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Value Partners unshaken by tariff moves

Value Partners’ fund manager Frank Tsui said the tariffs may lead to near-term market volatility, creating some buy-on-the-dip opportunities.
Value Partners unshaken by tariff moves

US president Donald Trump expressed his intent to impose tariffs of up to $60bn on products and metals imported from China, sparking concerns over possibility of a wider scale trade war.

Although Japan, Canada and Mexico, the European Union, Australia, Brazil, Argentina, and South Korea are expected to be exempt from the tariffs on metals, China is not. Further details will be announced in the next 15 days.

In response, China’s Ministry of Commerce said it plans to levy duties on US imports for up to $3bn. The additional duty imposed on dried fruit, wine and steel pipes will be at 15% while extra 25% will be levied on pork products and recycled aluminium.

The Chinese government has also made a list of 128 products from US that could be targeted if the two countries are unable to reach an agreement on trade issues, the ministry said.

Frank Tsui, fund manager at Value Partners, a firm with a strong investment focus on China, said that so far he is not overly-concerned about a trade war erupting.

“The reciprocal move of a $3bn tariff [imposed by China] is rather gentle, compared with the $50bn from US. A trade war is therefore unlikely at this stage,” he explained.

“The possibility [of the US tariffs] affecting the supply chain in China will be low, given the end demand remains stable,” he added.

“Assuming a 25% tariff will be imposed on Chinese imports to the US, the levy may reduce the country’s export receipts by $6bn annually. It is tiny when the amount is compared with total Chinese exports of $2.28trn and the scale of China’s economy with a nominal GDP of $12.3trn.”

However, the upcoming announcement on tariffs details from the US government will certainly drive market volatility in the near term, creating buy-on-dip opportunities for investors who are interested in exposure to Chinese equities, he said.

His optimistic views on China remain unchanged due to what he sees as “sound and solid macro and corporate fundamentals”.

Tsui manages Value Partners Classic Fund, a equity fund investing primarily in greater China.

Excluding greater China funds, there are only three funds available in Hong Kong that offer more than 50% exposure to China stocks. They are Eastspring Investment Dragon Peacock Fund, Mirae Asset Asia Great Consumer Equity Fund and Schroder ISF BRIC Fund.

Eastspring Investment Dragon Peacock Fund


Mirae Asset Asia Great Consumer Equity Fund


Schroder ISF BRIC Fund


Data: FE


Global allocation equity funds with largest China exposure


Allocation in China Largest geographical allocation
Amundi HK – Growth 23.05%


ICBC – Global Emerging Enterprises

23.3% China
Morg Stnly – Global Opportunity 19.04%

US (45.82%)

Data: FE

Part of the Mark Allen Group.