Overview: The Asian Allstars portfolio fell 5.20% net of fees for the month of September.

The Asian Allstars portfolio fell 5.20% net of fees for the month of September. Macro conditions continue to be weak given the backdrop of the upcoming NPC (National Peoples Congress) meetings in late October where it is expected that President Xi will be confirmed for a 3rd  five year term. While sentiment remains weak, the key question for investors to ask is whether or not certain markets are attractive based on current valuations. When comparing Asian equity markets vs developed markets, Asian markets especially China are trading at mid to high single digit P/Es.

Given these valuations the investment committee has resolved to increase Greater China Equities (+9%) and reduce Asian corporate credit (-9%) to position the portfolio for an inevitable rebound. We believe equities would rebound more strongly than credit given the data we have analysed. While we don’t know when this will happen, markets at some point turn back to rationality and valuations must reflect earnings of underlying companies.