Byron Wien Likes China Stocks Even If No More Trade Progress

(Bloomberg) -- Blackstone Group Inc.’s Byron Wien says there is still money to be made in China’s stock market, even while he doubted much more progress will be made on the U.S.-China trade front.

“I’m positive on China,” he said in an interview at Bloomberg’s New York headquarters. “I was positive last year and it paid off well and I continue to be positive.”

While a China-U.S. phase-one trade deal is expected to be signed on Jan. 15, that may be it for some time, according to Wien.

“We are going to have trouble getting a phase-two deal,” he said on Bloomberg TV. “The big deal is still pretty far away from getting done, in my opinion.”

Read about what Wien included in his annual 10 surprises list this year

In January last year, Wien said he expected Chinese equities would lead a rally in emerging markets and the Shanghai Composite Index would rise 25%. The China gauge advanced 22% in 2019, topping the 15% gain on the MSCI Emerging Markets Index. He didn’t provide a 2020 forecast on returns.

Wien, who is vice chairman of Blackstone’s private wealth solutions business, advises institutional investors to allocate 10% of assets to emerging markets. Elsewhere in Asia, Wien expects India’s stocks to rise 20% in 2020 as its government continues to enact business-friendly growth reforms.

Read how a Chinese small-cap rally is sending a bullish signal on the economy

The view on China is echoed by quantitative strategists at Sanford C Bernstein Ltd., who see the “stage set for another great year” in Chinese equity markets in 2020.

Attractive valuations, falling market perceptions of risk, and lower long-term earnings expectations should maintain the impetus for Chinese stocks in the year ahead, analysts including Rupal Agarwal and Anusha Madireddy wrote in a research report on Friday.

Within the past month, several gauges of Chinese stocks have broken above their 200-day moving averages for the first time since trade talks collapsed in May, according to BCA Research, which anticipates modest further gains for the Chinese yuan.

“More accommodative monetary and fiscal support in 2020, as well as an ongoing truce, provide a sound basis to overweight China’s stocks within a global equity portfolio,” analysts including Qingyun Xu and Jing Sima wrote in a research report dated Thursday.

©2020 Bloomberg L.P.