Mobile payments will not become a major factor in China despite increased innovation in tech and financials, Allianz’s Christina Chung has said.
Citywire + rated Chung currently has 29.2% of the Allianz China Equity fund allocated to IT and 26.3% allocated to financials.
While there has been growth in the so-called ‘FinTech’ area, Chung told Citywire Selector the IT sector is largely comprised of internet-focused companies.
‘The space is dominated by online platforms, many of which are listed in the US. From the share price performance, they tend to be sensitive to how foreign investors, for example in the US, are viewing the Chinese economy.
‘Mobile payments are still in the early stages of development and could potentially grow faster, but it is still a relatively small part of the financial sector in China. I don’t think it will become very big in the foreseeable future.’
Long term confidence
Chung previously said she was confident on the country’s economic outlook and highlighted the underlying strength of domestic demand.
Nearly eight years on, Chung believes this demand will grow stronger following President Trump’s proposed plans for trade deals with the country.
‘In the medium to long term, China is likely to form closer ties with other countries, with increasing partnerships in the rest of Asia and closer ties with other emerging economies.
‘Ultimately, China will certainly need to rebalance the economy, because now any positions on tariffs will be negative for Chinese exports. Overall China needs to rebalance away from manufacturing exports and move towards domestic consumption.’
Chung said rebalancing the economy is even more important in the medium to long term and will have an impact on the overall economic outlook for China.
‘Whatever the possible outcome in terms of trade friction and tension with China, it will obviously have some adverse effect on the Chinese economy. However, in the longer term, it is more important for China to continue to drive its rebalancing story.’
The Allianz China Equity fund returned 14.99% in US dollar terms, over the three years to the end of January 2017. This compares with a 17.50% rise, by its Citywire-assigned benchmark, the MSCI ZhongHua TR USD, over the same time period.