(Yicai Global) April 5 -- UBS Asset Manager is optimistic about the Chinese market, despite the significant drawdown of last year, according to the head of China Equities at the Qualified Foreign Institutional Investor program’s investor that holds the largest quota of Chinese stocks.

The main reason behind Shi Bin’s optimism is that at last month’s Two Sessions, the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference set up the growth target for the gross domestic product at 5.5 percent, higher than market expectations. “We believe this will buoy policymakers to enhance the monetary, fiscal, and credit support to the economy and capital market,” he said on March 31.

UBS (Lux) Equity Fund - China Opportunity, which is the largest QFII program’s fund, had a total value of funds of USD6.4 million as of March 31, according to data disclosed by credit rating agency Morningstar Credit Ratings. But the net value of its funds slumped 25 percent in 2021 and a further 8 percent so far this year. The fund holds stocks in top-ranking companies including Tencent Holdings, Kweichow Moutai, NetEase, China Merchants Bank, and Ping An Insurance.

The policies that led to sharp fluctuations in many sectors of China’s market last year may become the key to reversing the decline of the stock market this year, Shi added. Regulatory bodies’ recent probes into technology and medical companies are mainly the continuation and implementation of relevant policies issued last year, he noted.

The current valuation of China’s stock market has become attractive, Shi said, adding that some long-term trends are still appealing. The Chinese government is striving to upgrade the economic structure towards a service-oriented direction, expand healthcare expenses, and promote automation, digitalization, and transformation to green energy.

These tendencies plus the international investors’ relatively low investments in the Chinese stock market and the increasing level of opening up will bring many opportunities to active investors, Shi pointed out.

The QFII is a program that allows licensed international investors to take part in the Chinese mainland’s stock exchanges. It was introduced in 2002 to provide overseas investors with the possibility to trade stocks, treasury bonds, corporate debentures, convertible bonds, and other financial instruments approved by China’s securities regulator in Shanghai and Shenzhen. Before then, foreign investors were not allowed buy or sell shares in the mainland.

Editors: Dou Shicong, Futura Costaglione