Allianz China says it is ‘time to buy shares’ as its US$1.2 billion equity funds bets on reopening

Allianz Global Investors says China will lift its Covid-Zero policy in the near term, contrary to the government’s oft-stated goals, driving a reopening trade that will revive markets.

Anthony Wong, lead manager for the US$1.2 billion All China Equity Fund, said it’s time to buy shares in the tourism and leisure sectors, such as duty-free shops and hotel chains. They’re among the biggest over-weights in his portfolios, alongside renewable energy, electric vehicle supply chain and healthcare, which he expects to benefit from the nation’s structural growth trends.

“It is still a contrarian call at this point because market expectation on reopening is coming down,” Wong said in Hong Kong. “But we do believe that it is going to happen eventually, and hopefully within the next six months. And as usual, equities will move faster than fundamentals because of investor expectations.”

Wong’s views stand in contrast to a chorus of investors who expect China’s Covid-Zero strategy to remain in place as President Xi Jinping tightened his grip on the nation’s leadership after a key meeting. Chinese stocks tumbled on Monday, taking the year’s decline to 26 per cent in the CSI 300 Index, with traders concerned that less market-friendly policies will dominate in the years ahead.

China’s Covid-Zero policy and worsening property crisis crimped economic growth, while investors fret over ongoing tensions with the US.

The gradual lifting of Covid restrictions in Hong Kong and Macau are signs that China could also follow suit, Wong said in an interview last week. He reaffirmed his views on Monday after the party congress.