HONG KONG Reuters -- Swiss private bank Union Bancaire Priv e UBP is back in Chinese markets, its chief investment officer said, making it return to the world's second-largest economy after withdrawing last year.
UBP has more than $150 billion of assets in its possession. Norman Villamin, CIO of wealth management, said in August that it returned to China after having left all positions in mainland equities and credit in the third quarter of 2021.
Villamin said we went from zero to neutral.
Since 2019 there has been a deterioration in Sino-U, while institutional investors have reduced exposure to China due to a regulatory crackdown on tech giants. UBP is one of the few that is relocating to the country because of S. relations and strict zero-COVID policies.
Villamin said that UBP saw some hope that there would be more stimulus measures ahead of and after the Communist Party Congress in October.
At least if the COVID restrictions start to ease, at least we're moving in the right direction, said Villamin.
He added that the UBP deemed underweight exposure in China tactically risky.
China is going through a recession, while Europe is in a sluggish state, and the U.S. is likely to enter a recession in 2023, Villamin said.
UBP has only bought China A-shares, which is the domestic sector, and is avoiding companies that might have exposure to geopolitical issues.
The Chinese markets have been facing unprecedented challenges this year, with both the CSI 300 index and Hang Seng index down over 20% each, while hedge funds that invest in Greater China are seeing their biggest net fund outflows in at least 15 years.
UBP believes that China is slowly poised to recover, although it won't be a smooth sailing. Some deep problems, such as the real estate debt crisis, will take a long time to resolve.
Villamin said that China s objective on property is to shrink the sector as a share of the overall economy to wind down the amount of leverage in the sector.
There aren't a lot of growth opportunities there.