Home News China Focus

China’s soaring markets still present opportunities: UBS-AM

Jeffrey Tan
Jeffrey Tan3/2/2021 3:23 PM GMT+08  • 3 min read
China’s soaring markets still present opportunities: UBS-AM
"We still think there is a lot of attractiveness to the Chinese equity market,” says Gian Plebani, UBS portfolio manager.
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

China’s financial markets have performed significantly well over the last 12 months.

Yet there may still be investment opportunities to be grabbed, according to Gian Plebani, portfolio manager of the UBS China multi-asset strategy.

From a valuation perspective, Plebani notes that China’s equity market is relatively inexpensive compared to the US equity market.

And when compared to bonds, Chinese equities are even cheaper, he adds.

“Therefore, we still think there is a lot of attractiveness to the Chinese equity market,” he says at The Edge Singapore’s Fund Watch webcast on March 2.

See also: China’s Stimulus Tops $5 Trillion as Covid Zero Batters Economy

“We expect the Chinese equity market to outperform over the next 12 months,” he adds.

Fund Watch is a new webcast series launched and run by The Edge Singapore. Each episode will explore a different fund and strategy to seek alpha for investors.

According to Plebani, the performance of the Chinese equity market will continue to be underpinned by China’s economic resilience.

SEE:UBS-AM stays vested on China and EMs on post-lockdown recovery and favourable trends

See also: Secret escape through Chen Cang

Growth, he says, will be supported by China’s strong fiscal and monetary stimulus.

Moreover, the country has largely shrugged off the impact from Covid-19, thanks to its ability to contain further outbreaks of the virus.

As such, he expects China to register GDP growth of 8% this year versus the expected average global GDP growth of 5.5%.

Beyond that, the Chinese equity market will be driven by flows from international investors, both retail and institutional, Plebani says.

This is due to the “catch-up potential” arising from the disproportion of China’s GDP growth against the inclusion of its equities and bonds in global indices, he explains.

Although tensions between China and the US have yet to be resolved with an increasing focus on technology than trade, Plebani believes that the risk is manageable.

He points out that the US administration under President Joe Biden is more “predictable” than before.

To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section

Moreover, China is too big to be side-lined given its importance to the global technology supply chain.

“And therefore, there is no way large international companies can ignore China. They need to have access to this market,” he says.

So, what is Plebani’s asset allocation in China given the opportunities and risks going forward?

He says he is starting increase exposure to offshore stocks as financial markets have rebounded from the Covid-19 impact.

Within fixed income, he prefers Chinese high yield bonds.

However, Chinese government bonds are his least preferred allocation now.

From a sector perspective, Plebani says there could be opportunities in financial, material and industrial stocks considering their cheap valuations.

“If we have a recovering economy, that's exactly the sectors that should outperform,” he says.

Learn about China multi-asset investing with UBS Asset Management:


Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.