Market View

Why China A Shares?

‘Would you have not wanted to invest with the Dutch in the Dutch empire? Would you have not wanted to invest in the industrial revolution and the British empire? Would you not want to invest in the United States and the United States empire? I think it’s comparable.’

That’s how Bridgewater billionaire Ray Dalio, in a YouTube interview this week, describes the current opportunity in China, where equities have surge four-fold and bonds seven-fold over the past decade.

“If there’s no big war, I’m bullish on China,” he wrote in a LinkedIn post. “And if there’s a big war, I’m bearish on both the U.S. and China.”

Richard Titherington, CIO of emerging market and Asia Pacific equities at JP Morgan Asset Management is also a big fan of China’s A-share market.  Why?

‘It is very broad and very liquid, has a low correlation to offshore equity markets, and contains many of the more entrepreneurial, private sector-type companies in which we seek to invest,’ he says. ‘This asset class will attract more foreign attention and flow over time.’

‘The A-share market favours structural growth plays such as healthcare and consumption,’ he says. ‘In the case of tech, our investments are focused mainly in non-tradables such as software used within China.’

Source

  1. MarketWatch, Shawn Langlois, 2019-08-10, “Hedge-fund billionaire: Don’t Miss Out on this Historic Investment Opportunity”
  2. CityWire Selector, Rob Griffin, 2019-08-14, “A-shares can be a huge area of growth, says JPM AM’s EM chief”
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