Chinese equities can’t be overlooked due to its sheer size, according to DBS which is retaining its overweight position in the market.
Despite a slowing economy and downbeat investor sentiment, there are still reasons to stay invested in China, according to DBS chief investment officer Hou Wey Fook.
«We think the China market is too big to ignore,» said Hou at a media session attended by finews.asia.
Stimulus Hopes
For the longer term, DBS will keep its overweight position in China, though it will not add additional exposure unless there are some catalysts for a valuations upgrade. Examples include a massive fiscal stimulus package to address the slowdown and high youth unemployment or significant de-escalation of US-China tensions.
«Things right now are a little bit slow,» added Joanne Goh, an investment strategist at DBS.
Within China, DBS is positive on large state-owned banks for sustainable and attractive yields as well as insurers, large tech platform companies and A-shares for growth.
Indirect Play
While DBS is keeping a close eye on the China story, it notes that investors don’t necessarily have to invest directly to gain from its developments.
For example, Southeast Asia could benefit from both accelerating and slowing growth, due to the «China plus one» business strategy. Investors seeking to capitalize on Chinese consumption recovery could also consider European lux stocks.
«So to play China, we don’t really have to invest in China,» Goh said.
