The numbers don't add up: Is it worth investing in China despite growth-to-returns mismatch?

Ignore the hype over Asian superpower's prowess

clock • 4 min read

"Getting ahead of the growth opportunity". With such words, many an asset manager attempts to convince an investor to move their money into Chinese equities.

For anyone considering this, my warning is that returns will be lower and volatility higher than many an investment bank circular would suggest. When much of the Western world is mired in recession or slow growth, it is easy to quote big bold numbers to support China's investment case. Its share of global GDP reached 16% in 2020, so it dominates demand in such areas as commodities or luxury goods. The stockmarket is not the economy: Exploring the disconnect between GDP growth and Asian equities President Xi Jinping has set a goal of doubling GDP by 2035, which translates to just...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Asia

Kepler Partners' Josef Licsauer: Why it could finally be Japan's time in the sun

Kepler Partners' Josef Licsauer: Why it could finally be Japan's time in the sun

'Once-moribund stock market'

Josef Licsauer
clock 16 July 2024 • 5 min read
Value Partners Group's David Townsend: Unlocking the potential of China's A-share market

Value Partners Group's David Townsend: Unlocking the potential of China's A-share market

For more than two decades, China's domestic stock markets have beckoned foreign investors with the promise of riding the wave of the nation's phenomenal economic expansion.

David Townsend
clock 20 June 2024 • 4 min read
Chikara's Andrew Draycott: A letter from India

Chikara's Andrew Draycott: A letter from India

'Everything starts to make more sense'

Andrew Draycott
clock 19 June 2024 • 4 min read
Trustpilot