Swiss bank UBP returns to Chinese markets

The Union Bancaire Privee (UBP) sign is seen at one of its branches in Zurich, Switzerland, 20 November 2017. REUTERS/Arnd Wiegmann

HONG KONG, Sept 23 (Reuters) – Swiss private bank Union Bancaire Privée (UBP) is back in Chinese markets, its chief investment officer has said, making its way back into the world’s second-largest economy after its exit last year .

UBP has over $150 billion in assets. It returned to China in August after exiting all mainland equity and credit positions in the third quarter of 2021, Norman Villamin, CIO of wealth management, told Reuters.

“We went from zero to neutral,” Villamin said.

While many institutional investors have reduced their exposure to China since 2019 due to a regulatory crackdown on tech giants, deteriorating Sino-US relations and a strict zero-COVID policy, UBP is among the few new to investing in the country.

Villamin said UBP sees some “hope” that there will be more stimulus measures before and after the Communist Party Congress in October.

“If some of the COVID restrictions are easing, even if it’s gradually, at least we’re moving in the right direction,” Villamin said.

UBP considered an underweight in China “tactically risky,” he added.

“China has been going through a recession while Europe is in the middle of a recession and the US is likely to enter a recession in 2023,” Villamin said.

However, UBP has only bought China A shares, representing the domestic sector, and avoids companies that may face geopolitical issues.

Chinese markets have faced unprecedented challenges this year, with both the CSI 300 Index (.CSI300) and Hang Seng Index (.HSI) each down over 20%, while hedge funds investing in Greater China experienced their largest net outflows record at least 15 years.

UBP believes China is poised to slowly recover, although it will not be smooth sailing. Some deep-seated issues, like the housing debt crisis, will take a long time to resolve.

“We believe that (China’s) real estate goal is to shrink the sector as a share of the overall economy to de-leverage the sector,” Villamin said.

“We don’t see many growth opportunities there.”

Reporting by Summer Zhen; Adaptation by Stephen Coates

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