Amundi Slashes China Stocks Citing Covid and Housing Problems




  • In Business
  • 2022-10-07 07:52:25Z
  • By Bloomberg

(Bloomberg) -- Europe's largest asset manager Amundi SA has turned tactically neutral on China equities in the firm's global equity allocation, citing the nation's Covid-Zero policy and property crisis.

Most Read from Bloomberg

  • Biden Says Putin Threats Real, Could Spark Nuclear 'Armageddon'

  • Kremlin Lets State Media Tell Some Truths About Putin's Stalling War

  • Musk's Twitter Takeover Hits Snag Over Debt-Financing Issue

  • Nord Stream Leaks Caused by Detonations in Sign of Sabotage

  • Trump Says US Agency Packed Top-Secret Documents. These Emails Suggest Otherwise.

"While monetary and fiscal policies are accommodative, problems in the housing sector and the sporadic Covid lockdowns are affecting household incomes and spending," Amundi's Group Chief Investment Officer Vincent Mortier and team, who oversee more than $2 trillion in global assets, wrote in a note.

Amundi's downgrade on China stocks for the short-term comes nearly a week before the start of the nation's party congress, where President Xi Jinping will get another decade to steer the world's second-biggest economy. So far, there are little signs of any changes to policies that have weighed on the markets and consumers.

The MSCI China Index has more than halved from a peak in February 2021 as investors sold China equities amid concerns that the Covid lockdowns, property crisis and regulatory crackdowns would weigh on company earnings.

The asset manager has been relatively bullish on China equities for at least the last four months. Mortier told Bloomberg in May that his firm was turning more bullish on the country's stocks after trimming exposure during the first quarter's harsh selloff.

Chinese holidaymakers have cut back sharply on travel and spending during the National Day break this week. This comes as the property market shows no signs of easing, global demand for Chinese goods is slowing and as the currency is plunging.

In other calls, Amundi said US equities should do better than those in Europe even as both do not fully reflect the deteriorating economic backdrop.

It has turned negative on high-yield corporate bonds in US and Europe, citing Federal Reserve's resolve to raise rates and a mild deterioration in Europe's financial conditions.

(Updates to add more context, chart and changes by Amundi in other assets.)

Most Read from Bloomberg Businessweek

  • The Massive Gas Field That Europe Can't Use

  • Even After $100 Billion, Self-Driving Cars Are Going Nowhere

  • 'I Am Energy': Inside the Bang Billionaire's Reeling Empire

  • Millions in Cryptocurrency Vanished as Agents Watched Helplessly

©2022 Bloomberg L.P.

COMMENTS

More Related News

Protesters angry at China
Protesters angry at China's lockdowns call for Xi to resign; crowds clash with police in Shanghai

Police cleared protesters in Shanghai who called for Xi's removal. Social media reports said protests spread to other cities, including Beijing,

Emerging-Market Bond Laggard Asia Is Primed for Rebound in 2023
Emerging-Market Bond Laggard Asia Is Primed for Rebound in 2023

(Bloomberg) -- Emerging Asian bonds have trailed their developing-nation peers this year, but a turning point looks to be just around the corner. Most Read...

A Rising Star in the Biden Administration Faces a $100 Billion Test
A Rising Star in the Biden Administration Faces a $100 Billion Test

WEST LAFAYETTE, Ind. - Commerce Secretary Gina Raimondo was meeting with students at Purdue University in September when she spotted a familiar face...

Cuba wins China debt relief, new funds
Cuba wins China debt relief, new funds

China has agreed to restructure Cuban debt and provide new trade and investment credits to the beleaguered Caribbean Island nation after a meeting in Peking ...

Protests of strict lockdown hit Shanghai, other China cities
Protests of strict lockdown hit Shanghai, other China cities
  • World
  • 2022-11-27 09:10:06Z

A protest against China's strict "zero-COVID" policies resurfaced in Shanghai on Sunday afternoon even after police cleared away hundreds of demonstrators in...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business