Written by Serena Lee and Xie Yu
HONG KONG (Reuters) – Asia's top financial leaders weighed in on geopolitical tensions, the upcoming U.S. election and Chinese government policy, as investors look to other regional markets such as India for better returns. We expect uncertainty to continue to undermine investor confidence in China in 2024.
China is using policy tools to boost investor sentiment and stabilize a plummeting domestic stock market. The country said on Wednesday it would release about 1 trillion yuan ($139.64 billion) in liquidity to support the shaky economy and prop up sluggish mainland and Hong Kong stock prices. announced rate reductions.
But restoring confidence will not be easy and more geopolitical headwinds are expected in 2024, exchange operators and asset managers said during a panel discussion at the Asian Financial Forum in Hong Kong on Thursday. executives said.
“To be honest, it's very difficult to explain (the situation in China),” said Rene Buhlman, global CEO of investments at British asset management firm Abdon.
“We all know that valuations are quite low and we have some great companies in our portfolio,” he said, adding that the return of international capital will only happen if confidence is restored.
This requires systemic changes in Chinese government policy, rather than single measures, Bühlmann said.
Bob Prince, co-chief investment officer at Bridgewater, said deflation, weak employment and geopolitical tensions were holding back China's economy.
“China's problems are caused by the coronavirus and the economy is too weak,” he said, adding that deflation was hurting corporate profitability and exacerbating debt problems.
Prince added that geopolitical issues are also causing a “capital pullback” from China, but noted that the current risk premium makes Chinese assets attractive.
China's benchmark CSI300 index is down 47% from its February 2021 high.
Over the past 12 months, Hong Kong's benchmark Hang Seng Index has fallen 26%, the CSI300 index has fallen 22% and the broader Shanghai Composite Index has fallen 15%. During the same period, Japan's Nikkei Stock Average rose 24%, and the US S&P 500 index rose 27%.
Hong Kong Exchanges and Clearing CEO Nicholas Aguzin said on Thursday that Hong Kong's stock market, trading near a 15-month low, was weighed down by global geopolitical flashpoints and U.S.-China tensions. He said he has received it.
Aguzin said the run-up to the US presidential election in November will boost investor confidence in 2024.
Although he did not provide figures, he added that private investors and hedge funds have recently begun to shift their focus to new capital inflows into the Hong Kong market.
Minglan Tan, APAC chief investment officer at UBS, said investors were looking for alternatives to China, making India “an essential part of the future.”
“India still has room to take it to the next level because what we are seeing at the moment is a lot of public infrastructure, stable demographics and higher investment rates,” he said.
He added, “The U.S. presidential election is in November.It is also important whether pressure on China will increase further.''
(1 dollar = 7.1612 Chinese Yuan)
(Reporting by Serena Lee and Xie Yu in Hong Kong; Writing by Scott Murdoch in Sydney; Editing by Kim Cohill, Jamie Freed and Sri Navaratnam)
