Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<p>We called for covering short exposure and putting on risk in our bull group near SPX 3,800 support (hit 3,804.75) and did see a nice bull reversal in NY to short up the bull case off of SPX wedge support. The risk buckle came within the Feb 21 window. We now need to clear hurdle resistance levels to avert a downside re test.</p><p>This insight focuses on upside resistances to clear to open the way to a new highs and supports to hold to validate the SPX bull reversal off of primary wedge support. Our bull group is where we added risk and outline where we want to add risk in Asia.</p>

We called for covering short exposure and putting on risk in our bull group near SPX 3,800 support (hit 3,804.75) and did see a nice bull reversal in NY to short up the bull case off of SPX wedge support. The risk buckle came within the Feb 21 window. We now need to clear hurdle resistance levels to avert a downside re test.This insight focuses on upside resistances to clear to open the way to a new highs and supports to hold to validate the SPX bull reversal off of primary wedge support. Our bull group is where we added risk and outline where we want to add risk in Asia.

China and US Equity Analyst

Roger Xie

Cross Asset Strategy

<ul>
<li>China Asset Management industry has record year in 2020, with AUM approaching RMB 20 trillion, a 35% year-over-year growth. The total domestic mutual funds have reached about 8000. Equity-focused funds AUM stands at 10-year high RMB 6.4 trillion, accounting  10% of A-share free-float market-cap. This underscored that domestic institution funds have increasing participation and influence in A-share market. And investment positions and style have been re-shaped accordingly.</li>
<li>China Asset Management industry likely grows at 10% CAGR from 2018 to 2025 and to reach RMB 139 trillion by 2025. This is fueled by the increasing disposal income and stronger corporate balance sheet. It is estimated that the largest contribution for the larger market size is coming from saving deposit, which is constantly seeking higher yield and portfolio diversification. And the contribution to investing in A-share market will continue to rise.</li>
<li>This trend will be long-term positive for A-share market. It is also more important to look into local fund management's equity holding to get some hints on the market. The data shows local mutual funds’ position is currently at 4-year highs, as evidenced by their currently low cash ratio of 10.1% vs the past 5-year average of 13%. Retail investors, which account over 80% of daily liquidity and own ~60% of the free ﬂoat market cap, also appear constructively positioned in A shares based on several indicators, such as new brokerage account openings, margin financing, and fund flow. </li>
</ul>


China Asset Management industry has record year in 2020, with AUM approaching RMB 20 trillion, a 35% year-over-year growth. The total domestic mutual funds have reached about 8000. Equity-focused funds AUM stands at 10-year high RMB 6.4 trillion, accounting  10% of A-share free-float market-cap. This underscored that domestic institution funds have increasing participation and influence in A-share market. And investment positions and style have been re-shaped accordingly.
China Asset Management industry likely grows at 10% CAGR from 2018 to 2025 and to reach RMB 139 trillion by 2025. This is fueled by the increasing disposal income and stronger corporate balance sheet. It is estimated that the largest contribution for the larger market size is coming from saving deposit, which is constantly seeking higher yield and portfolio diversification. And the contribution to investing in A-share market will continue to rise.
This trend will be long-term positive for A-share market. It is also more important to look into local fund management's equity holding to get some hints on the market. The data shows local mutual funds’ position is currently at 4-year highs, as evidenced by their currently low cash ratio of 10.1% vs the past 5-year average of 13%. Retail investors, which account over 80% of daily liquidity and own ~60% of the free ﬂoat market cap, also appear constructively positioned in A shares based on several indicators, such as new brokerage account openings, margin financing, and fund flow. 


China Asset Management: Record-High AUM and User Growth, Set to Expand Further in 2021

Shanghai Stock Exchange Composite Index / Technical Analysis

Shanghai Stock Exchange Composite Index (SHCOMP INDEX)

<p>HSI short from 30k did kiss the 28k target and sets up a long trade into the next swing lower. Shanghai composite also met the 3,450 long support as the key driver for H shares and HK with some slippage/lag. A heavier global cycle will provide headwinds for the A50 initially which has yet to hit ideal buy support at 17,500 but now looks more promising.</p><p>HSI will need more work to proof a low at pocket support on the back of a heavier global cycle in coming sessions.</p>

HSI short from 30k did kiss the 28k target and sets up a long trade into the next swing lower. Shanghai composite also met the 3,450 long support as the key driver for H shares and HK with some slippage/lag. A heavier global cycle will provide headwinds for the A50 initially which has yet to hit ideal buy support at 17,500 but now looks more promising.HSI will need more work to proof a low at pocket support on the back of a heavier global cycle in coming sessions.

Korea Stock Exchange KOSPI 200 / Technical Analysis

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<div>Asia lean was on the short side (STI, HSI, KLSE, SET, Japan and India banks). Short protection called for in Taiwan and Korea for a pullback cycle. USD rally risk will add to pressure now that the USD/KRW has cleared resistance (we are long from 1,080).</div><div></div><div>Long equity and short the USD is a crowded trade and we are poised for a shakeout in the next few weeks. We like selling equities on a bounce attempt and buying the USD on dips into early February but divergences suggest this may start to see a bigger unwind.</div>

Asia lean was on the short side (STI, HSI, KLSE, SET, Japan and India banks). Short protection called for in Taiwan and Korea for a pullback cycle. USD rally risk will add to pressure now that the USD/KRW has cleared resistance (we are long from 1,080).Long equity and short the USD is a crowded trade and we are poised for a shakeout in the next few weeks. We like selling equities on a bounce attempt and buying the USD on dips into early February but divergences suggest this may start to see a bigger unwind.

