Investing in China Onshore

UBS has downgraded Chinese government bonds to Neutral after yields reached year-end targets, while maintaining Attractive stances on offshore tech and onshore dividend stocks. April data indicates macro weakness but solid enough growth to keep the PBoC from aggressive near-term easing.

Key Takeaways

• 1.Chinese government bonds (CGB) have been downgraded to Neutral as yields have reached the 1.7% year-end target and the PBoC has turned less dovish.
• 2.Offshore China equities remain Attractive, driven by accelerating AI monetization and improving technology sector earnings.
• 3.Onshore high-dividend stocks are favored as defensive plays amidst geopolitical uncertainty and muted domestic demand.

Table of Contents

• Our view
• Offshore China equities: Attractive
• A-share dividend stocks: Attractive
• China government bonds: Downgrade to Neutral from Attractive
• Onshore high grade credit bonds: Attractive
• Appendix

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