UBS GWM says China equities need 'punchier' policies

UBS GWM says China equities need 'punchier' policies
The wealth manager says Beijing needs to be bolder to revive stocks.
JAN 22, 2024
By  Bloomberg

The benefits of monetary easing by the People’s Bank of China have already been priced in and “punchier” policies are needed to revive the country’s equities, according to the global wealth management arm of UBS Group AG.

Authorities need to adopt a more sustained and “holistic” approach to tackle the core issues that are affecting the economy, said Eva Lee, head of Greater China equities at UBS Global Wealth Management. In the long run, Chinese stocks are still the firm’s most preferred market and expected to deliver a return of around 10% this year.

A cut to banks’ reserves or the one-year policy rate has been priced in, and “is not going to really excite the market,” Lee said in a briefing on Friday. In this environment, the money manager is staying defensive on Chinese equities and favors state-owned banks which offer attractive dividend yields, sectors that generate a recurring cash flow and new economy names that are actively buying back shares.

The gloom surrounding China’s assets is deepening as a long-running property slump, geopolitical risks and a lack of massive stimulus cloud the outlook. Some $6.3 trillion has been erased from the market value of Chinese and Hong Kong stocks since a peak reached in 2021, while the offshore yuan has weakened 1% this year after dropping almost 3% in 2023.

“If there is some sense that maybe the near-term pain is a bit too much that the National People’s Congress can have something punchier, that is the upside to break out of” a defensive stance, Min Lan Tan, head of Asia Pacific chief investment office, said at the same briefing.

Investors are looking for larger fiscal steps such as more support through a pledged supplementary lending facility or comprehensive reforms to show that the government is re-prioritizing high growth, and not just keeping the pace of expansion at around 4.5%, Tan added. 

Latest News

JPMorgan mulls new asset lending scheme aimed at crypto ETF investors
JPMorgan mulls new asset lending scheme aimed at crypto ETF investors

Insiders say the Wall Street giant is looking to let clients count certain crypto holdings as collateral or, in some cases, assets in their overall net worth.

Fintech bytes: Future Capital adds RayJay alum to C-suite, Advyzon welcomes ex-Envestnet leader
Fintech bytes: Future Capital adds RayJay alum to C-suite, Advyzon welcomes ex-Envestnet leader

The two wealth tech firms are bolstering their leadership as they take differing paths towards growth and improved advisor services.

UBS 'wrongfully' fired Idaho advisor in 2021: FINRA panel
UBS 'wrongfully' fired Idaho advisor in 2021: FINRA panel

“We think this happened because of Anderson’s age and that he was possibly leaving,” said the advisor’s attorney.

Cetera Trust hires Fidelity vet Kerri Scharr for chief fiduciary officer role
Cetera Trust hires Fidelity vet Kerri Scharr for chief fiduciary officer role

The newly appointed leader will be responsible for overseeing fiduciary governance, regulatory compliance, and risk management at Cetera's trust services company.

Trump's 'revenge tax' might come back to bite US borrowers, experts say
Trump's 'revenge tax' might come back to bite US borrowers, experts say

Certain foreign banking agreements could force borrowers to absorb Section 899's potential impact, putting some lending relationships at risk.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave

SPONSORED The evolution of private credit

From direct lending to asset-based finance to commercial real estate debt.