Five common concerns when allocating to China

The fast view

• China is, quite simply, an opportunity too big to ignore; there is little doubt that the most populous country in the world is — and increasingly will be — a major force in directing global capital markets. Its economy has been a success story of the pandemic, but investors worry about whether it will continue to grow.
• They also want to know whether China A-shares offer insulated exposure to China's growth. We believe they do, which is why we launched a dedicated China A-shares strategy in January 2020 to capture the country's compelling domestic growth through its increasingly accessible onshore market.
• Geopolitical disputes, ranging from tensions with the US to disagreement with the Australian government, remain in the headlines and a concern for investors. However, we believe such incidents are to be expected as China evolves towards becoming the world’s largest economy.
• Another common concern is the US executive order banning investment in Chinese companies it claims have military ties. In this Q&A we explain our firm's position and the potential implications.
• Will the next century belong to China? Rising superpower displacement is an issue that investors have had to consider throughout history. We argue that if investors considering whether to invest in rising economic superpowers over the last 500 years had put behavioural bias to one side and had invested based solely on fundamentals, in just about every instance, it would have been a profitable trade.
• We address these concerns in detail in the Q&A, and in doing so, explain why we believe the long-term reward of investing in China significantly outweighs the risks.