A cautionary tale of corporate governance pitfalls

Navigating the A-share market requires a careful risk-aware approach to assessing opportunities.

Dec 9, 2019

11 minutes

Navigating the A-share market requires a careful risk-aware approach to assessing opportunities.

At a glance

  • A recent case highlights the potential corporate governance pitfalls when investing in the A-share market.
  • Warning signs are often identifiable before the effects materialise and an active investment approach can help evaluate opportunities, while also aiming to avoid corporate governance pitfalls.
  • As corporate governance in China improves and the A-share market opens up, there is a growing pool of potential opportunities for investors.
  • From our extensive experience investing in China, we believe investors can mitigate corporate governance risks, while also capturing alpha using a risk-aware approach to construct a portfolio with sufficient diversification and reasonable valuations.

 

Read the paper

 

Specific risks. Currency exchange: Changes in the relative values of different currencies may adversely affect the value of investments and any related income. Emerging market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.

All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results.

Authored by

Wenchang Ma

Portfolio Manager

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

All rights reserved. Issued by Ninety One.