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Talking Heads – Matices en las perspectivas de la renta variable china

CHAO DavidDaniel Morris
2 Autores - Ideas de inversión
12/02/2024 · 5 Min

Aunque la evolución de la economía china no es muy halagüeña, tampoco es tan sombría como algunos la pintan: algunas áreas continúan ofreciendo oportunidades atractivas. Así lo explica David Choa, director de renta variable de China continental, a Daniel Morris, estratega jefe de mercado, en nuestra edición semanal del podcast Talking Heads.

Según David, aunque de manera irregular, la recuperación tras la pandemia sigue su curso, si bien es cierto que dicha recuperación sería más sólida si el país mostrara una acción política firme y clara, menos bandazos políticos y mayor claridad sobre la financiación de las medidas que está adoptando el gobierno. Entre las cuestiones que podrían impulsar el crecimiento destacan la modernización industrial, la innovación y el gasto en experiencias, por ejemplo, en viajes y ocio.

También puedes escuchar el podcast y suscribirte a Talking Heads en YouTube y leer la transcripción.   

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Leer la transcripción

This is an audio transcript of the Talking Heads podcast episode: Talking Heads – A more nuanced look at Chinese equities

Daniel Morris: Hello and welcome to the BNP Paribas Asset Management Talking Heads podcast. Every week, Talking Heads will bring you in-depth insights and analysis on the topics that really matter to investors. In this episode, we’ll be discussing Chinese equities. I’m Daniel Morse, Chief Market Strategist, and I’m joined today by David Choa, Head of Greater China Equities, based in Hong Kong. Welcome, David, and thanks for joining me.

David Choa: Thank you, Daniel. My pleasure to be here.

DM: After China finally left [zero Covid policy] lockdown, Chinese equities had a challenging 2023. That’s continued with a sharp correction in the market year-to-date. Do you see things on the ground as really that bad?

DC: The situation is not as disastrous as the market suggests. There are issues like property, local government debt and demographics. Recovery is uneven and patchy.

There are areas doing less well, like property and construction. However, other areas are still doing alright, for example, the automotive industry, parts of the internet, travel and exports.

The government is now really trying to put a floor on the downside with the help of monetary and fiscal easing. We are also seeing more assurance from the government. For example, we see local government employing more resources from the central government and pulling forward local government bond programmes.

On the property side, there are programmes like urban renovation and social housing projects, which together aim to create extra demand to clear the [housing] inventory. So, although market sentiment is poor, [China’s] recovery momentum is still ongoing.

DM: If the market perception is worse than the reality, one would assume that’s going to open up an opportunity for you as an investor. Foreign observers have been waiting for even more policy support than we’ve had so far. What are some of the positive catalysts that could finally turn things around and remove the entrenched negative expectations and sentiment that we see?

DC: The help from the government has not been a ‘big bang’ or the ‘magic bullets’ people expected. But we are seeing a lot of action coming on more frequently from the government.

For example, we recently saw another 15 points off banks’ reserve requirement ratio (RRR), releasing more capital into the market. We have also seen the setting-up of national funding totalling more than USD 215 billion. So, more frequent actions, but it needs to be more consistent. Beijing needs to have clearer, more stable policy actions.

There are some signs of a more stable policy, for example in healthcare, where the authorities are allowing a more flexible pricing regime for innovative drugs.

On the property front, they want urban renovation. But we need more details of such a big policy. Is there a compensation scheme for the residents in the affected areas, for example a housing voucher or subsidies? Where’s the financing coming from?

And then there are more difficult areas like demographics. The retirement age could be an upside surprise. It is currently very low, but is going to be increased.

Secondly, reform of the Hukou system that used to prevent the overflow of the population into the top-tier cities. Migrant workers used to be restricted on where they could live, but now they have the freedom and flexibility to stay where they work in the top-tier cities; they can easily move their families to these cities and create extra demand for housing and consumption.

These are the big structural policy changes that really help, But the biggest issue relates to private enterprises, because whichever way you looks at things, enterprises are the engines of the Chinese economy, accounting for more than two-thirds of GDP growth.

We need better clarity on what private enterprises can do, a framework of where these private enterprises stand. This would really instil confidence into business owners. They would know what they can earn, and what they [are allowed to] do, so they can deploy capital and start hiring again. Without such confidence, it is really hard for them to grow.

Reigniting the ‘animal spirits’ of private enterprise is one of the most important catalysts to reignite China’s economy.

DM: The current environment is one of a patchy recovery. Global demand is uneven. The US is doing relatively well, but [demand is] not so strong in Europe. There are concerns about geopolitical tensions. At the same time, there is always opportunity. China is still growing by at least 7% a year, so there should be opportunity there. What are the areas you like?

DC: China is changing in terms of where it stands in the economic cycle. In terms of portfolio strategy, we are still adjusting. We want to focus on those few areas that can still deliver growth. For example, industrial upgrade innovation. Secondly, consolidation – after the last few years of [zero] Covid policy, the survivors of all these different hiccups are become stronger.

We look for companies where the supply dynamics [have] become more favourable: definitely,  consumption. Consumers still have a lot of money to spend. They have excess savings. How they spend is changing. It’s less about durable goods, less about luxury goods, more about experience-based consumption like travel, concerts, etc.

We believe consumption will remain a key area. So, we short retail and [we are] long innovation, the practical trends –internet, artificial intelligence (AI), digitalisation – will still work even in this challenging macroeconomic environment. With the angle of improving free cash flow and dividend, there could be anticyclical ideas. And lastly, turnaround names which are also more immune to the current environment.

DM: David, thank you very much for joining me. DC: Thank you, Daniel. It’s my pleasure to be here today.

Aviso legal

Algunos artículos pueden contener lenguaje técnico. Por esta razón, pueden no ser adecuados para lectores sin experiencia profesional en inversiones. Todos los pareceres expresados en el presente documento son los del autor en la fecha de su publicación, se basan en la información disponible y podrían sufrir cambios sin previo aviso. Los equipos individuales de gestión podrían tener opiniones diferentes y tomar otras decisiones de inversión para distintos clientes. El presente documento no constituye una recomendación de inversión. El valor de las inversiones y de las rentas que generan podría tanto bajar como subir, y es posible que el inversor no recupere su desembolso inicial. Las rentabilidades obtenidas en el pasado no son garantía de rentabilidades futuras. Es probable que la inversión en mercados emergentes o en sectores especializados o restringidos esté sujeta a una volatilidad superior a la media debido a un alto grado de concentración, a una mayor incertidumbre al haber menos información disponible, a una liquidez más baja o a una mayor sensibilidad a cambios en las condiciones sociales, políticas, económicas y de mercado. Algunos mercados emergentes ofrecen menos seguridad que la mayoría de los mercados desarrollados internacionales. Por este motivo, los servicios de ejecución de operaciones, liquidación y conservación en nombre de los fondos que invierten en emergentes podrían conllevar un mayor riesgo. Los activos privados son oportunidades de inversión no disponibles a través de mercados cotizados como por ejemplo las bolsas de valores de renta variable. Permiten a los inversores beneficiarse directamente a temas de inversión a largo plazo y pueden brindarles acceso a sectores especializados como infraestructura, inmobiliario, private equity y otros alternativos difícilmente disponibles a través de medios tradicionales. No obstante, los activos no cotizados requieren un examen minucioso, pues tienden a tener niveles elevados de inversión mínima y pueden ser complejos e ilíquidos.

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