Chinese Economic Concerns Prompt Focus on Quality, Investor Says

Jay Leupp, managing director and portfolio manager at Lazard Asset Management, joined REIT.com for a video interview at NAREIT’s 2016 Washington Leadership Forum at the St. Regis Hotel in Washington, D.C.

Lazard has invested in China, Hong Kong and Macau for more than eight years, so concerns about the Chinese economy are “making a difference,” Leupp said. In order to combat those concerns, Lazard has focused on high-quality assets and companies, he noted. Leupp said Lazard is primarily invested in companies based in Hong Kong or trading on the Hong Kong Stock Exchange because of their superior transparency, disclosure and balance sheets.

Overall, “we like the growth profile of China, but we do have concerns about systematic financial risk,” he said.

Turning to the United States, Leupp said the focus of attention continues to be the specter of rising interest rates and the general economic growth profile.

“We’re watching growth, employment and other indicators we believe will drive future job and income growth,” he said. The additional factors include the balance of supply and demand.

Meanwhile, Leupp said he continues to see “pockets of opportunity” when investing in public real estate worldwide. The Philippines is one country in “emerging Asia” that Lazard particularly favors due to its democratic government, strong economic growth and demographic profile, according to Leupp. “It’s a relatively young country with a lot of growth ahead of it,” Leupp said.

Lazard is also keen on more stable European markets as well as Latin America, particularly Mexico. Elsewhere, Lazard is looking for “bargains” in Canada, where there have been some oil- and commodity-related sell-offs, Leupp noted.