Our Chairman’s Message
Value Partners has been a pioneering force in the Asian asset management industry since we first arrived on the scene in 1993. Our mission, goals and values remain the same now as they did then: to seek the very best investment opportunities for you among under-followed and out-of-favor stocks in the Asia-Pacific region.
Our core investment creed – our guiding principle – has not changed since day one: it’s something that we call “value investing”. Our belief in this time-tested stock selection strategy (applied with discipline and courage regardless of market fads) has proved us right – with consistently excellent returns for our clients, and recognition from our peers.
For 2018asdf, we expect very volatile markets, and we are cautious. China-related stocks, trading at about 12.5 times forward earnings, remain reasonably priced, especially when Chinese companies are enjoying double-digit earnings growth. But in many parts of the world, stocks do look expensive, and investors seem too complacent, at a time when interest rates are trending up. We also worry about rising tensions in the Sino-American trade relationship. Investing mainly in the Asia-Pacific region, however, we would expect any setback to be temporary, as the region’s economic fundamentals remain robust, with new sources of growth available for use.
Indeed, we stick to our view that Asian fund managers like Value Partners are entering a Golden Age. The mainland Chinese public, with the world’s biggest pool of savings, are clearly looking to diversify their investments. We think this could be one of the biggest business opportunities ever seen in the history of asset management.
Now it’s a matter of “when,” not “if,” the Chinese authorities would proceed further with deregulation and market-opening. Currently, the government is preoccupied with stabilizing the domestic financial system, with no-nonsense measures that include closing down unauthorized lending channels, restricting “shadow banking” activities and curbing irregularities. This difficult but critical campaign to strengthen the foundations has slowed down the market-access programme, but we think we don’t have much longer to wait.
What we see with the Chinese mainland is a lot of money requiring professional management and, over time, huge surges in capital flows, both domestic and overseas, as well as further emphasis on ownership rights, the role of markets and the rule of law. To achieve the national ambition of becoming a fairly developed country by the early 2020s, China knows it needs efficient markets. Savings need to be channelled into investments, not wasted, while social stability can be enhanced by improving access to better quality investment choices.
In a sense, Value Partners has spent the last 25 years preparing for this “Big Bang.”
Sincerely,
CHEAH Cheng Hye
Chairman and Co-Chief Investment Officer