Trading the dragon: Chinese stocks are ‘second-half story’ for Deutsche while Lombard Odier sees safer bets in proxies
- ‘China is very much a second-half of the year story for us,’ says Stefanie Holtze-Jen, Asia-Pacific CIO at Deutsche Bank Private Bank
- ‘Our clients would be looking at [China’s] underperformance relative to global markets as being a little concerning,’ Lombard Odier says
Investors are willing to wait for policy clarity and stability in economic indicators before returning to the market, or rely on alternative offshore assets as proxies if they choose to stay invested in China’s economic recovery story.
“China is very much a second-half of the year story for us,” Stefanie Holtze-Jen, chief investment officer for Asia-Pacific at Deutsche Bank Private Bank, said in an interview. “What an investor needs to see is repeated macroeconomic data shifts, some consistency. Until then, there will be a bit of hesitation.”
The German private bank, which manages about US$593 billion of client assets globally, took a position on Chinese equities in February after seeing signs of stabilisation, but abandoned the trade last month because fragile market sentiment was not likely to sustain the momentum, it concluded.
The MSCI China Index, which tracks more than 700 stocks listed at home and offshore, has declined 35 per cent since 2021, compared with a 6.2 per cent gain for the S&P 500 and a 33 per cent rally in the Nikkei 225 Index. Despite state-led market intervention, the gauge has lost 1.8 per cent this year, while the S&P 500 and the Nikkei 225 advanced by 6 and 15 per cent, respectively.
