Guide to the Slow Bull: How to Position in the Long Term

UBS outlines a strategy for navigating China's 'slow bull' market, characterized by the stock market replacing property as a wealth reservoir and supported by long-term capital inflows.

Key Takeaways

• 1.The A-share market is strategically replacing property as China's primary wealth reservoir to offset negative wealth effects from the real estate downturn.
• 2.Investors should structurally overweight growth styles, particularly in the 'greater tech' sector (electronics, telecoms, computer, and national defence) which aligns with self-reliance initiatives.
• 3.Long-term capital inflows from ETFs, insurance funds, and the 'national team' (Central Huijin) are structural stabilisers reducing market volatility.

Table of Contents

• Why is a 'slow bull' market needed? How has it progressed in recent years?
• Positioning strategies in a 'slow bull' market
• Equity strategy: earnings recovery/capital inflows to drive further rally
• Strategy No. 1: buy the dip amid major volatility
• Strategy No. 2: structurally overweight growth
• Strategy No. 3: track the trend of net inflows from long-term capital
• Strategy No. 4: buy sectors benefiting from capital market development
• Valuation Method and Risk Statement

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