A well balanced investment portfolio will have some exposure to China given the scale of its economy, but Catherine Yeung, investment director at Fidelity International in Hong Kong, says many investors focus only on the big consumer and tech names when there is a long list of old, established, former state-owned companies that are ‘sitting on lots of cash’.
After years of stellar growth, investors should expect slower growth as the 'new norm', says Yeung, adding that it’s the quality of growth that’s important, not the scale.
To this end, the Chinese government is working towards de-risking the process of investment and is making strides in transforming what was an ‘opaque’ system into one of transparency, according to Yeung.
So where should investors look? There’s the burgeoning consumer in China and all that they buy — consumables particularly, she says. There’s also China’s move towards innovation and away from the ‘low end, copy-cat’ manufacturing model that it used to be known for.
Finally, Yeung says that investors should watch out for potential investor-friendly announcements from the People's Congress in October and potential inclusion of Chinese A-shares in the MSCI global indices.