(Yicai Global) Feb. 22 -- China remains a haven for global investors at a time of high inflation and uncertainty in the West, the chairman of the newly established Amundi Institute told Yicai Global in a recent interview.
2022 will be the year of a global regime shift, with a series of changing macro and micro concepts that investors have followed for decades, Pascal Blanque said. This includes the role of central banks, fiscal doctrines, tech innovations and energy revolutions.
The Amundi Institute was set up on Feb. 16 as the research, market strategy and asset allocation advisory arm of Europe’s biggest asset manager Amundi Asset Management. Blanque is the first chairman.
Below are excerpts from the interview:
Yicai Global: What kind of role will China play in the global regime shift?
Pascal Blanque: China is a part in this regime. Chinese assets are attractive today for both short-term and more long-term structural considerations. We are rebuilding positions on Chinese equities on valuation grounds or earnings rebound considerations. I see China as the Germany of the 1970s, and the Chinese yuan as the Deutsche mark of the 1970s. From the gross domestic product standpoint, we are seeing a shift towards more autonomous growth engines close to consumption and services. In addition, China for me is an oasis of lasting positive real returns.
YG: The year of 2021 was remembered by international investors as the year of strong regulations, which shocked many international investors. How do you view these regulations?
PB: I think it is critical to keep calm, to think beyond the noise and to basically stick to the long-term benefits of the Chinese story. If you take a long-term view, these policies are likely to boost competition, productivity and reduce systemic risks. On top of this, as part of those policies, there is an objective of increasing the size of the middle class to expand consumer spending, while upgrading the level of consumption with a focus on high-quality growth, green agenda and education.
YG: Do you worry about a hard landing?
PB: No. The worries are related to the property sector, which is in a phase of adjustment with liquidity requirements. And policy is relaxing in the near term, easing liquidity pressures for developers. I don’t expect much real change, nor significant material change regarding the housing sector. The view is that we stay in a sort of slowdown process or framework throughout this year. However, the property sector is not the overall economy. The property sector is not likely to derail the rest of the Chinese growth fundamentals.
My last point is, in 2022, we will see opportunities back in the emerging market space, for sure, China, or the Chinese Asia. If you combine these three angles, an emerging market with no inflation in China, or inflation basically close to a peak, strong internal demand and very attractive currency valuation on fundamental grounds, I think you’ve got the recipe for a positive surprise down the road in 2022.
Editor: Kim Taylor
