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Market Commentary
Is Xi Jinping Really the Winner?
Author: Phillip Mutual Bhd
November 9, 2017




19th Communist Party Congress has finally concluded. Within the market, commentators mostly saw it as winner takes all for Xi and the beginning of new era. The new Politburo line-up, however, is less of a surprise. Xi stays as General Secretary and Li Keqiang stays as Premier.

Of the two other candidates widely viewed as potential Standing Committee members, Hu Chunhua remains in the Politburo and Chen Min’er has become a Politburo member, not standing committee as widely speculated. It is worth noting that by the time the CPC holds its next NCCPC in 2022, of the seven members of this Standing Committee, Xi Jinping, Li Zhanshu and Han Zheng will all have passed the party’s implicit retirement age of 68. Although Xi Jinping’s name being added to the party constitution, the standing committee line-up suggests the president is still consolidating his political power (Figure 1). We expect economic policies over next five years though increasingly towards Xi’s style, which emphasises supply-side reform, stronger SOEs, deleveraging the economy, income distribution and environmental protection, may change courses when facing political hurdles.

Figure 1 18th and 19th China Standing Committee and Politburo

19th Standing Committee


18th Standing Committee


19th Politburo


18th Politburo

Source Various media

Against this background, market consensus is that things may slow down post the 19th party congress, a minority yet rising view is that growth will remain steady.

To conclude, we believe Investors are at best neutral weight on China in 1Q 2018.

Table 1 Valuation of MSCI Indices
  PER PBR
CY 2017
Dividend Yield
CY 2017
CY 2017 CY 2018
World 17.4 15.7 2.2 2.4%
World Developed 18.0 16.4 2.3 2.4%
World Emerging 13.9 11.8 1.7 2.4%
Asia Ex Japan 14.8 12.8 1.7 2.7%
China 15.1 13.1 1.9 2.0%
Source MSCI, Bloomberg

Funds With Exposure into China Asset Class
Name Geographical Focus 1 Year Returns (%)* 3 Years Annualized Returns (%)* 5 Years Annualized Returns (%)* EPF Islamic
Eastspring Investments Dinasti Equity Greater China 39.64 23.01 16.53
Manulife Investment Greater China Greater China 36.88 19.96 14.20
Pacific Focus China Greater China 36.49 17.83 14.67
CIMB-Principal Greater China Equity Greater China 36.07 23.43 18.87
RHB Big Cap China Enterprise China 35.89 20.23 15.81
Manulife China Equity Greater China 28.88 15.44 14.73
Affin Hwang World Series - China Growth USD China 25.37 10.68 12.72
Manulife Dragon Growth USD Hong Kong N/A N/A N/A
(%)* Refers to Annualized Performance Return. (Eg. A 33.1% gain in 3 years works out to a 10% gain per year when annualised.) Source: Lipper IM

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