China: active opportunities
China is on course to be the world’s largest economy by 2030, which could be the most transformative development in financial markets in the coming decade.
In our view it is the right time to get one step ahead of this opportunity – by investing actively with the right partner to help you navigate a changing market.
Click the button below to jump to our latest investment insights about China, and explore the rest of this page to learn more about this dynamic region.
China – the investment opportunity
Already the world’s second-largest economy, China is set to become the biggest global economy by 2030. Reforms are shifting its focus to high-value sectors such as robotics, biotech and tourism.
Given the scale of the opportunity, we think investors’ current allocations to China underrepresent the potential rewards – and we expect investors to increase their exposure steadily.
As more investors look to China, “buying the index” may not provide the right kind of access, since China is widely underrepresented in benchmark indices. An active, selective approach may provide better exposure.
China’s markets have been volatile, though their institutionalisation and transparency are improving. Yet it’s still an unfamiliar market, emphasising the need to invest with conviction – and the right partner.
China A-shares:
7 key facts investors need to know
Source: Wind as at 28/04/2020.
Markets can be volatile, but stock suspensions have fallen
A-share stock suspensions have fallen significantly
Volatility in China’s A-share market has gone up and down: 39.8% at the end of 2015, 10.7% at the end of 2017, 21.5% at the end of 2019. Investors should understand the risks and have a long-term perspective. Still, stock suspensions have fallen dramatically thanks to constructive new regulations: 51% of listed A-shares were suspended from trading in July 2015, but only 0.1% today. These are encouraging signs that also emphasise the importance of investing with the right partner – one that can help investors be active and selective in this dynamic market.
Source for chart (suspensions): Wind, Goldman Sachs Global Investment Research as at 20/2/2020.
Source for text (volatility): ThomsonReuters DataStream as at 31/12/2019. Volatility figures are calculated using USD weekly total returns of MSCI China A Onshore Index, on an annualised basis.
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Recent insights
There is no guarantee that actively managed investments will outperform the broader market. Foreign markets may be more volatile, less liquid, less transparent, and subject to less oversight, and values may fluctuate with currency exchange rates; these risks may be greater in emerging markets. Equities have tended to be volatile, and do not offer a fixed rate of return.
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