From 20 to zero: What is not to love about Chinese equities?

Weighing up the pros and cons of investing in Beijing

With many investors keen to take profits on US equities after their recent strong performance, more are looking at emerging market assets.

Indeed, it has recently been suggested by one economist that sizeable exposure to China is essential. I disagree and suggest the correct figure should be 20% or zero. Let me explain. Two arguments put forward for holding Chinese equities are not very persuasive, namely strong economic growth and very attractive valuations. It is an old story that China will be one of the faster growing economies over coming decades, overtaking the USA on some estimates. President Xi Jinping's ambitious plans to double the size of the economy by 2035 would imply an annual average growth rate of 4.7% to...