Mirae Asset Global Investments is bullish on Chinese equities after a recent correction following the country's regulatory crackdown on various sectors, including tech, property and education, Chief Investment Officer Rahul Chaddha said.
"China looks attractive on a risk-reward basis," Chaddha, who manages USD 215 billion in assets, told the Reuters Global Markets Forum (GMF) on Tuesday.
Although the crackdowns forced Mirae Asset to lower its outlook on China's internet gaming platforms, Chaddha said he was upbeat on the sector after share prices fell by more than his firm's reassessed targets. He was also positive on e-commerce, food delivery, consumption and renewables like solar chain and electric vehicles' supply chain.
"Some regulatory uncertainty will remain for a while," Chaddha said, adding, however, that it was already priced in.
Global fund managers told GMF last week that the unpredictability of China's regulatory measures make the country unappealing to foreign investors in the short term, but could increase China's long-term attractiveness.
More broadly, Chaddha expects share prices of expensively valued companies across Asia to fall, along with mid and small-cap firms, especially in South Korea and India.
Mirae Asset is looking to switch to defensive names like hospitals, financials within cyclicals, and large-cap firms from mid and small-cap companies, he added.
India is already getting more interest, with a slew of large public listings there capturing much of those fund flows, Chaddha said.
Chaddha expects the US Federal Reserve to provide clarity on its asset purchases' taper plan by November-December this year, but he does not see markets reacting to that in a 2013-style taper tantrum.
He attributed that to a lower current account deficit along with a better fiscal situation in the United States this time around.
Chaddha said his firm didn't have any investments in cryptos and preferred gold over the new-age asset to hedge against inflation.
"Medium-term, gold should do well, as central banks will find (it) difficult to exit money printing!" Chaddha said, adding that in the near term, however, rising real yields may be a negative for the precious metal.
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