A recent research trip to the U.S. by macro research house TS Lombard has found U.S. investors are starting to warm to China, even as political risk and economic growth remain concerns.
In meetings with an array of U.S. buyside investors, TS Lombard noted that the most striking takeaway was that investors were now the least bearish on China for at least five years.
"The combination of (China) tech, China stimulus and relative U.S. performance is shifting sentiment," writes TS Lombard chief China economist Rory Green.
Key topics included whether the Chinese economy has bottomed and how trade negotiations with the Washington will play out.
On the latter, Green says he expects a bumpy negotiation that ultimately leaves tariffs in the 20-30% range.
On the former, Green believes recent stimulus measures to stabilise growth have been sufficient for "fragile green shoots" to emerge, but warned there was still a long way to go to reach pre-COVID levels of private activity.
"Pre-Covid, the China team would be asked 'How should we invest in China?'," Green writes.
"After 2020, the question, quite rightly, shifted to 'Why should we even bother?'."
"This year investors appear to be moving closer to the old paradigm."
Source: Reuters (Samuel Indyk)