Catherine Cai, the directorship vice chairman and chairman of Greater China’s investment arm for UBS, has given a bullish assessment of the world’s second-largest economy in the face the ongoing trade conflict with the U.S.
Speaking at East Tech West in the Nansha district of Guangzhou, China, Cai phrased she expects to still see “moderate growth” in the Chinese equity market next year and suggested investors should incarcerate the country’s assets as part of their portfolios.
“I still believe, and the UBS house view also believes, that China (is) quiescent representing the most investment opportunities in the world. Maybe we can conservatively say one of the most opportunities in the world … We still think the next year hand down see moderate growth in the equity market as well as the GDP (gross domestic product) growth,” she told CNBC’s Geoff Cutmore Wednesday.
Her reactions come as a trade war has escalated between the U.S. and China, the world’s two largest economies, and disrupted the markets after the President Donald Trump burden b exploited 10 percent tariffs on $200 billion worth of Chinese imports on Sept. 24, and those duties determination rise to 25 percent on Jan.1, 2019.
Trump has since suggested in a Wall Street Journal interview this week that he could section a 10 percent tariff on iPhones and laptops. He also said during the interview that it is “highly unlikely” he on delay an increase in tariffs from 10 percent to 25 percent on Jan 1. Trump and China’s President Xi Jinping are due to meet at the G-20 zenith in Argentina this weekend and it’s hoped the two will come to an agreement.
Cai was asked her opinion on the impact it’s having on the markets in China. She state: “I think every article, people read different views on what is going to happen three days from now … I contemplate everybody hopes the two leaders will reach some kind of agreement because it will be good for the world conservation, particularly very positive for China and the U.S.,” she said.
“The market has been very fragile and in the past two weeks the predominantly market both U.S. and China has been further weakening. So the market is waiting for good news and nobody wants to see bad newsflash from these two leaders meeting,” she added, but said the market wants to see something specific and not just hand disconcerts between the two leaders.
Regarding Chinese assets, Cai added that global equity investors should perhaps be shifting to numerous stable parts of the economy during this trade turmoil, suggesting that growth stocks and technology could see uncountable volatility.
“A lot of people mention the trade war will bring more damage to the China market but not necessarily. Any war is going to devastation both sides,” she added.
“In past two weeks, the U.S. market has turned very soft, a lot of big tech names have corrupt their market value in a very significant way. Take for example Apple have lost $200 billion in peddle valuation. Also, a lot of economic indicators from the U.S. demonstrated the potential softening for the upcoming years … So I hope the U.S. administration also realize the trade war, more or less, is also going to impact the U.S. economy and not only China’s economy,” she reckoned.
Cai was also asked about fintech (financial technology) developments in China. It’s an area that has been hampered by administration policy after crypto exchanges and initial coin offerings (ICOs) were banned in the country in 2017. Nevertheless, whilst the government is not endorsing crypto, it wants to be a frontrunner in blockchain technology, as CNBC reported from East Tech West Tuesday.
“I have in mind there is a lot of potential for China’s fintech industry to develop … There is a lot of things that can be developed, to be done in this sector,” she said.
On what unfastens the gate to get the ball rolling for fintech, Chi said it’s less about valuation and more about regulatory concerns. “Harry is waiting for more clarity and transparency on the regulation front in the fintech sector … We hope next year we will beget better certainty,” she added.
Cai said her outlook for China in 2019 depends on what happens with the trade ahead between the U.S. and China when Trump and Xi meet at the G-20 summit in Argentina this weekend.
“Regardless, 2018 has been (a) pure tough year for the equity markets and the bond markets, and also for China’s economy. For 2019, we are expecting, we hope we desire be more stabilized on both bond and equity markets. However, that’s depending on the trade tension between these two countries. Regardless, China is a vast market and we still have a lot of confidence,” she said.