Message from Coach (This will the last summary insight for the year ☺️)
On this week’s market summary:
📍1. Hong Kong’s financial companies will be forced to declare how their assets and investments have an effect on climate change under new requirements aimed at boosting government efforts to ensure the city becomes a major “green finance” hub. The mandatory disclosure requirements will be introduced in 2025, regulators said, while banks will have to carry out stress tests next year as part of the city’s drive to capture a slice of a market that is expected to be worth US$350 billion this year. “Hong Kong’s plan will also have a major impact globally, as it has an extremely large footprint, and the international significance of Hong Kong’s HK$45.7 trillion (US$5.9 trillion) capital markets means that it will play a critical role in the overall effort to reach net-zero carbon goals.”
📍2. Negotiators are racing to agree a treaty on investment between the EU and China, which European businesses have long hoped would rebalance the relationship between the two giant markets. It is intended to make it easier for European companies to invest in China, while safeguarding the EU’s much more open market for Chinese businesses. Until recently, Beijing was in no hurry to do a deal. But in the countdown to the inauguration of Joe Biden as US president, the Chinese leadership is pulling out the stops and offering concessions. Striking a deal with the EU on market access would be a coup for China’s president Xi Jinping. It would make it harder for the EU and the new US administration to make common cause on market opening and non-discrimination.
📍3. Hong Kong developers, facing a dismal Christmas shopping period at home, have pulled out all the stops to woo big spenders to their up-market malls in mainland China with huge, vibrant festive displays and decorations. While their shopping centres in cities like Shanghai are decked out with enormous, colourful Christmas trees, bright lights and themed entertainment – much of it sponsored by famous luxury brands – the picture is rather more subdued in Hong Kong where a fourth wave of the deadly corona virus is derailing spending during the holiday period. “These landlords have to plough more of their resources into China where consumers can come out freely to spend to shore up sales and compensate for whatever they are losing back home. It does not make sense to roll out elaborate displays in Hong Kong where foot traffic is really low,” said Michael Cheng, PwC’s Asia-Pacific consumer markets leader.
📍4. Is a traditional portfolio of 60 per cent in equities and 40 per cent in bonds obsolete? Many investors thought so this year. However, the strategy has so far defied forecasts of its demise. Despite concerns that the secular bull market for interest rates is ending, a closely watched benchmark for the 60/40 strategy delivered a return of 11 per cent in 2020 up to December 15. That followed three decades of annualised returns of 7.6 per cent. No doubt the New Year will bring more questioning of the 60/40 strategy and, in particular, whether bonds offer an effective complement to riskier asset classes such as equities.
One of the must-ask interview questions for banking and finance is: “Have you read any news recently?”, with the follow-up questions: “How would you link this news to the market and what investment suggestions would you give to your clients based on this news?”
Showing your market sense and ability to provide feasible investment ideas would help to differentiate you from other candidates. Therefore, apart from the weekly news update / investment insights, we have also generated this Weekly Market Summary for you to have a quick understanding of the market development and tips to answer some hot discussion topics.
Take a look of the summary and WhatsApp us in the group if you have questions.