Policy trends are creating opportunities
Deleveraging will remain a key theme for 2018, policies in line with this strategy have increased regulation of the financial system, tightened controls on the shadow banking sector and pushed up market rates, creating highly attractive fixed income yields. Chinese government bonds, which are currently at around 4%, offer compelling value compared to key rates across the world.
Elsewhere, the continued focus on deleveraging, combined with stringent application of environmental regulations is addressing excess capacity in China's industrial sector. Closure of inefficient, polluting factories, plus the forced closure of zombie companies is an essential step forward and frees up resources that can be channeled into developing China's new economy and rebalancing toward a consumer-and services-led economic model.
In China's new economy, private companies are dominant, and they are an attractive investment prospect since they carry lower debt levels and offer attractive profitability compared with old economy sectors. Indeed, its because of these factors that new economy sectors, in areas like IT, healthcare, and consumer, have performed consistently well against the old economy and SOE sectors over the long-term.
So, with new economy sectors coming to the fore, reforms creating opportunities, and China being emphatically 'open for business' to investors, we believe it’s the right time for investors to catch the wave as China speeds up its integration with the global economy.
And that's where UBS Asset Management, with its years of experience in the China market, is ideally placed to help you capitalize on these trends. We have been investing in China since 1997 and have developed extensive local expertise with an outstanding team of experienced investment managers for traditional and alternative assets.