Jonathan Unwin shares his views on China with Citywire Selector
Under the title “Ready for a revival? Where eight selectors stand on China now”, the magazine published an article where “international selectors talk (…) about what is likely to shape their thinking on the country in the near and long term.” “Fund pickers have been very positive on China in recent years but has 2020 dented this optimism?”, journalist Chris Sloley asks.
Jonathan Unwin, Deputy Head of Asset Management and Advisory at Banque Havilland S.A. – UK Branch, answered:
“Chinese equities have been a constant within our portfolios for a few years, and while we accept there can be significant drawdowns in the market, the transition of global economic growth from West to East is well underway, so we expect to maintain this stance for the long haul. We want exposure to other emerging Asian markets too, so we have a longstanding position in the Veritas Asian fund, which has served us well and currently holds around 50% in Chinese stocks.
The region is likely to continue to benefit from being the first to emerge from the pandemic, and previous concerns over the amount of debt being accrued to fund growth don’t look so bad now in light of developed economies’ debt binge to counter the effects of sustained economic lockdowns. It is becoming increasingly hard to ignore the Chinese onshore bond market, due to the relatively attractive yields on offer.
The 3.2% yield on a China 10-year bond versus -0.06% for a Portuguese equivalent is a case in point. The yields on the corporate bond market are very enticing, but investors need a very selective approach. We are aware the market is heavy in real estate names, and as such we are potentially looking at a more conservative strategy such as the Pictet Chinese Local Currency Debt fund. If consensus predictions of a lower dollar in 2021 transpire this type of fund could do well.”
( source: Citywire Selector )