Earlier this year, we advocated dedicated China equity allocations within portfolios given their potential to enhance prospective risk-adjusted returns. Since then, there have been a number of regulatory actions in areas of antitrust, data security and private education:
Our strategic recommendation on China is not undermined by recent events, even though they have further highlighted the importance of choosing an active mandate for this allocation. From a tactical standpoint, we note that the decline in equity markets has reduced valuations, presenting a cheaper entry point. However, we would not go all gung-ho yet to allow more time for the current regulatory dust to settle. Therefore, our tactical (one– to three-year) view on Chinese onshore and offshore equities is to be invested in line with the long-term strategic allocation explained above.
Download the paper to learn more about why the strategic case still sound.
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