Head of Fixed Income, Asia Pacific
Bloomberg Asia Pacific Head of ETF and
Index Sales Strategy
Associate Managing Director,
Moody's Asia Pacific
China Fixed Income Portfolio Manager,
UBS Asset Management
Hayden Briscoe's presentation at GCC on January 8th demonstrated how the inclusion of onshore China bonds will change the outlook for the global fixed income market; and the opportunities that are emerging.
Index inclusion: the time is right
Moving onto the Q&A session, Briscoe asked the panelists about why index inclusion is happening, what benefits it will bring, and whether onshore markets are set up to handle the process.
William Tu explained that 'in 2016 we felt the pace of reforms in China meant the time was right to bring onshore bonds into our indices.'
Tu went on to say that, 'after consulting with clients and market participants, we presented our ideas and proposals to China's regulators and they responded by doing the groundwork for the inclusion process.'
As for the impact of index inclusion, Ivan Chung added 'index inclusion will bring positive changes because the authorities are working hard to adapt to their needs of international investors.'
…the index inclusion process will bring more transparency to onshore markets by forcing issuers to meet the standards required by international investors.
In China we will see a L-shaped recovery in 2019, longer business cycles, and longer-term quality growth.
China in 2019 – the three Ls
Turning to the outlook for China and fixed income markets, Briscoe explained that 2019 looks quite different to previous years and that the outlook will be dominated by what he calls the 'three Ls':
1. An L-shaped recovery: growth is slowing in China as we move into 2019, but policy support will improve the macro outlook for the economy in H2 2019 and stabilize the growth rate. That's different to previous slowdowns, when massive stimulus drove a sharp rebound in growth.
Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report was compiled, and any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Commentary is provided at a macro level and is not with reference to any investment strategy, product or fund offered by UBS Asset Management and is provided in Canada generally pursuant to the registration exemption provided for in Section 8.25(2) of National Instrument 31-103 and in Ontario pursuant to Section 34 of the Securities Act (Ontario) and does not purport to be tailored to the needs of the person or company receiving the advice.. The information contained in the materials should not be considered a recommendation to purchase or sell any particular security. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. UBS Asset Management services offered to Canadian persons are provided by UBS Asset Management (Canada) Inc., a Nova Scotia corporation. UBS Asset Management (Canada) Inc. is an indirect wholly-owned subsidiary of UBS AG and is registered as a portfolio manager and exempt market dealer (in all provinces of Canada), commodity trading manager (Ontario), adviser – commodity futures (Manitoba) and investment fund manager (Ontario, Quebec and Newfoundland), all pursuant to Canadian securities law. Materials may include forward-looking statements. Actual future results, however, may prove to be different from expectations. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss.
Please confirm you are a Canada resident to proceed.