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Julius Baer: «You Cannot Wish Away China»

«Short-term, yes, you should expect greater volatility more than anything else,» said Bhaskar Laxminarayan, ‎Julius Baer’s Asia CIO. «But you have to own China in your portfolio from a longer-term perspective, whichever way this goes. Growth is a very scarce commodity and it is going to be even more difficult to find [after the pandemic].» 

Laxminrayan urges investors not to get lost in translation with regards to U.S. legislation that could negatively impact China nor upcoming moves that might represent posturing more than actual action. 

«There’s so much noise every single day. There will always be uncertainty and politics but when we step back and take a look, it is clear where the growth engines are,» he said. «You cannot wish away China. You have to have a slice of this growth.»

UBS: Political Gridlock

At UBS, Hong Kong equities were expected to face headwinds not only due to political gridlock which could challenge consumption recovery but also earnings contraction caused by the ongoing coronavirus pandemic, though it did not specifically comment on the new security law.

Hong Kong equities, alongside Thailand, was named as least preferred stock markets in Asia Pacific ex-Japan, UBS added, while China and Singapore were the most preferred.

The bank forecasts Hong Kong GDP to contract 6.8 percent in 2020 before growing 4.9 percent in 2021.