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China Investment Outlook: Crisis or Opportunity?

Chinese New Year Edition: ‘Be not afraid of growing slowly, be afraid only of standing still'

While the Wuhan coronavirus news story is still a developing issue and its economic, social and other impacts far from being fully understood, China still has attractions for long-term investors. A number of outlook papers continue to see China becoming the world's pre-eminent force, certainly economically and also perhaps militarily, over the next decade.

In this collection of papers, Savvy Investor has collated commentary from leading institutional asset managers that outline both current and future investment attitudes towards China. Long-term opportunities are highlighted as the economy transitions towards a more domestically focused, balanced economy where GDP growth rates are likely to be slower, but more sustainable. Several papers also focus on ways of generating alpha in the notoriously volatile China A-share market.

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The next phase of China's growth (JP Morgan AM, 2019)

In this report from JP Morgan AM, they note that China's influence on the global economy has risen inexorably over the last two decades. China is likely to remain a focal point over the next 15 years, even though growth will slow as the country transitions from a middle to high-income economy.

The China Position: Gauging institutional investor confidence (Invesco, Jan 2020)

For compliance reasons, this paper is only accessible in certain geographies

This Invesco-sponsored EIU survey obtained the opinions and future investing intentions towards China of over 400 institutional investors.

Accessing the China A-Shares Market via Minimun-Variance Investing (FTSE Russell, 2018)

In this paper, FTSE Russell outlines the concept of minimum variance (MV) investing as it might be applied to the China A-shares to construct a portfolio with significantly lower volatility.

FTSE Russell China Bond Research Report Q3 2019 (FTSE Russell)

FTSE Russell's Q3 China Bond Research Report outlines several key milestones that were achieved, including the total holdings of RMB denominated bonds owned by offshore investors exceeding 2 trillion RMB for the first time in Q3. They also note that in July, the Chinese State Council's Financial Stability and Development Committee announced 11 broad strategic initiatives intended to provide additional transparency and further encourage foreign companies to consider Chinese markets.

A new world order: China's place in the world (UBS AM, Jan 2020)

UBS AM takes an in-depth look at several long-term, investable themes that have the potential to drive China's economy and in so doing, will influence the world economy.

Will the Coronavirus Cause a Major Growth Slowdown in China? (Project Syndicate, Jan 27)

Shang-Jin Wei argues that three key elements will mitigate the impact of the coronavirus upon both Chinese and Global GDP.

Will the Wuhan Coronavirus Infect China’s Economy? (AB blog, Jan 2020)

For compliance reasons, this paper is only accessible in North America and South America

AB examines past patterns of contagion and the economic impact of previous infectious diseases in order to estimate the impact on the Chinese economy.

Factor Investing in the China A-Share Market (CAIA, 2019)

The authors of this paper aim to simplify quantitative investment in the China A-share market, exploiting several structural, risk and alpha opportunities that they believe can be harnessed to generate quant-based, risk-adjusted returns which outperform.

Reimagining Real Estate 2020 - China Real Estate Market (Savills)

This paper by Savills outlines the changing nature of the Chinese commercial property market in 2020.

Investing in China: A question of stock picking rather than index picking (Robeco, Jan 2020)

This report from Robeco features an interview with George Magnus, former chief economist at UBS and author of 'Red Flags: Why Xi Jinping's China is in Jeopardy' published by Yale University Press in 2018. His view is that in emerging markets, although investors can generate decent returns over a longer-term investment horizon, 'it is really a question of stock picking rather than index picking'.

China A-Share Market: Blending Low Volatility with Dividend Yield (S&P Dow Jones Indices, 2019)

S&P Dow Jones Indices illustrates the relative benefits of combining high dividend and low volatility strategies in the notoriously volatile China A-shares market.

Commodities: China Growth Prospects (CME Group blog, Jan 2020)

CME Group notes the high correlation between certain emerging market currencies and soft commodity prices, while metals prices respond to a narrow measure of Chinese growth.

Outlook Series: China Fixed Income (Manulife IM, Jan 2020)

For compliance reasons, this paper is only accessible in certain geographies

Manulife IM 's China Fixed Income team highlights the opportunities that they see on the back of prudent monetary easing and proactive fiscal policies.