jump.
Singapore Exchange (SGX) lists close to 100 stocks which derive at least 50% of their revenue from China. The top 10 most traded stocks within this segment averaged 5.0% total returns in November, with 5 out of the 10 stocks notching double-digit gains over the month.
Amongst the top 3 gainers in the list, Yangzijiang Shipbuilding reported record high total orderbook value as of Nov 13, CapitaLand China Trust saw marked recovery in its retail portfolio in Q3 2022, while Yangzijiang Financial remained on track in its portfolio diversification strategy.
Chinese stocks ended the month of November with record performance buoyed by expectations on slowing pace of US Fed’s rate hikes and key policy moves from mainland China. During the month, the CSI 300 Index and FTSE China A50 Index gained 9.5% and 12.4% respectively, reversing four consecutive months of decline. Meanwhile, the Hang Seng Index rose 23.2%, its highest monthly gain recorded since the conclusion of Asian financial crisis in 1998. Overseas-listed Chinese stocks paralleled gains, with the Nasdaq Golden Dragon China Index up 37.5% in the month.
Analysts lifted outlook for China’s economic growth in November on the back of key policy moves which included optimised COVID response and a rescue package for the property sector, along with further fiscal and monetary support. Most recently, in a speech given to a central bank conference on Dec 2, the Governor of the People's Bank of China (PBOC) Yi Gang declared that the central bank’s attention is now centred on economic growth. The Communist Party’s Politburo meeting convened by its top decision-makers on Dec 6 also pledged pro-growth policies for the upcoming year while prioritising stability to “strongly boost market confidence”, according to state media report. This was followed by the announcement of 10 new COVID containment measures which marked sweeping changes, including home quarantine for mild cases, and removal of testing requirements for entering most public facilities and cross-regional travel.
Singapore Exchange (SGX) lists close to 100 stocks which derive at least 50% of their revenue from China. The top 10 most traded stocks within this segment, which accounted for 95% of the segment’s average daily turnover in January-November 2022, averaged 5.0% total returns in November, reversing October’s 6.8% decline. 5 out of the 10 stocks notched double-digit gains over the month. On a year-to-date basis, however, average total returns for the 10 stocks remained flat, while the STI returned 9.6%.
| Stock | SGX Code |
Market Cap S$M |
YTD Average Daily Turnover S$M |
YTD Net Institutional Fund Flow S$M |
YTD Total Return % |
Sector | Nov22 Total Return % |
Nov22 Net Institutional Fund Flow S$M |
|---|---|---|---|---|---|---|---|---|
| Yangzijiang Shipbuilding | BS6 | 5,649 | 33.0 | 110.6 | 118.1 | Industrials | 19.2 | 60.5 |
| CapitaLand China Trust | AU8U | 1,891 | 4.9 | -67.1 | -0.2 | REITs | 16.5 | 4.0 |
| Yangzijiang Financial | YF8 | 1,273 | 14.3 | -241.5 | -44.4* | Financial Services | 11.3 | -15.7 |
| NIO | NIO | 24,938 | 5.0 | -23.8 | -37.5* | Consumer Cyclicals | 10.6 | -2.6 |
| Hutchison Port Holdings Trust | NS8U | 2,217 | 2.3 | 13.1 | -9.4 | Industrials | 10.4 | -2.3 |
| Sasseur REIT | CRPU | 958 | 1.4 | -38.5 | -1.4 | REITs | 9.9 | -0.8 |
| Wilmar International | F34 | 25,590 | 29.8 | 64.2 | 2.9 | Consumer Non-Cyclicals | 5.7 | -13.6 |
| Jiutian Chemical | C8R | 149 | 2.5 | 19.3 | 7.0 | Materials & Resources | -3.8 | -0.9 |
| Geo Energy Resources | RE4 | 513 | 6.4 | -16.7 | 31.1 | Energy / Oil & Gas | -6.4 | -6.4 |
| NanoFilm Technologies | MZH | 874 | 4.2 | -95.1 | -64.9 | Technology | -23.6 | -17.9 |
Source: SGX, Bloomberg (Data as of 30 Nov 2022).
Note: Returns are in terms of SGD.
* Total return for Yangzijiang Financial and NIO are as of their respective listing date this year to 30 Nov 2022.
Yangzijiang Shipbuilding (SGX:BS6)
- Yangzijiang Shipbuilding's total orderbook value as of 13 Nov 2022 stood at US$10.3 billion, a record high for the Jiangsu shipbuilder which was established back in 1956. Year-to-date new order wins at US$4.2 billion have already more than doubled 2022’s target, with Yangzijiang now seeing revenue visibility to mid-2025.
- Notably, recent maiden contract for LNG carriers represents the first time a non-state-owned Chinese shipbuilder has entered this market, a key milestone that was a result of the group’s “consistent development and acquisition of technologies and licenses over the years”.
- With a new ESG committee to further advance its green vessel strategy, management believes that Yangzijiang is poised to be a beneficiary of stricter environmental regulations within the industry.
CapitaLand China Trust (SGX:AU8U)
- Singapore’s largest listed China-focused REIT, CapitaLand China Trust has exposure to retail, business parks, and logistics parks across 12 Chinese cities, with a combined valuation of S$4.9 billion as at 31 Dec 2021.
- CapitaLand China Trust’s earnings resiliency has been strengthened over recent quarters owing to its strategic diversification into new economy assets, which now represents more than half of its portfolio exposure based on gross floor area. Most recently, CapitaLand China Trust reported 7.5% YoY growth in net property income for 9M22 on the back of increased contributions from new economy segment.
- Meanwhile, CapitaLand China Trust's retail portfolio achieved its first positive rental reversion of 4.9% since the start of COVID-19, while reporting quarterly growth of 37.5% and 33.7% in Q3 2022 shopper traffic and tenant sales respectively.
Yangzijiang Financial (SGX:YF8)
- Established in Apr 2022, Yangzijiang Financial is the spin-off of the investment arm of Yangzijiang Shipbuilding. As at 30 June 2022, Yangzijiang Financial’s asset under management (AUM) totalled S$4.8 billion, with a track record of delivering above 9.5% pre-tax return on assets (ROA) for the last 3 years.
- In its Q3 2022 business update, Yangzijiang Financial reported lower YoY income which was attributed to a higher percentage of assets being held in cash and yield enhancement products due to uncertain economic outlook, along with interest income and fair value losses from its China-focused portfolio. Nonetheless, the group was profitable for the quarter and remained on track to achieve its long-term target of diversifying 50% of AUM to offshore investments.
- Most recently, Yangzijiang Financial secured from the PBOC a liquidity pool scheme which will serve to accelerate cost-efficient deployment of capital in and out of China.
