China's economic growth looks set to miss the government's targets, but the mainland's markets still offer good value, Pimco said in a note Wednesday.
"China is dealing with a property slowdown and deleveraging of the shadow banking system, and can no longer rely on low wages and a competitive currency to support an endless export boom," Isaac Meng, Pimco's emerging markets portfolio manager, said in the note.
Pimco expects the mainland's economic growth in "the low 6 percent territory" this year, compared with official expectations for around 7 percent.
But that hasn't stopped Pimco, which has around $1.59 trillion under management, from continuing to invest there, both in fixed income and in stocks.
When it comes to fixed income, "the value proposition is clear given the high real rates on offer," Luke Spajic, who manages Asian credit portfolios at Pimco, said in the same note. Pimco is buying government bonds and both quasi-sovereign and bank debt.