Swiss bank Lombard Odier cuts China asset allocation amid challenges facing world’s second-biggest economy
- Chinese authorities seem unlikely to deliver catalysts that would sustainably reverse negative investor sentiment, senior strategist Homin Lee says
- Last week’s market-boosting measures prove inadequate as Chinese and Hong Kong stock benchmarks erase gains
Lombard Odier is the latest to sour on China, cutting allocation to the nation’s assets over concerns about the outlook for the world’s second-largest economy and geopolitical risks.
It is too early to take a positive view on Chinese assets, including stocks, bonds and the yuan, according to the Swiss private bank, which manages US$230 billion of assets globally.
The changes in strategic asset allocation reflect a reassessment of China’s long-term challenges, the bank said in a note to clients on Tuesday.
“Despite new steps to boost bank lending and equity markets, Chinese authorities seem unlikely to deliver catalysts that would sustainably reverse negative investor sentiment,” said Homin Lee, senior macro strategist at Lombard Odier. “A durable turnaround would require a credible reflationary package and structural reforms, which we think policymakers are unlikely to deliver.”
02:31
China GDP: Beijing’s long to-do list to boost its economy in 2024
China recently initiated a number of measures to support the market, including injecting 1 trillion yuan (US$140 billion) of liquidity in the banking system and tightening rules on short-selling. But the impact seems to have been short-lived.