At the World Economic Forum in Davos, Switzerland, UBS fund managers outlined a notable trend of increasing investor allocation into Chinese technology equities. The shift is motivated by the relatively lower valuations of Chinese tech stocks compared to their U.S. counterparts, combined with perceived government backing and a looser fiscal stance in China.
Mark Haefele, chief investment officer at UBS Global Wealth Management, highlighted that the Chinese tech sector presents distinct successes and governmental support, making it an appealing segment for investors globally. He pointed out that clients from diverse regions including the U.S., Europe, and Asia are actively seeking investment avenues that can function as a hedge against the appreciating U.S. dollar.
Further elaborating on the market dynamics, Ulrike Hoffman-Buchardi, Americas CIO and head of global equities at UBS, cited the influence of a broad cyclical backdrop driven by fiscal stimuli. She believes this macroeconomic environment tends to benefit several global regions, particularly those markets presenting relatively attractive valuations.
While endorsing optimism about these emerging opportunities, Hoffman-Buchardi also cautioned about potential downside risks. These risks are particularly relevant in countries and markets that have recently received significant capital inflows, with the U.S. highlighted as a major recipient of such investment.
In sum, the UBS investment leadership underlines an ongoing strategic rotation towards Chinese technology equities, motivated by a combination of valuation attractiveness, government support mechanisms, and fiscal policy settings. This movement occurs against the backdrop of broad market recalibrations influenced by fiscal interventions and currency considerations.