More fiscal support the catalyst to revive consumption and housing market in China, Pimco says

If fiscal support is expanded to the property sector and consumers, it could be a positive catalyst for a recovery, Pimco’s Mohit Mittal says

Mittal sees opportunities in India’s infrastructure-related bonds and Macau’s gaming industry

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Mittal, the asset manager’s chief investment officer, is a Pimco veteran of 16 years and took on his current role in December. Photo: Sun Yeung

Published: 7:30am, 31 Jan 2024

Pimco, one of the world’s largest asset managers overseeing assets worth US$2 trillion, has called for more fiscal support from China to prop up consumer sentiment and the housing market.

Policy support such as the People’s Bank of China’s announcement last Wednesday of a 50 basis-point cut to banks’ reserve requirement ratios from February 5 and talk of a stabilisation fund to support China’s equity markets are all positive steps, Mohit Mittal, Pimco’s chief investment officer in core strategies, said in an interview with the Post.

But more can be done.

“So far, fiscal support is targeted towards public housing as well as AI [artificial intelligence] and hi-tech investments within the region,” Mittal said. “But if that is expanded a little bit, recognising the weakness in the property space as well as consumer sentiment, that could be a positive catalyst for a recovery in the region.”

Mittal, a Pimco veteran of 16 years, took on his current role in December to oversee fixed-income portfolios across the asset manager’s core suite of strategies, and to lead the core portfolio management team.

Significant repricing in China’s property sector over the past two to three years has pushed down the sector’s representation in Pimco’s US$2.4 billion Asia high-yield bond fund, he said.