Date
21 July 2017
Bhaskar Laxminarayan said his firm has sold off all of its A-share holdings and part of its H-share interests. Photo: HKEJ
Bhaskar Laxminarayan said his firm has sold off all of its A-share holdings and part of its H-share interests. Photo: HKEJ

Experts warn of A-share risks amid China’s high debt levels

China’s high leverage level may lead to a worldwide economic slump in the next two to five years, investment experts warned.

Since 2008, the country’s economy has been underpinned by debt, and now its total debts have risen to 204 percent of the gross domestic product, second only to Japan, Pictet Wealth Management’s Asia chief investment officer Bhaskar Laxminarayan told the Hong Kong Economic Journal.

Aware of the impact of such high debt level on enterprises and the economy, Pictet Wealth Management has sold off all of its A-share holdings and part of its H-share interests, Laxminarayan said.

UBS analyst Lu Wenjie said long-term investors are not rushing to buy H shares at the moment.

It is likely that such investors are more interested in A shares since its prices are trending lower, while H shares are more resilient following the recent stock rout, Lu said.

Lu maintains his forecast on the Hang Seng China Enterprises Index at 13,500 points, noting that H shares are likely to gain support from interest rate cuts and economic reforms in the medium and long term.

[Chinese version中文版]

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