With a determined push to meet its people’s lifestyle and cultural needs, and for a better society all-round, China is expected to drive investments in social infrastructure and technologies that are sustainable and green.
This change in focus may cause trepidation in some quarters that it would slow China’s economic growth, which over the last 10 years has been focused on being export oriented and labour intensive. The benefits of raising productivity, boosting domestic demand with higher living standards and investing in clean technologies, may work in China’s favour to emerge stronger and even more competitive in the global arena.
China’s major targets for social and economic development as spelled out in the 12th five-year development plan are:
- to maintain stable and relatively fast economic growth;
- to achieve major development in economic restructuring;
- to universally raise people’s incomes at a relatively fast pace;
- to remarkably enhance social construction; and
- to continuously deepen reform and opening-up.
Rising Prospects
As China continues to modernise with improved social welfare on the cards, low cost housing for its people is both a necessity and a political priority. Investors will be keeping a close eye on material and construction industries as more projects emerge in the coming years. Of further interest to investors is the government’s announcement to pump resources into seven strategic industries:
- New energy – Development of clean/alternative energy from nuclear, wind, solar, and bio-fuel sources;
- Energy conservation and environmental protection;
- New materials – Rare earth, alloys, membranes,and high-end semiconductors materials;
- Biotechnology – Drug/vaccine development, advanced medical equipment, promotion of biomedical research and development;
- New generation of information technology – Build-out of broadband and mobile communication networks, internet security infrastructure, and artificial intelligence;
- High-end equipment manufacturing – Aerospace, telecom and railway equipment, and marine equipment; and
- New energy vehicles – Electric cars and plug-in hybrid cars.
The government aims to increase their contribution to GDP from the current 2%to 8% by 2015, and to 15% by 2020.
A period of Strategic Opportunities
With the Shanghai Composite Index down by about 9% in October 2010, and the Central Bank raising reserve ratio to mop up liquidity, chances are high that the market will continue to consolidate. This makes the Chinese market very attractive relative to the other markets.
With the launch of UOB’s United China Strategic Focus Fund in January 2011, investors are offered a niche opportunity to capitalise on investment areas that will open up with China’s 12th five-year development plan for 2011 to 2015. The fund will not be invested in the entire Chinese market but the 30 stocks of companies from industries that may benefit directly from the five-year plan. In a market commentary by UOB Asset Management, the consumer sector will see strong tailwinds from supportive government policies and minimum wage increases. As mentioned earlier, improved social welfare and low-cost housing will offer investment opportunities in the cement and infrastructural industries as these will benefit from the accelerated development of the Western provinces and inland cities.
Target Returns, Auto-termination
One key feature that differentiates this fund from the pack is the automatic termination mechanism. Many investors have not made as much as they would have liked to or have simply lost all their winnings because they do not know when to cash in. The phrase “I wish I had taken profit earlier!” may still be ringing in their ears. “Investors should understand the importance of setting a price target for a stock before buying it and having the discipline to sell when that target is reached,” says Goh Teik Cheng, Head, Research & Product Advisory, Personal Financial Services at UOB.
With the United China Strategic Focus Fund, the auto-termination feature will be triggered when the net asset value (NAV) of the fund hits S$1.25 per unit and above1. When this happens, the assets of the Fund will be liquidated at the market price1.
Investors should note that the net proceeds upon liquidation of the Fund may be lower than the NAV per unit upon auto-termination. The Fund will also have a performance fee of 0.75% of the NAV of the unit as at the liquidation date. Please refer to the prospectus for more information.
“Being a successful investor means investing with your head, knowing not only when to buy but, just as importantly, knowing when to sell,” says Teik Cheng “and at UOB, we have a fund with a “Price Target” feature just for you; a fund that automatically terminates when your investment hits the target price.”
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AT A GLANCE |
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* The fund will mature and terminate upon (1) NAV is greater or equal to S$1.25 or (2) 2 years from the inception date of the fund, whichever is earlier
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More Information
- Call the 24-hour Privilege Banking service line at 1800 355 1118 (within Singapore) /
+65 6355 1118 (outside Singapore) - Contact Us
Contact Us
- Call 1800 355 1118 (within Singapore) / +65 6355 1118 (outside Singapore) or leave your details here. (To qualify for UOB Privilege Banking, clients need to maintain a minimum balance of S$350,000 in deposits and/or investments with us.)
