Time the Sentiments - China - Edelweiss Greater China

  

A lot has been said about "Timing the Market". My experience and learning have made it easy for me to accept it easily that no one can successfully time the market consistently. Timing the market has two elements: "catching the bottom/peak "and " catching the trend falling/rising" of a particular Sock/index. A successful timing of the market means catching the bottom with the rising trend and vice versa, for an investor to repeat this every time consistently is extremely difficult to execute. 

Successfully capturing only "catching the trend" can easily generate above-average returns over a long period. Many factors can impact the trend of a particular Index/stock/industry eg Govt Policies, Monetary policies, Structural changes, and many more. Within that, there is one more element that plays a vital role "Sentiments".

Timing the Sentiments can be learned and practiced. One needs to look at various Indexes/stocks at a distance without being emotionally attaching his/her own views for every fall or rise. Many a  time we miss the sharp change in sentiments of the market which in the hindsight looks very obvious. Sudden changes in sentiments are always emotional and largely irrational. When a large number of participants start acting irrationally that creates the Opportunity of  "timing the sentiments". 

I can quote many examples wherein one element of trend has brought the opportunity of "Timing the sentiments".  Govt introducing lockdown brought the global sell-off creates Covid led Equity investing opportunities,  In 2015 Indian govt banned Maggi and Nestle was up for grab, In 2018 NBFC crisis Bajaj fin corrected by 25%, In Auto crisis of 2018-19 a basket of good quality auto companies corrected was a very obvious investing opportunities Eg Eicher, Bajaj Auto, Minda Industries. And there are many more.

All these Opportunities are very attractive in the hindsight. But common theme across all these opportunities is " sharp change in sentiments".

We are seeing a very sharp change in sentiments in china market currently. Chinese stocks have corrected across the board because of various indicative policy changes by the Chinese government in the last 6 months. China's government is making stronger regulations to govern the data impacting the tech giants like Didi, Tencent, Alibaba. Though the guidelines are majorly targeted towards the Chinese Companies listed in the US market. But this has brought broader corrections across many quality companies. Sentiments have been dampened recently with the indicative educations policy of the Chinese government to bring down the cost of education. Educational training institutions are banned from raising money through stock listings, while foreign capital cannot invest, according to a copy of the Chinese-language document. 

This is exactly the opportunity of  " Timing the sentiment".  

Indian Investors can capture this opportunity via the "Edelweiss greater china equity offshore fund". 

It is a Fund of Fund, underlying fund is J P morgan Greater China fund. 

Top Holding of funds are

The key strategy to capture this Sentiment is to stagger the allocation over the next 6 months.

Global allocation in Investing portfolio is not truly global without allocating towards china market. 

#Timethesentiments