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New | Chinese investors urged to take advantage of euro zone bargains

Cheap valuations and low interest rates increase competitiveness compared to Chinese shares, says UBS

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Exchange-traded funds listed in European markets such as Germany may be better options for Chinese investors. Photo: Reuters

Euro zone equities will offer lucrative opportunities for Chinese investors over the next six months because of their cheap valuations amid low interest rates, UBS Securities says.

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"Not only for Chinese investors, but also for global investors, euro zone equities offer the best opportunities for asset allocation," said Xu Jian, a managing director for equities sales at the brokerage. "Compared with the A-share market, valuations in the European markets are so much cheaper."

The Shanghai Composite Index rose 43 per cent in the first five months of this year. But there have been bumps in the ride, with Friday's 6.42 per cent drop a fresh reminder of market volatility.

The weakness in euro zone economies has taken a toll on the European markets over the past few months, while the uncertainty over the Greek debt crisis has added pressure.

Xu said the euro zone's low interest rates could allow investors to enjoy low financing costs.

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"While the US is expected to start raising rates, the euro zone has maintained loose monetary policy to inject more liquidity into the market," he said.

The euro's weakness was also making the region's equities more attractive, Xu said.

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