© Reuters. The Union Bancaire Privee (UBP) signal is seen at certainly one of its department workplaces in Zurich, Switzerland November 20, 2017. REUTERS/Arnd Wiegmann
By Summer season Zhen
HONG KONG (Reuters) – Swiss personal financial institution Union Bancaire Privée (UBP) is again in Chinese language markets, its chief funding officer stated, making its approach again to the world’s second-largest economic system after withdrawing final yr.
UBP has greater than $150 billion of belongings. It returned to China in August after having exited all positions in Chinese language equities and credit score by the third quarter of 2021, Norman Villamin, CIO of wealth administration, instructed Reuters.
“We went from zero to impartial,” Villamin stated.
Whereas many institutional traders have lowered publicity to China since 2019 amid a regulatory crackdown on tech giants, a deterioration in Sino-U.S. relations and strict zero-COVID insurance policies, UBP is among the many few that’s re-allocating to the nation.
Villamin stated UBP noticed some “hope” that there can be extra stimulus measures forward of and after the Communist Get together Congress in October.
“If a few of the COVID restrictions begin to ease, even whether it is gradual, no less than we’re shifting in the precise path,” Villamin stated.
UBP deemed an underweight publicity in China “tactically dangerous”, he added.
“China has gone by way of a recession, whereas Europe is within the midst of recession, and the U.S. is probably going getting into a recession in 2023,” Villamin stated.
UBP has nonetheless solely purchased China A-shares, which is the home sector, and is avoiding firms which may have publicity to geopolitical points.
Chinese language markets have been going through unprecedented challenges this yr, with each the CSI 300 index and down over 20% every, whereas hedge funds that put money into Higher China are seeing their largest web fund outflows in no less than 15 years.
UBP believes China is slowly poised to recuperate though it is not going to be a clean crusing. Some deep-seated issues, equivalent to the true property debt disaster, will take a very long time to resolve.
“We expect (China’s) goal on property is to shrink the sector as a share of the general economic system to wind down the quantity of leverage within the sector,” stated Villamin.
“We do not see a variety of development alternatives there.”
(Corrects second paragraph to say the financial institution exited positions in all Chinese language equities, not simply mainland-listed equities)