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Alternative Market Briefing

UBP shifts exposure to China via long/short China-focused hedge funds

Monday, August 12, 2019

B. G., Opalesque Geneva:

Swiss private bank UBP says it has started rotating China positions towards asymmetric positioning, as geopolitical risks remain concerning.

Despite the 6-7% declines in China equity indices in August, valuations still fall short of pricing the economic risks ahead as well as the increased geopolitical risks, said UBP in a report last week called "The end of the US-China trade war..".

UBP has started adopting asymmetric positioning in China, allowing portfolios to participate in upside potential in markets while establishing protection against downside risks.

"Without a re-pricing of valuations to better reflect the uncertain growth and geopolitical outlooks, we believe our 'asymmetric' approach, via select long-short China focused hedge funds as well as partially capital protected structured exposure allows us to participate should China choose to deploy more significant stimulus than expected, while limiting exposure should growth and/or geopolitical concerns crystallise in the months ahead," the report concludes. And from a stock-selection perspective, UBP sees relative 'safe harbours' among education leaders, healthcare, and telecommunications companies in China.

Tariffs and currency US President Donald Trump's August 1st announcement that the US would impose 10% tariffs on the remai......................

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