1. The COVID-19 outbreak has heightened global concerns of excessive dependency on China’s manufacturing sector and led governments in many countries to incentivise companies to shift their manufacturing base back home. While we have already seen higher tariffs lead some companies serving the US market to move to other supply centres, we believe that a broad shift out of China is unlikely in the short term due to factors such as its high labour productivity, favourable infrastructure and sophisticated supply chains.

2. The bone of contention with the US Holding Foreign Companies Accountable Act, which could result in the delisting of Chinese companies from US stock exchanges, is the lack of perceived transparency over audited financial statements. Since Chinese firms are audited locally (in most cases by the ‘Big Four’ multinational accounting firms or their affiliates), China’s policy has been to deny overseas regulators access to the audits, citing national security concerns. This has been a long-running issue between the United States and China, and negotiations have been ongoing for years. We have seen some Chinese companies list on the Hong Kong and Chinese exchanges, and we could see some of the other US-listed Chinese companies also list in the Hong Kong or Chinese exchanges in the future.

3. The gradual re-opening of economies and increased mobility as governments start to ease social distancing measures has raised expectations of a recovery in consumerism. While the economic impact of the virus is expected to weigh on many emerging market economies in the short term, we believe that the consumer trends we have been witnessing for some time are likely to remain relevant. For example, goods and services related to health and wellness were a fast-growing trend prior to the crisis, and we believe this theme will remain broadly intact post-crisis – perhaps even more so. Additionally, there is strong demand for goods and services such as cars, high-speed broadband, life insurance and home ownership which represent potential investment opportunities.

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