A senior official from China’s banking authority says that the country’s capital markets still present a strong value proposition for wealth management and insurance funds.
Xiao Yuanqi (肖远企), chief risk officer at the China Banking and Insurance Regulatory Commission (CBIRC), said that offshore investors are already turning to renminbi assets as a safe-haven amidst the uncertainty created by the spread of the novel coronavirus.
Xiao said to China Securities Journal that that as a result of China’s containment of the coronavirus its financial assets can be viewed as “safe-haven assets in the short-term, and value assets in the long-term.”
Xiao also said that CBIRC will “encourage wealth management and insurance funds to expand their value investing under the precondition of compliance,” with a view to better stabilising the Chinese financial system.
“Over the long-term wealth management funds and insurance funds will both play a stabilising role for financial markets,” Xiao said.
“Firstly, the funds of both are considerable, and secondly both are institutional investors, whose investments are most stable and focused upon risk avoidance.”
Xiao highlighted several reasons for improvements to China’s financial markets of late:
- “At present the coronavirus has basically been controlled domestically, and work and life are gradually returning to normal.”
- “The long-term trend of improvement in China’s fundamentals remains unchanged.”
- “China’s financial asset valuations are still at a comparatively low level overall, and the Chinese stock market’s PE ratios are still quite low.” Xiao said that China’s financial assets can be viewed as “safe-haven assets in the short-term, and value assets in the long-term.”
- “China’s policy tools are diversified, and there is considerable room for fiscal policy and monetary policy compared to overseas countries.” Xi said that while “many countries have entered an era of zero or negative rates, China still has considerable room from an interest rate perspective alone.”