(Yicai) May 12 -- Given their risk resilience and low correlation attributes, Chinese assets are being referred to more and more as a safe haven by international institutional investors amid increasing global uncertainties and geopolitical tensions, according to the head of China global markets at UBS.

International investors' interest in the Chinese capital market is continuously rising, as it has a complete industrial chain, stable policy support, ample strategic reserves, a diversified energy structure, and a strong ability to respond to external shocks, Thomas Fang said at a media briefing yesterday.

Earnings of Chinese mainland-listed companies are entering an upward cycle, buoyed by reversing inflation pressures, improving domestic demand, and a stabilizing real estate market, Fang explained.

China's dependence on oil and natural gas for electricity generation is only about 3 percent, much lower than the nearly 20 percent in most countries, said Meng Lei, China equities strategist at UBS Securities. This explains the resilience of Chinese mainland-listed shares during the market correction in March, he added.

Firms listed in the mainland experienced an overall growth of over 7 percent in the first quarter, which reached 12 percent excluding the financial sector. Even when removing petrochemical companies from the equation, the growth rate still remains between 11 percent and 12 percent, a big improvement compared to less than 3 percent last year.

Regardless of the impact of oil prices, the overall earnings recovery trend among Chinese mainland-listed firms has shifted to double-digit expansion from a zero-growth environment in 2023 and 2024, Meng pointed out.

The current equity risk premium in mainland shares is much higher than the historical average, while that of US shares has fallen into negative territory, Meng noted. This indicates that the valuation of Chinese shares offers a better cost-performance ratio.

In the next phase, upward momentum will be driven by earnings growth, Meng predicted. He expects that the continued net inflow into exchange-traded funds will lead technology leaders to outperform the market.

Editor: Futura Costaglione