Swiss bank UBP returns to Chinese markets

Swiss bank UBP returns to Chinese markets

by Summer Zhen

HONG KONG (Reuters) – Swiss private bank Union Bancaire PrivΓ©e (UBP) has returned to Chinese markets, said its chief investment officer, on its way back to the world’s second-largest economy after pulling out last year.

UBP has more than $150 billion in assets. He returned to China in August after exiting all positions in Chinese stocks and credit by the third quarter of 2021, Norman Villamin, CIO of Wealth Management, told Reuters.

“We’ve gone from zero to neutral,” Villamin said.

While many institutional investors have reduced exposure to China since 2019 amid a regulatory crackdown on tech giants, deteriorating Sino-US relations and tough anti-coronavirus policies, UBP is among the few reallocating the country.

Villamin said UBP saw some “hope” that there would be more stimulus measures before and after the Communist Party convention in October.

β€œIf some of the COVID restrictions start to ease, even if they are gradual, we are at least moving in the right direction,” Villamin said.

He added that UBP considered exposure to underweight in China a “tactical risk”.

β€œChina has gone through a recession, while Europe is in the midst of a recession, and the United States is likely to enter a recession in 2023,” Villamin said.

However, UBP only bought shares of China A, which is the domestic sector, and is avoiding companies that might be exposed to geopolitical issues.

Chinese markets have faced unprecedented challenges this year, with both the CSI 300 index down more than 20% each, while hedge funds investing in Greater China are seeing their largest net fund inflows in at least 15 years.

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UBP believes that China is slowly preparing for a recovery although it will not be smooth. Some deep-rooted problems, such as the mortgage debt crisis, will take a long time to resolve.

β€œWe think the (China) goal in real estate is to shrink the sector as a share of the overall economy to reduce the leverage in the sector,” Villamin said.

“We don’t see a lot of growth opportunities there.”

(Corrects the second paragraph to say the bank took out positions in all Chinese stocks, not just mainland-listed stocks)

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