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.
Lower correlations can help benefits to portfolios
China A-shares have a historical correlation of 0.21 with global equities, and 0.58 with Hong Kong-listed China stocks. This suggests that investing in A-shares could bring additional diversification benefits to portfolios. The gradual institutionalisation of China A-share markets is expected to result in a higher correlation with their offshore counterparts – though this process could take many years.
China A-shares have low historical correlations with major equity markets
List of benchmarks
| Bloomberg Ticker | Index name | Proxy for: |
|---|---|---|
| MXCN1A Index | MSCI China A Onshore Index | China A-shares |
| MXCN Index | MSCI China Index | HK-listed China stocks |
| MXAPJ Index | MSCI AC Asia ex-Japan Index | Asia-Pacific ex-Japan equities |
| MXEF Index | MSCI Emerging Markets Index | Global Emerging Market equities |
| TPX Index | TOPIX Index | Japan equities |
| SPX Index | S&P 500 Index | US equities |
| MXEU Index | MSCI Europe Index | European equities |
| MXWO Index | MSCI World Index | World equities |
Source: Bloomberg, Allianz Global Investors as at 31/1/2020. Correlation data is calculated based on historical return of respective MSCI indices for the past 10 years, using weekly USD return.
| For details, please email us at sgenquiry@allianzgi.com or visit our distributors to get more information. | |||
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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