The Rise of Chinese Assets: Should Malaysian Investors Chase the Market?

Recently, Chinese assets have demonstrated remarkable growth, emerging as a formidable force in global financial markets.

This raises a critical question: should investors chase this market rally? And if so, how can they protect themselves through effective stop-loss and take-profit strategies?

Chinese stocks have seen impressive gains, driven by a variety of factors including favorable government policies, growing consumer demand, and innovation in key industries. For instance, technology companies like PDD and NIO are thriving due to China’s strong push towards technological self-sufficiency and sustainability.

The e-commerce sector, in particular, continues to expand, supported by rising internet penetration and the shift towards digital consumption. Similarly, the electric vehicle (EV) industry, where NIO is a prominent player, benefits from the global move toward clean energy and China's policy backing for green technologies.

However, while the momentum is strong, investors must also recognize the potential risks. China's regulatory environment is known for being unpredictable, as seen in the recent crackdowns on technology firms. Geopolitical tensions, particularly with the United States, also pose a threat to Chinese assets, leading to increased market volatility. Despite these challenges, the long-term outlook for certain Chinese stocks remains promising, especially in sectors such as technology, renewable energy, and electric vehicles. Malaysian investors looking to capitalize on this trend must be prepared to navigate these risks carefully.

Among the vast array of Chinese companies, several have emerged as popular investment targets for both domestic and international investors. These companies represent key sectors of China’s economic future, including technology, e-commerce, and clean energy.

Investing in volatile Chinese stocks like Futu, Pinduoduo, NIO, and Ying requires careful risk management through stop-loss and take-profit strategies. These tools help protect your investment from significant losses while ensuring you lock in profits at the right time.

A stop-loss order automatically sells your stock when its price drops to a set level. For volatile stocks like NIO, using a wider stop-loss (e.g., 15-20%) helps prevent being stopped out by small price swings. A fixed-percentage stop-loss (e.g., 10%) is a simple method, while a trailing stop-loss moves upward as the stock rises, protecting gains while allowing room for growth.

Take-profit orders sell your stock once it reaches a predetermined price, locking in profits. You can use a fixed target (e.g., 20% gain), or a tiered approach to sell portions of your stock at different price points as it rises. This balances risk and reward by securing gains while leaving some room for further upside.

Using stop-loss and take-profit orders together helps manage risks and maximize gains. For example, you can buy Futu at RM50, set a stop-loss at RM42.50 (15% below), and take-profit at RM62.50 (25% above). This approach limits losses while capturing profits. By applying these strategies to popular Chinese stocks, you can navigate market volatility with confidence, protecting your investments and optimizing returns.

While the recent surge in Chinese assets presents a tantalizing opportunity for investors, it’s essential to remain cautious about chasing the high without a solid risk management plan. Investors should focus on companies that are well-positioned in key growth sectors like technology, e-commerce, and green energy, while maintaining a disciplined approach to stop-loss and take-profit strategies. By combining fundamental insights with technical analysis and a clear risk management strategy, investors can capitalize on the opportunities in the Chinese market while minimizing potential losses!