The basic logic of BlackRock's investment in the Chinese market is that due to the historically low valuation of A-shares and the upcoming downturn of the US dollar, Chinese stocks will have attractive allocation potential and attract overseas funds in the future, "said Fan Hua, the head of BlackRock's China region, at the" 2024 Asset Management Annual Meeting.
Fan Hua believes that in the current market environment, investment should pay attention to long-term compound interest value, and how to allocate assets determines wealth returns. If we look at the extended cycle, after deducting inflation factors, stock funds are still one of the highest yielding choices. From the perspective of asset allocation, it is recommended that global investors allocate Chinese assets, while Chinese investors also have the opportunity to increase returns and reduce risks by adding overseas assets to their investment portfolios.
Asset allocation first requires multiple prerequisites: to confirm what the return target is and what kind of risk can be borne? What is the maximum drawdown and investment period? Is there a requirement for liquidity and can leverage be used?
"At present, the global asset allocation still has obvious advantages." Fan Hua said that countries around the world are in different economic development cycles. Investors can choose assets in different cycles. For countries with better economic growth, they can consider choosing more stocks. Otherwise, bonds may perform better, which can provide some risk diversification effect.
From a correlation perspective, the correlation between Chinese assets and overseas stocks and bonds is relatively low, and the diversification effect is good. Therefore, overseas investors adding Chinese assets to their investment portfolios not only bring potential returns, but also diversify due to low correlation. Conversely, Chinese investors investing overseas are no exception.
Fan Hua also summarized the recent fluctuations in the international market. Fan Hua believes that there may be an overreaction in the market's expectations for the Federal Reserve to cut interest rates. Meanwhile, overseas investors' views on Chinese stocks have been constantly changing. From the fourth quarter of last year to this year, it has been very significant, from low allocation to slightly low allocation. However, more investors are still watching and if they see more positive signs, they will be willing to increase their holdings of Chinese assets