Swiss banking giant UBS released a white paper last week, saying that China is driving the global economy and creating opportunities. UBS Chairman Axel Weber expects a soft landing of the Chinese economy and more stimulative measures from the Chinese government in 2019.
"Chinese economy is going to see a soft landing. I don't take the data released too alarming... Chinese authority has many areas to continue to stimulate the economy and give economy support… Over the next few months, you will see [measures] stimulate the economy and help your economy to bottom out. So I'm not really worried about a substantial slowdown," he said.
Weber expects a series of measures of stabilizing growth to come out this year. And he warned that China-U.S. trade friction is a big issue. “The biggest issue for China is to get the trade disputes with the United States resolved in a reasonable manner," he stated.
UBS Chairman Axel Weber. /VCG Photo
According to UBS white paper, while trade tensions, debt concerns, and doubts about market reforms have driven news cycles over the past year, global investors can find good prospects within China's fundamental drivers like wide-ranging reforms, growing data pools, expanding consumer demand, rapid innovation, and an evolving trade sector.
It also indicates that these thematic trends are not only propelling growth in China and the global economy but also creating long-term investment opportunities that every global investor can be positioned for.
"Even when China didn't do so much opening-up, there were so many money inflows to the Chinese market... China is opening-up to global investors. Global investors need exposures to the Chinese economy. And the way they do that is investing in A-shares and in the developing bond market," he claimed.
Weber believed that opening-up and inclusion in key indexes, like MSIC, would bring more investments into China in the next few years. "We estimate over the few years 250 billion of inflows into the Chinese market from the global economy," he explained.
Last year, UBS became the first foreign bank to be allowed to increase its stake in its securities joint venture in the country, to 51 percent from just under 25 percent. And expanding in China is a key element of UBS' strategy. Weber is also confident in the company's business model in China.
"We have a very simple business model. We bring global investors to China. And we also increase flows for Chinese investors [to go abroad]… Market has been too pessimistic, but the outlook has been improved. We hope to see a reasonable year,” the chairman said.