Summary:
David Barrett interviewed on the yuan's rise vs. the US dollar. The Fed's slower rate hikes prompt investors to seek global market opportunities.
As the global economy continues to recover, the yuan has surged this week. On December 5, the yuan rose above the 7-per-dollar mark both offshore and onshore against the dollar for the first time since September this year. China Business News interviewed David Barrett, CEO of EBC Financial Group, who gave some insights on Chinese and US assets.
What do overseas investors expect from the investment value of the Chinese market?
David Barrett: if we compare China's economic size, the asset allocation is generally lower for western investors. This can be observed over the past week, that investors have begun to return to invest back to China that it surpassed the previous Chinese market benchmark. If China continues with its policy, we will see more new investors from overseas that enter the market.

From a valuation perspective, what is your view on the future growth of the Chinese market?
David Barrett: If we look at the other markets in the Asia-Pacific (APAC) countries, we can see that Chinese assets actually provide a very good investment value. Let’s compare the price–earnings ratio levels for let’s say, India or other countries in the APAC region, Chinese market is still considered undervalued compared to them. As positive policy changes continue, people are looking for value for money in the market, which is why we are seeing huge spikes in Chinese assets, and the spikes are expected to continue.

The US Stocks lack clear direction. Do you think now is the best time to build some exposures?
David Barrett: In the past, the US stock market reacted too quickly and too optimistically, hence the trends are slightly lower than what the investors expected. Due to that, it is expected that we will continue to see higher interest rates that put pressure on economic activity. For the first quarter of 2023, investors still need to remain cautious. This is due to the Asian market has just recovered again and the global economy is still adjusting. As for some industries that are in the US stock market may begin to perform. Plus, it seems like the US stocks show good opportunities for the rest of the year.
Conclusion: The Federal Reserve hints at slowing down the pace of interest hikes, so the funds that used to flow into the US market began to look somewhere else for investment. In the long term, the world’s major economies will keep inflation in check, while mainstream assets are expected to rally.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment, or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.
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