With markets shaky due to the human and financial toll the corona virus is taking, everyone is wary of investing. Every country’s market is falling, yet investors are eyeing the rise of one: China.
Going All In
According to CNBC, many investors are considering, or have started investing in the Chinese market. New York’s Pinebridge Investments has said that it has gone “all in”. Its global head of multi asset, Michael Kelly said,
We have recently boosted China A shares from a small single-digit starting position to a low double-digit weighting,”…“As a result of COVID-19, the West is now seeing plunging economics through at least (the second quarter)” while “April macro data will clearly have a better tone for China,
Pinebridge Investments valuation stood at USD 101.3 billion at the end of 2019, with USD 64.3 billion in fixed income and USD 25.5 billion in stocks.
UBS Asset Management is another firm that has already taken the plunge into the Far East. It started an Exchange Traded Fund (ETF) targeting China’s internal stock market. According to the Regional Chief Investment Officer at UBS, said that significant portions of MSCI China’s stocks are from technology related companies. Technology industry, hi opined, is far less likely to be affected by the corona virus. Companies in the sector are already using technology that allows people to work remotely and even if physical presence is required, it can be kept at a bare minimum. Kelly sees other areas that are impacted,
We expect the virus to have long-term implications in areas including US-China trade, global supply chains, digital infrastructure, and offline to online migration.
As said by Kelly, not all areas and markets in China are shrugging the effects of corona virus. Market experts say that industries such as telecom, semiconductor chip manufacturers and the health care is the key areas to invest in at this time. Another area that companies are seeing to invest is the real estate. To keep the economy boosted, loans in China are available at low rates as compared to the rest of the world. This means that money will keep flowing in this area.
The Yuan is another factor in the strong investment opportunities firms are seeing in the country. People’s Bank of China is aggressively working on a Centrally Backed Digital Currency (CBDC). This will enable the Yuan to gain traction and edge over other ones, even the US Dollar. It is no secret that China intends to see its currency become a default in international trading. Shifting to a pure digital one would see the Asian giant not needing Dollars for international trade. It would be far easy and cheaper for countries and investors to acquire the digital Yuan and pay directly for trades being done with China. The use of blockchain as a basis makes it extremely secure and resistant to censorship by other entities, such as sanctions by the US.