(Reuters) – Financial company AIA retains a positive outlook on China, driven by its long-term structural growth and commitment to open up financial markets to foreign investors, despite its recent regulatory changes, group CIO Mark Konyn said.
“International investor sensitivity to policy risk has certainly heightened,” Konyn, who’s firm manages $230 billion in assets, told the Reuters Global Markets Forum on Wednesday.
But he viewed these regulatory changes as a transitionary phase, with long-term sentiment intact on the liberalisation of China’s financial system.
“The bottom line is markets are recalibrating risk premiums on Chinese risk assets … we continue to hold a positive outlook on China,” he added.
Chinese stocks and sentiment took a drubbing with Communist Party rulers seeking to remake the property, technology and education sectors to curb cost pressures and better serve ordinary people.
Konyn said the sell-off in Chinese equities has provided opportunities to invest in the country, such as in financial services and sectors catering to direct consumption, in line with the themes of urbanisation and a broadening middle class.
Meanwhile, Konyn expected inflation to be transitory and the U.S. Federal Reserve to announce its stimulus withdrawal plan by November or December this year, but he did not see markets reacting to that in a 2013-style taper-tantrum.
He predicted the dollar index to end 2021 near the 97-level and the U.S. 10-year Treasury yield around 1.6%.
The dollar index has risen 2.5% year-to-date to 92.251 currently, and the U.S. 10-year Treasury yield has increased to 1.1920% from 0.9182% on Jan. 1.
(This interview was conducted in the Reuters Global Markets Forum chat room on Refinitiv Messenger. Join GMF: https://refini.tv/33uoFoQ)
(Reporting by Divya Chowdhury in Mumbai; editing by David Evans)