Swiss bank UBP returns to Chinese markets By Reuters

(Corrects second paragraph to say the financial institution exited positions in all Chinese language equities, not simply mainland-listed equities)

By Summer time Zhen

HONG KONG (Reuters) -Swiss non-public financial institution Union Bancaire Privée (UBP) is again in Chinese language markets, its chief funding officer mentioned, making its manner again to the world’s second-largest financial system after withdrawing final 12 months.

UBP has greater than $150 billion of property. It returned to China in August after having exited all positions in Chinese language equities and credit score by the third quarter of 2021, Norman Villamin, CIO of wealth administration, informed Reuters.

“We went from zero to impartial,” Villamin mentioned.

Whereas many institutional buyers have decreased publicity to China since 2019 amid a regulatory crackdown on tech giants, a deterioration in Sino-U.S. relations and strict zero-COVID insurance policies, UBP is among the many few that’s re-allocating to the nation.

Villamin mentioned UBP noticed some “hope” that there could be extra stimulus measures forward of and after the Communist Occasion Congress in October.

“If a number of the COVID restrictions begin to ease, even whether it is gradual, no less than we’re shifting in the precise route,” Villamin mentioned.

UBP deemed an underweight publicity in China “tactically dangerous”, he added.

“China has gone by way of a recession, whereas Europe is within the midst of recession, and the U.S. is probably going coming into a recession in 2023,” Villamin mentioned.

UBP has nonetheless solely purchased China A-shares, which is the home sector, and is avoiding firms which may have publicity to geopolitical points.

Chinese language markets have been dealing with unprecedented challenges this 12 months, with each the CSI 300 index and down over 20% every, whereas hedge funds that put money into Larger China are seeing their greatest internet fund outflows in no less than 15 years.

UBP believes China is slowly poised to get well though it is not going to be a easy crusing. Some deep-seated issues, comparable to the actual property debt disaster, will take a very long time to resolve.

“We expect (China’s) goal on property is to shrink the sector as a share of the general financial system to wind down the quantity of leverage within the sector,” mentioned Villamin.

“We do not see lots of progress alternatives there.”