The panel addresses vexing questions of investor interest: Mark Leahy (head of debt origination and fixed income syndicate, Asia ex-Japan, Nomura) is asked: has a reduction in the rate of appreciation of the yuan reduced retail appetite for dim sum bonds? A major driver of investor participation has been the currency play - an expectation of yuan appreciation versus the US dollar and the Hong Kong dollar. That rate of appreciation has lessened. At the same time, new issuance is generating increasing levels of interest and participation from institutional investors. This can be seen in the lengthening maturities of new deals - for example, China Development Bank issued a 15-year bond in January - the longest so far. Some investors are less interested in dim sum bonds due to a slower pace of currency appreciation, but in their place is a broader range of investors with very different investment criteria. The market is maturing. Meanwhile, private-bank participation remains high, with those firms buying as much as 20 per cent of recent new dim sum issues. These banks are also actively trading dim sum bonds in the secondary market. The market outlook remains strong and, as it matures, investors are willing to look at new, often foreign credits such as America Movil (which last month became the first Latin American entity to issue a dim sum bond). This is increasing the attractiveness of the CNH (yuan traded in Hong Kong) market to foreign issuers and satisfying investors' demand for greater diversity in their portfolios. Marc Lansonneur (regional head of investment teams and market solutions, Societe Generale Private Banking) is asked: markets are up. Is it time to jump back into equities? In the past two months, equity markets have gained from encouraging US economic data, sustained growth in emerging countries and Asia, and improved sentiment towards the euro-zone sovereign debt crisis. The recent rally delivered double-digit gains in certain markets, such as Hong Kong (up 17 per cent year to date) and India (23 per cent) - a robust start for this year. We would be cautious as a technical correction that will push equity markets to the downside is likely. Greece's situation is still a concern; geopolitical risks in Middle East are growing, as are inflationary pressures on energy prices. This would not be good for the mainland, where inflation must remain under tight control. Higher inflation would increase risks of a hard landing for the property sector. At current levels, equities markets remain attractive in terms of historical valuation and yield for medium- to long-term investments. We prefer to wait for a downside retracement to obtain a better entry level on short-term positions. For instance, for the Hang Seng Index, the 20,000 area would offer a solid sphere of support at which to enter Hong Kong equities. As for investors who built positions recently, generating substantial profit, we would advise them to secure part of their gains by putting trailing stop-loss orders (by issuing a standing order to sell shares if it falls below the current share price by a set level). For those who know structured products and are willing to enter equity markets now, structures that provide downside protection can also provide a decent means to enter this market.
