Ahead of the curve: Hold faith in Chinese equities
Investment & Pensions Europe (IPE)
By Jason Hsu and Phillip Wool (article contribution to IPE)
Exposure to Chinese equities presents opportunities in both market beta and alpha
For emerging markets stocks, 2018 was a challenging year. Mainland Chinese stocks – the ‘A shares’ – suffered particularly badly, falling just over 25% through the end of December, as proxied by the CSI 300 index.
That will not come as good news to investors who took the plunge into China’s equity markets upon MSCI’s inclusion of A shares in its popular benchmarks during the second half of the year. In light of such disappointment, there will always be a temptation to shy away from significant Chinese exposure. As is often the case, such a focus on short-run performance might obscure a strong long-term rationale for making a greater allocation to China in 2019.