As world markets, especially U.S. markets, tremble on surging cases of the coronavirus, there’s one market seeing investors return: China. To emphasize this point, markets have gyrated wildly for weeks. The number of coronavirus cases mushrooms globally, in particular in the United States.
The infection rate of coronavirus has slowed in China, and there appears to be a growing appetite among fund managers to start buying Chinese assets again.
Pinebridge Investments, a New York-based firm, is going “all in.” The firm had $101.3 billion as total assets of the end of the year. In addition, $25.5 billion was in stocks and $64.3 billion in fixed income.
Michael Kelly, global head of multi-asset at Pinebridge, told CNBC over email. He said, “We have recently boosted China A shares from a small single-digit starting position to a low double-digit weighting.”
He added, “As a result of COVID-19, the West is now seeing plunging economics through at least (the second quarter). Meanwhile, the East led by China which is already full of.”
According to cnbc.com, Pinebridge is not alone. UBS Asset Management in late February launched a new Exchange-Traded Fund (ETF) that gets it into China’s onshore stock market. ETFs track benchmarks in the same way mutual funds do, but they trade more actively like stocks.
Regarding to the picking sectors, analysts see opportunities in infrastructure-related themes in China, such as 5G connectivity, semiconductors and health care.
China’s government spending, at 1% of gross domestic product, lags the U.S. rate of 10%. But China is expected to do more in terms of fixing disrupted supply chains.
In the riskier, high-yield space, where companies tend to be more likely to default, Pinebridge prefers the property sector. With loans available at cheaper rates, the flow of money is continuing within that sector.