BNP Paribas Wealth Management is positive on the Chinese market but it remains cautious on the internet sector, preferring to take a wait-and-see approach with regard to the regulatory landscape.
While an increasing number of banks and investors believe that Chinese policy tightening for the internet sector has peaked with a positive turnaround in sight, others prefer to exercise caution and seek confirmation on the new regulatory landscape.
«Premier [Li Keqiang] and other China government officials said they want a strong platform economy. The key is that it's a ‘show me’ market,» said BNP Paribas’ Asia chief investment officer Prashant Bhayani in a recent webinar attended by finews.asia. «People need to see the details so they can estimate the earnings impact. We are starting to get that but we need more details.»
A-Shares Preferred
Despite concerns in the tech sector, the bank is positive on the overall Chinese equity market with a preference for A-shares due to it being the beneficiary of domestic tailwinds like the economic reopening while avoiding offshore equites’ correlation with global markets.
According to the bank, the market is expected to see more consolation in the near term following a strong rebound in June and it advises investors to view corrections as buying opportunities. It also expects more certainty on political and policy direction after the 20th Party Congress held in the fall and the improved clarity could further benefit Chinese assets.
But for the broader equity asset class, BNP Paribas Wealth Management remains neutral after first downgrading against the consensus view in February this year. The French private bank is staying cautious to await further reduction of uncertainties including inflation, rising bond yields, monetary policies, the Ukraine war and the energy crisis.
