Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the S&P 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest M&A in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.

Author: Lishma Kapadia

Chinese stocks continued to rise on Friday (September 27) after a series of stimulus measures were announced earlier this week, further boosting investor sentiment at the Central Political Bureau meeting held on September 26.

$CSI 300 Index (000300.SH)$ Index closed up by 4.47% on Friday, with a cumulative increase of 15.71% for the week, marking the largest weekly gain since November 2008. Hong Kong$Hang Seng Index (800000.HK)$Rising 3.55% on Friday, accumulating a 13.13% increase for the week, marking the largest weekly gain since 2009.

The Central Political Bureau meeting held on Thursday proposed deploying sufficient fiscal expenditures to ensure China's economy achieves its target of 5% growth this year.

Chinese stock ETF $iShares MSCI China A ETF (CNYA.US)$ rose 8% on Thursday,$iShares MSCI China ETF (MCHI.US)$ rose 7.8%.

For strategists who remained cautious about the interest rate cuts and other stimulus measures announced earlier this week, this political bureau meeting provides another support for the economy, highlighting a shift in the government's language in using fiscal policy. Investors believe that fiscal policy is essential to boost consumer and business confidence. Analysts commented: "This is the moment when Beijing will spare no effort."

The meeting pointed out the need to expand the scale of monetary policy, curb the decline in the real estate market, promote stability in the real estate market, and increase lending for certain real estate projects.

Two days ago, on September 24, the Chinese government announced the largest stimulus package since the outbreak of the new crown epidemic, which includes further lowering of policy interest rates by the People's Bank of China, a 0.5 percentage point reduction in existing mortgage rates, and an increase in providing loans to local governments to purchase unsold inventory housing.

Some fund managers and analysts have previously expressed doubts about the measures introduced earlier this week, believing that the issue is not the lack of channels to access low-cost credit or liquidity, but rather the lack of willingness to borrow.

Andy Rothman, investment strategist at Matthews Asia, said in an email to Barron's, 'The good news is that the government's ideas seem to be heading in the right direction and are willing to revitalize the confidence of Chinese entrepreneurs and consumers through more aggressive measures.'

Some Chinese observers remain cautious. Shehzad Qazi, managing partner of the independent research firm China Beige Book, said, 'The most important question is, what impact will this have on the real economy? These measures may help the real estate market find a cyclical bottom in the coming months, but the effect on stimulating consumer spending remains to be seen.'

However, the Chinese government's new comments are enough to trigger a stock market rebound. Analysts said: 'We may be witnessing a global stimulus policy linkage similar to that seen between 2015 and 2016, and we believe that the phase of investors shifting from US assets to other assets has begun.'

Chinese stocks have underperformed US stocks in recent years

In recent years, due to economic slowdown and geopolitical tensions, many investors have significantly reduced their holdings of Chinese assets. A shift in rhetoric may prompt some investors to decrease their reduction in Chinese assets, thus providing impetus for the rebound of Chinese assets in the short term.

Philip Wool, Chief Research Officer of Rayliant Global Advisors, pointed out that the effectiveness of policy implementation is the most important, but "it's hard to ignore the importance of the shift in Beijing's thinking pattern and communication tone reflected in this week's statements."

Once China announces specific fiscal measures – such as helping banks deal with bad debt issues arising from the real estate crisis, or aiding consumers in distress due to salary cuts, unemployment, and declining real estate prices – investors will significantly increase their holdings of Chinese stocks in their portfolios.

Long-term investors will closely monitor the scale and implementation of such fiscal measures, as well as whether they can reverse the pessimism of households and businesses. Bank of America economist Helen Qiao expects the Chinese government to take the next step in fiscal measures in the next two to four weeks.

Currently, as China increases the intensity of monetary and fiscal policy easing to boost asset prices and stabilize the economy, the Chinese stock market and the entire emerging markets have received some support. Meanwhile, the Fed and other central banks have also entered into an easing mode.

Louis Gave, Co-Founder of Gavekal Research, said: "For China and the world as a whole, the only major obstacle to comprehensive prosperity may be concerns about further deterioration of US-China relations, risks include trade wars, Trump proposing a 60% tariff on Chinese goods (if he is elected US President), and China's countermeasures against the US."

The next six weeks will be a crucial period as investors search for specific actions from Chinese policymakers and observe the results of the November US election.

Editor/Rocky