China is the world’s second largest economy and growth forecasts continue to be over of 6% annually even in a world dominated by COVID-19. More importantly, the growth drivers are now broad-based as the world’s largest population matures, urbanises, embraces technology and e-commerce. State support, through fiscal packages and poverty reduction schemes, provide a material tailwind. Chinese equities have low correlation with developed and other emerging markets. Global investors can capture the benefit of diversification by making a dedicated allocation to Chinese equities.
Large market dominated by local retail investors
The Chinese equity market is very large – second only to the US – with over 4 000 listed companies including some of the world’s largest, most innovative and fastest growing companies. However, the market only really opened to foreigners with the creation of the StockConnect programme in 2014. Foreign ownership of local equities remains very low, at around 5%. Instead, the market is dominated by poorly-informed local retail investors. This creates opportunities for carefully-selected, skillful managers.
Multi-manager approach essential
Chinese fund managers tend to specialise by sector or region. They have a private equity mindset and portfolios tend to be concentrated in a few companies, which they know extremely well. This may provide good returns over the long-term, but performance can be volatile. Adopting a multi-manager approach mitigates this by including managers with different specialisations, thereby unlocking the opportunity and delivering portfolio returns at much lower levels of volatility.
Orient Opportunities China Fund
A multi-manager solution that aims to maximise capital growth by investing directly or indirectly into Chinese equities and equity-related securities.
Universe: Listed China Equity
Benchmark: 65% MSCI China A Index + 35% MSCI China Index
Base Currency: USD
Fund Type: Qualifying Investor AIF
Available to qualified and institutional investors.
Learn more about China equities
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How COVID-19 is accelerating China’s digital economy
The case for China
Contact us about China equities