From Asian Investor: 2024-05-27 11:28:15

Ping An Insurance Group’s Benjamin Deng is betting on China’s policy support and high-dividend state firm shares to navigate economic challenges. He expects US rate cuts to pave the way for China to ease monetary conditions. Deng anticipates Fed rate cuts in the third quarter for both economic and non-economic reasons.

Deng highlights the declining Chinese yuan against the US dollar and predicts additional interest rate cuts in China this year. He emphasizes the importance of China’s stable monetary policy and active fiscal policy to support economic growth. Deng anticipates more detailed fiscal policies in the coming months to stabilize different sectors.

Chinese authorities recently announced measures to boost the property market, including interest rate cuts and special government bonds issuance. Despite stimulus packages, small developers in lower-tier cities may face challenges. Ping An focuses on large developers in first-tier cities for stability. Deng expects more fiscal policies for industrial upgrades and machinery replacements.

To mitigate market uncertainties, Ping An maintains a double barbell asset allocation strategy focusing on long-duration government bonds and risk assets. The risk asset portfolio prioritizes high-dividend Chinese stocks, private equity investments, and growth stocks. The strategy has resulted in strong returns from high-dividend state-owned enterprises (SOEs).

Ping An’s high-dividend stock portfolio has outperformed the CSI 300 Index, driven by cheap valuation and strong underlying cash flows of SOEs. Deng is optimistic about the role of large SOEs in driving China’s economy, citing their high dividend payouts and low valuations as key factors. Practical measures like share buybacks and dividends aim to boost stock valuations.



Read more at Asian Investor: Ping An bets on policy push, SOE stocks amid China uncertainty | Equities