Renminbi assets are increasingly viewed as a must-have component of globally diversified portfolios, with China's competitive edge in the artificial intelligence supply chain, improving corporate earnings and a strengthening yuan making the Chinese market difficult to overlook, said executives and analysts.
Janice Hu, China country head of UBS and chairperson of UBS Securities, said that international investors can no longer view the Chinese market through simply a bullish or bearish lens. "Without investing in China, their portfolio will not represent a final diversified allocation decision," she said.
China's stock market is now valued at nearly $15 trillion and accounts for roughly a quarter of the MSCI index universe, making Chinese assets an essential allocation for many global investors, she added.
Hu noted that the fundamentals are also improving. Earnings growth of A-share companies rebounded to more than 7 percent in the first quarter, prompting the Swiss investment bank to raise its full-year earnings growth forecast for A shares to 11 percent.
A strengthening yuan is providing an additional source of return for overseas investors, as UBS expects the yuan to appreciate 3 to 4 percent against major currencies this year.
