Top US, European investors bullish on China market
Published: Nov 22, 2022 08:31 PM
Pedestrians walk past the New York Stock Exchange in New York, the United States. File Photo:Xinhua

Pedestrians walk past the New York Stock Exchange in New York, the United States. File Photo:Xinhua

Top investors from the US and Europe are increasingly making long-term bets on China, as they believe that the world's second-largest economy is on a fast track to recovery and will bring them significant gains.

Now is the time to make long-term investments in China because the nation is set to bounce back after the pandemic, said the head of Allianz Global Investors, one of Europe's biggest asset managers, according to a report by the South China Morning Post on Tuesday. 

"Investors should play the long game, work on a new mindset toward China and turn away from [labeling] China a 'risky terrain'. China is an economic powerhouse in the world, undoubtedly with potential," CEO Tobias Pross said. 

The UBS Chief Investment Office expects China's economic growth to recover further on resilient infrastructure and manufacturing, as well as a pick-up in consumer spending, read a statement on its website on October 24.

Those bullish views are in line with the Wall Street, as a "chorus of 'buy China' calls is getting louder" there, according to a Wall Street Journal report on Sunday. For instance, Morgan Stanley lifted its targets for the country's stock gauges last week, expecting the MSCI China Index to rally 14 percent by the end of next year. 

The optimism of foreign investors mostly came from strong policy support from the central government, which has precisely targeted the country's "pain points" and worked on them, observers said.

"There are currently two obstacles that plague the recovery of the domestic economy, one is the pandemic, and the other is a weakening real estate market. However, the recent introduction of policies has marginally improved these two areas, and sent positive sentiment through the market," Luo You, a researcher at the Star Atlas Institute of Finance, told the Global Times on Tuesday.

China's Ministry of Industry and Information Technology (MIIT), along with two other ministries, jointly issued a notice on Monday that listed 17 measures to shore up the development of major industries, varied enterprises and different regions of the country as a stronger move to bolster economic growth.

In the real estate sector, the People's Bank of China (PBC), the central bank, convened a symposium along with the China Banking and Insurance Regulatory Commission on Monday. During the meeting, PBC Deputy Governor Pan Gongsheng noted that the PBC will launch a 200 billion yuan ($28 billion) loan support plan for six commercial banks, so that they can help in guaranteeing house deliveries, according to a report by the Economic Daily.

The inflow of capital also comes amid an unstable international political and economic landscape, such as soaring inflation in the US and a volatile global financial market. China has become a safe haven for investors to hedge risks, analysts said, noting that frequent talks between Chinese and US high-level officials, which help build on that positive sentiment.

"In the face of a resilient Chinese economy and the continuous high-quality development of the Chinese capital market, it is a very rational and normal professional practice for European and US financial market players to adjust their investment strategies and shift to long-term holdings of Chinese assets," Chen Jia, an independent analyst of international strategy, told the Global Times on Tuesday.

China has the most powerful and active consumer and investment groups in the world, and the scale effect is very significant. It is also of strategic value to be able to participate deeply in China's reform, opening-up and modernization process, which will in turn help them maintain a competitive edge among global investors, Chen said.

These investors, who have experience in mature markets and human capital reserves, can also help China further deepen capital market reforms and establish a comprehensive, wide-ranging and multi-level financial system, the expert said.

Global Times