According to UBS, affluent investors from around the world have developed a keen interest in the Chinese market, thanks to the stimulus measures implemented to boost growth.
Investors in Singapore may push ahead with new projects in 2025, and some may also direct more funds to mainland China and Hong Kong in response to stimulus initiatives launched by the Beijing government, banking insiders predict.
“China currently stands at a crossroads, as a comprehensive package of monetary, property, debt, and capital-market initiatives is being rolled out,” stated Koh Liang Heong, head of global family and institutional wealth for the Asia-Pacific region at UBS.
Our clients perceive the relatively modest valuations on the Chinese market and are also expecting a rebound in the Chinese market’s strength in 2025.
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The enhanced sentiment, as observed by Koh, can be attributed to the global economic cycle of interest rate decreases that was initiated by the US Federal Reserve in September of last year. Market projections anticipate an ongoing trend of rate cuts throughout 2025.
Markets remain uncertain with the looming threat of president-elect Donald Trump increasing tariffs on Chinese goods entering the US.
Beijing may conclude by next year’s National People’s Congress in March its stimulus measures, which could include a relatively higher debt-to-GDP ratio of around 4% by 2025,” explained Koh. “This could potentially involve increased government bond sales and a shift towards looser monetary policy.
Koh stated UBS’s high-net-worth clients are also drawn to Taiwan and India.
Taiwan has emerged as the most attractive market because its semiconductor industry is driven by significant demand for artificial intelligence technologies.
India also presents a favorable outlook. During a global trade war, its domestic-driven economy and close relationships with the US would help mitigate trade tensions, potentially positioning it as a relatively resilient economy.
The Regional Head of Asia-Pacific at UBS pointed out according to the UBS Global Family Office Report 2024, that Asia-Pacific based family offices intend to expand their investments in fixed income, equities from developed markets, private equity, and hedge funds within the forthcoming five-year period.
Households are now investing in a variety of geographic areas, specifically across the Asia-Pacific region, rather than focusing solely on Greater China,” he stated. “Diversifying investments across different regions and sectors is a way to increase the potential for returns.
According to JPMorgan Private Bank, family offices are expected to pursue global diversification, potentially leading to increased investment in alternative asset classes.
Global public markets may have peaked, so family offices are expected to increasingly seek alternative returns through private markets, particularly private debt, infrastructure, and traditional private equity investments.
US tariffs pose a significant hurdle for Chinese markets, as he pointed out.
A rise in tariffs to 60 per cent could substantially impair China’s economic progress, resulting in a decline of 1 to 2 percentage points, according to him.
“We believe this policy adjustment signifies a recognition of the economic downturn and a determination to tackle it,” he stated.
US rate cuts will lead to high-net-worth individuals swapping cash for higher-yielding investments and potentially taking on debt.
According to Raymond Cheng, Standard Chartered’s head of investment for wealth solutions in North Asia, he is optimistic about the performance of US stocks and bonds in the year 2025.
We anticipate a significant increase in market fluctuations at the start of the new year,” Cheng stated. “The extent of this volatility will largely depend on how US President Donald Trump’s policies unfold, particularly regarding the tariffs he may impose on Chinese imports.
We anticipate that Trump’s policies will foster considerable growth-oriented approaches. Our suggestion is to allocate substantially more to US stocks and also US high-yield corporate bonds.
Standard Chartered believes that tariffs will be introduced in stages, serving as a negotiating tool for the incoming administration to secure US economic benefits, he stated.
We expect the Hang Seng Index to trade between 20,000 and 22,500 if the announced tariff matches our forecast,” Cheng said. “However, if President Trump intensifies the tariff deployment, we forecast the benchmark index to decline to 18,000 to 20,000.
Kenny Wen, the head of investment strategy at KGI Asia, a brokerage firm based in Hong Kong, cautions that market instability is anticipated for the upcoming year.
Market experts advise investors to diversify their investments by purchasing shares, short-term bonds, and gold now, and taking advantage of the current lower prices,” he said. “The value of gold, meanwhile, is supported by an upward trend that stretches over a long period, driven by global economic slowdowns and increasing political uncertainty.
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This article was first published in The South China Morning Post, a prominent media outlet that provides in-depth coverage of China and Asia-related news.
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