Source: Bloomberg
Author: Tania Chen, Abhishek Vishnoi, Richard Henderson
This year should be the year of China's economic recovery. In the process, Chinese stocks and bonds should once again become a must -buy option for global investors.
Ten months have passed, and things are contrary to their wishes.Chinese stocks have become one of the worst performance in the world. Investors are withdrawing funds out of the country at the fastest speed since 2015. As the real estate crisis has affected the economy, it offsets the long -awaited post -resurgence.Near the 16 -year low.
This sale this time has even caught off guard by the investment, forcing them to re -adjust their strategies to adapt to Beijing's new economic model.Policy makers no longer pursue growth at all costs, nor are they interested in rescue real estate developers in trouble; cracks in China and Western countries have almost no signs of ease.
Of course, investing in China has never been an easy task, but the situation that the fund manager is now becoming more and more complicated, and it needs to be flexible.Here are the views of some large investors and famous Chinese observer.
Justin Thomson, T. Rowe Price
The chief investment officer of international stocks believes that "the best investment is done when you feel the most uncomfortable" -the apply this principle to the Chinese market.
He said in an interview that although some customers need to exclude China from the investment portfolio due to geopolitics, macro and regulatory risks, "this negative emotion provides reverse investment opportunities."
He said that the problem of the real estate industry in China is structural, rather than periodic, and will give the economy a long shadow, which means that the growth rate will be lower than the previous decades.Nevertheless, investors should not make a mistake in mixing economic growth with the return of stock markets.
The quality of many industrial supply chains means that China will still be the preferred manufacturing base for many multinational companies. China ’s leading position in battery technology and electric vehicles shows that the automobile industry has the potential for global.
He said that because the valuation is still low and the market sentiment has reached the limit, investors' interest will return to China, just like the past cycle.
Joyce Chang, JP Morgan Chase
The Global Research Chairman said that although China was included in the main index a few years ago as an important milestone that attracted passive investment, China is not the current mainstream, and half of the investment has withdrawn.
"This is not just a periodic phenomenon, it is also a structural narrative for many investors," she said in an interview.Under the recently announced stimulus measures, we believe that this year will exceed 5%of the growth goals, but by the end of this decade, the growth may fall to about 3%.
When talking about the problems faced by foreign investors' purchase of Chinese assets, she said that if fund managers, especially public retirement funds, feel that she will be attracted by parliament members, or to a certain degree of public supervision or board review,It will become more challenging.
She said that in view of the rise in the rate of developed markets, some funds can now do other things.In view of the surge in US Treasury yields, Chinese government bonds no longer provide yield buffer.
Stephen Chang, PIMCO
Stephen Chang, managing director and investment portfolio of Asian Fixed Revenue.Investors have weakened interests.
Chang said in an interview that we have become more defensive and carefully selected. Compared with the benchmark, we have a lower configuration and conservative attitude towards individual bonds.For developers who are in trouble, it is difficult to evaluate the value of recovery, and it is difficult to predict when the real estate market recovers.
Even if Chang see opportunities in areas such as medium -risk private enterprises or non -real estate industries, he will only try to "try it with sufficient buffer."
George Efstathopoulos, Fidelity International
The investment portfolio manager of the global diversified asset income fund said that once the profit starts to revise it, the person who leaves China will return. He also said that he will be "cautious and optimistic" about the prospects of corporate performance in the next few years.manner.
"China used to be a low -end manufacturing center. Now it is battery and electric vehicles," he said in an interview.
Another important aspect worthy of attention is how to release the excess savings of families to promote the sustainable recovery of consumer -related income.
He said that once this happens, investors will return to China when the valuation is very cheap.
Jason Pidcock, Jupiter Asset Management
The fund manager of the Jupiter Asian Income Fund predicts that there will be a brief rebound, but it will not continue in a sustainable way.
He said in an interview that we believe that there are not many measures to stimulate the economy except for supporting currency devaluation.But this may be retaliated by tariffs by other countries.
The preset operation of the Chinese government in the past is to strengthen infrastructure stimuli, but the current dilemma is that the roads and airports owned by China may exceed their actual needs.
The construction of more infrastructure may cause excitement in the short term, but it cannot make the economy truly improved productivity, thereby bringing sustainable economic growth.
Over the past few decades, when the economic performance is better than the global average, the Chinese stock market is often in trouble. Therefore, when people generally believe that economic growth will slow down, the situation of the stock market will be more difficult.
Thomas table, Belaid
Bellee Ishares Asia -Pacific investment strategy supervisor said that although some tactical trading opportunities may occur in the next few months, long -term over -equipped Chinese stocks will be more difficult to prove its rationality.
He said in an interview with Bloomberg that investors regarded China as a trading market, and they did not want to be overdue for a long time, because growth in the next few years will continue to slow.
China is no longer the source of motivation for Asia.This has shifted more to India and Indonesia, and may even be Malaysia.
Short -term opportunities will depend on how the People's Bank of China stimulates the economy.He said that the analysis believes that the People's Bank of China does not do enough.