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<p><em><strong>Exports were the key driver of China's acceleration in GDP in 4Q 2020, but FAI had been the key factor buoying the economy in April-December 2020. The low base will help power a substantial acceleration in YoY growth in 1Q 2021, but the impact of the FAI surge will hurt in 2H 2021, as export opportunities shrink once the rest of the world's production normalizes. In the interim, however, we recommend staying tactically overweight China. </strong></em></p><p>China's industrial growth of 7.3% YoY in December 2020 was the fastest in 3.5 years, while the 7.1% YoY growth in 4Q 2020 was the fastest since 3Q 2014. In turn, that powered the 6.5% YoY growth in real GDP during 4Q 2020, the fastest growth pace since 3Q 2018.  The key driver of the faster growth was a surge in fixed-asset investment (FAI) in April-November 2020 (+9.6% YoY), and a sharp acceleration in exports (+16.9% YoY) in 4Q 2020. The record trade surplus of US$212 billion in 4Q 2020 was accompanied by only a modest US$74 billion increase in foreign reserves, reflecting continued net capital outflow even amid the strengthening RMB. </p><p>Given that China has massive industrial over-capacity, the sustainable response would have been to stimulate domestic consumption to take up that capacity. Retail sales did improve in 2H 2020, but still grew only 4.6% YoY in December and in 4Q 2020. Instead China added hugely to excess capacity (particularly physical infrastructure) with a boom in FAI, up 9.2% YoY in Apr-Dec 2020, the fastest pace since 1H 2016. This approach didn't hurt China in 2020, because the rest of the world's industrial capacity was inoperative, and China's exports consequently soared.      </p><p>Full year real GDP growth was only 2.3% in 2020, the slowest in 3 decades, primarily because of the steep contraction in 1Q 2020 (the only quarter in which China was partially locked down on account of the Wuhan coronavirus). Consequently, 1Q 2021 will see spectacular YoY growth in all China's economic numbers -- exports, industrial output, FAI, retail sales, EPS growth -- helped by the artificially-depressed base. From 2Q 2021 onwards, real GDP growth will slow significantly (we estimate 5% YoY for 2Q-4Q 2021), as the reopening global economy reduces demand for China's exports, and industrial overcapacity resumes biting. In the near-term (1Q 2021) we recommend staying tactically overweight China. </p>

Exports were the key driver of China's acceleration in GDP in 4Q 2020, but FAI had been the key factor buoying the economy in April-December 2020. The low base will help power a substantial acceleration in YoY growth in 1Q 2021, but the impact of the FAI surge will hurt in 2H 2021, as export opportunities shrink once the rest of the world's production normalizes. In the interim, however, we recommend staying tactically overweight China. China's industrial growth of 7.3% YoY in December 2020 was the fastest in 3.5 years, while the 7.1% YoY growth in 4Q 2020 was the fastest since 3Q 2014. In turn, that powered the 6.5% YoY growth in real GDP during 4Q 2020, the fastest growth pace since 3Q 2018.  The key driver of the faster growth was a surge in fixed-asset investment (FAI) in April-November 2020 (+9.6% YoY), and a sharp acceleration in exports (+16.9% YoY) in 4Q 2020. The record trade surplus of US$212 billion in 4Q 2020 was accompanied by only a modest US$74 billion increase in foreign reserves, reflecting continued net capital outflow even amid the strengthening RMB. Given that China has massive industrial over-capacity, the sustainable response would have been to stimulate domestic consumption to take up that capacity. Retail sales did improve in 2H 2020, but still grew only 4.6% YoY in December and in 4Q 2020. Instead China added hugely to excess capacity (particularly physical infrastructure) with a boom in FAI, up 9.2% YoY in Apr-Dec 2020, the fastest pace since 1H 2016. This approach didn't hurt China in 2020, because the rest of the world's industrial capacity was inoperative, and China's exports consequently soared.      Full year real GDP growth was only 2.3% in 2020, the slowest in 3 decades, primarily because of the steep contraction in 1Q 2020 (the only quarter in which China was partially locked down on account of the Wuhan coronavirus). Consequently, 1Q 2021 will see spectacular YoY growth in all China's economic numbers -- exports, industrial output, FAI, retail sales, EPS growth -- helped by the artificially-depressed base. From 2Q 2021 onwards, real GDP growth will slow significantly (we estimate 5% YoY for 2Q-4Q 2021), as the reopening global economy reduces demand for China's exports, and industrial overcapacity resumes biting. In the near-term (1Q 2021) we recommend staying tactically overweight China. 

China's 2021 Will Look Spectacular in 1Q, but Overcapacity Will Bite Thereafter

China

The FTSE China A50 Index includes the largest 50 A Share Chinese companies by total market cap. 

FTSE China A50 Index (XIN9I INDEX)

SPX Hit 3,800 Long Risk Support

We called for covering short exposure and putting on risk in our bull group near SPX 3,800 support (hit 3,804.75) for the bull case from SPX wedge...

Thomas Schroeder

China Asset Management: Record-High AUM and User Growth, Set to Expand Further in 2021

China Asset Management industry has record year in 2020, with AUM approaching RMB 20 trillion, a 35% year-over-year growth. They will account 10%...

Roger Xie

HSI Short and Composite Target Met

HSI short from 30k did kiss the 28k target. Shanghai composite also met the 3,450 long support as the key driver for H shares and HK with some...

Thomas Schroeder

Asia Pullback Protection with USD Risk

Long equity and short the USD is a crowded trade and we are poised for a shakeout in the next few weeks. We like selling equities on a bounce...

Thomas Schroeder

China's 2021 Will Look Spectacular in 1Q, but Overcapacity Will Bite Thereafter

FAI surge of 9.2%YoY in Apr-Dec 2020 will hurt once global economy normalizes in 2H 2021. But in the interim, 1Q 2021 will be spectacular for...

Prasenjit K. Basu