Market Commentary: Friday’s big sell-off | Reviewing your risk level

06 December 2021

Watch Freddy Lim, co-founder and CIO, and Stephanie Leung, Group Deputy CIO, discuss the latest global events and their potential impact on the markets and on our investment portfolios.

In this episode:

  1. The CSRC debunks reports of a VIE ban [0:16]

  2. China leading the Fourth Industrial Revolution [2:00]

  3. Is it time to review your SRI? [4:45]

Prefer to read? Here’s a 2-minute summary.

We saw a steep sell-off of US-listed shares in China Internet and Technology on Friday night. 

Here are a couple of reasons why this sell-off happened:

Investors are concerned that the VIE structure is no longer valid. 

Investors fear that Chinese companies will have to delist from the US and relist in China. But in fact, the China Securities Regulatory Commission has announced that they aren’t planning to ban the VIE structure and that they’re working with US regulators to figure out how to move forward. 

And remember, we’ve been here before: Will China Ban the Use of VIE?

It’s the year-end effect.

Many fund managers are choosing to lock in their profit and losses for their year-end calculation of payments, partially driving the sell-off.

The market is focusing on China’s short-term woes, but we’re focusing on the long term.

China’s real estate problems and regulatory changes are dominating headlines.

But if we take a step back, we see that China is leading the Fourth Industrial Revolution. Think automated warehouses, smart ports running 5G networks, mines operated by remote control, and factories run by self-programming robots. 

These initiatives are happening at scale, so don’t let short-term news derail you from China’s phenomenal medium-term potential. If you take another perspective, China’s shares are trading cheaply, so it pays to stay invested.

Is it time to review your StashAway Risk Index (SRI)?

If the recent volatility in your portfolio makes you nervous, maybe it’s time to assess your risk level and ensure that it suits your personal situation and risk tolerance. Higher risk portfolios, on average, in the long term, generate higher potential returns. But they may experience more short-term volatility.

We hope this update has helped you navigate through this short-term turbulence, and we’ll continue to monitor the situation closely.

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