17 апреля 2019 г.

A time when the Chinese economy was growing in double digits is a thing of the past. In 2015, GDP of the world’s second largest economy fell below 7 percent and has stayed there since then. With no apparent signs of improvement emerging market investors are edgy and are evaluating possible risks and returns of investing into Chinese securities.

On April 11, CFA Association Russia held a business breakfast, inviting two investment experts from the UFG Wealth Management family office, Alexey Potapov, CFA, and Evgeniy Pundrovsky, CFA, to draw a clear picture of investing into Chinese stocks and bonds.

The Chinese stock exchanges can be a fruitful place for short-selling. Evgeniy brought an example from the summer of 2015 when he and Alexey bought short positions in the Shanghai stock exchange and made a 30 percent gain for one of their clients in a short time.

Above: Evgeniy Pundrovsky, CFA

The key factor of their success was timing. According to the expert, Chinese equity analysts tend to overvalue stocks, which can create a false sense of security.

“It is important to read between the lines and make a good judgment. We did it and got out unscratched shortly before the 2015 Chinese bubble exploded,” said the expert.

In 2019, it can be a good strategy to increase the shares of Chinese ETFs. Alexey took the floor next and told how by increasing a number of Chinese ETFs in a client’s portfolio last December they received an 18 percent yield in the first quarter of 2019.

Although both speakers agreed that the Chinese market is risky and often can be unpredictable for Western investors, there are many interesting opportunities.

It is a good idea to focus on the shares of companies that put priority on China’s growing internal market. As imports and services for China’s own market are becoming a priority, investors should take a closer look at the companies that provide goods and services for China’s domestic population, Alexey said.

Above: Alexey Potapov, CFA

The expert also pointed out the healthcare sector, the ride-hailing platform DiDi, and coffee, which surprisingly is becoming a very popular beverage in China.

In terms of risks, Alexey advised to stay away from the real estate and heavy industry.

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FULL VIDEO OF THE EVENT >>>