15th march china stocks upgraded most prefferd by UBS weath mangement

    china stocks upgraded by UBS wealth                                        Management

we are seeing the bearishness when it comes to chinese stocks or hong kong stocks this chart on the bloomberg just showing how bearish investors are with the put call ratio remaining elevated for hong kong listed stocks why do you like chinese equities.


 

yeah morning yeah it's certainly true that chinese markets currently don't don't have many friends although if we just go about a month back or so china especially offshore was actually probably the best performing large market it's not so long ago so you know basically what it shows you is you know these these sentiments can swing very quickly but why haven't we upgraded it in particular because it's the only really large economy on the planet right now that is actually losing right everybody else is either standing still or or tightening and we're seeing very early signs and competed in the property market property pricing we're you know seeing some stabilization we do expect a little bit more loosening actually if you tie it in also in with the massive underperformer that we had seen over the last 18 months or so and still think there is there's reason to believe that this is attractive rather than something to be too scared about .
 

will loosening and monetary easing be able to offset the fact that we continue to see more covid lockdowns?

 yeah that certainly complicates the equation a little bit um we have in our estimates in any case not a gun for the for the whole um gdp target that that has been put out or we were slightly below that to also have a bit of buffer but i mean we should come ultimately to the vincinity and if growth slows too much i mean that there's always enough room also for the pboc for example to loosen for the government also to you know on the physical side to even do a little bit more um that there is buffer therefore for these measures..
 What are the biggest delays is there a pretty big risk?

That we see the macro turnaround taking longer than expected i wouldn't say it's a large risk it can be delayed by maybe a couple of months that is possible because of the the current covet outbreak but look uh we we had kobe pretty much in many other places including actually two years ago in in china already so we we know how the market looks at it and it's very cautious sometimes scared even at the beginning and then you know oftentimes even before these waves are peaking the market's already sort of finding it's it's footing again so i wouldn't be too negative because we have one of these episodes that we have also seen in many other economies before and that do not in a lasting fashion influence markets we're of course seeing global bonds extending the route when it comes to credit in the us the worst quarter since 2008 there's lots of fears about the surge in inflation even stagnation as well where do you find opportunities in the bond space now yeah on the bond space we still favor the the ones that are floating rates.




 So because that i think is pretty much a done deal we can argue how many times the fed will hike to zero even next year but uh it has brought contentious delta hike a couple of times and also you in our view are early enough in the cycle and say say two years or so just over two years in the cycle where you can still also take credit risk especially also in the us and especially also when you know some of it being energy that that is very well shored up right now so in other words u.s senior loans or some of also of the private credits is what we like right now as long as they have floating voting rates but across emerging asia do you see any opportunities or other risks facing ems to too great given what we see going on in china and then also what we see with the elevated uh monetary policy risk from the fed no china actually we believe says or is it pretty clear they have a bit of a cycle of their own shouldn't be too rate dependent and also if i look at the just the performance of the chinese market again over the last 18 months it doesn't really suggest that you're extremely rate sensitive to the us at these levels i mean you know a lot of the previous growth stocks have become value stocks by now so that is something that i don't think should have too much of an influence and uh here also in the regional strategy as we mentioned at the beginning we were we're still pulling through with that overweight on china how much further do we see that rally when it comes to financials we are seeing uh in particular here in australia the banks are one of the few leaders in what is an overall down day is there much of a sustained boost given that we do see rising yields yeah this is a valid question we have uh in our strategies set the the financials not only banks by the way also to some extent insurers or especially also life insurers we had those included but then also for example in europe not too long ago even even before the war started we have we have taken it down because the the rally was very very strong so yeah i would agree that you know it is still an interesting place to to look at it but um yeah you know when they when they have a good rally then you can also clip the positions or already a bit i mean they have they have run for quite a while already.