‘180-degree flip’ sees global investors turn to China for diversification: Pimco president

Global investors are turning to China again in search of alternatives to crowded US asset markets, with Pimco seeing Chinese bonds as one of the safest ways to diversify portfolios after sentiment towards the world’s second-largest economy “flipped 180 degrees”.

The US-based asset manager, which oversaw more than US$2 trillion in assets by the end of June, had been pointing its clients, particularly those outside the United States, towards Chinese offshore bonds, according to its president, Christian Stracke, because it was one way to reduce concentrations in US dollar and equity assets after years of strong gains in the American market.

“We do get a lot of questions from our clients, particularly non-US clients, about what are some other ways to diversify away from US concentrations … and we talk about China – China offshore bonds in particular – as one of those ways,” Stracke said in an interview with the South China Morning Post in Hong Kong on Monday.

“It’s not always that people are worried about the US. It’s just that their portfolios, because the US has done so well, have become very exposed to the US dollar, to the US equities market.”