80% of investors will consider investments in China at some point over the next 12 months. This, at least, is the conclusion from the Economist Intelligence Unit’s study The China Position survey on China’s exposure to global investors.
The survey, commissioned by Invesco, also shows that only 4% of respondents plan to reduce exposure to one of the world’s most important economies. In fact, respondents generally described their Chinese exposure as above-average compared to their counterparts in the industry.
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China is becoming a key investment destination
The Economist survey involves 411 asset owners and professional investors from North America, Asia Pacific (Apac), Europe, and the Middle East and Africa (Emea). Respondents included asset managers, insurance companies, sovereign wealth funds and commercial banks with total assets under management of between $500 million and more than $10 billion.
According to the results of the survey, almost 90% of the respondents have a “dedicated investment exposure” in China. “Dedicated” means that investments are targeted at China and do not fall into grouped investments, such as the generative “emerging” category. Even in the remaining 10%, two-thirds still have exposure to China through mixed basket funds (global, Asian or emerging markets).
Better regulations have smoothed the barrier to entry
In addition to China’s growth and the organizations’ development in the Chinese market, regulatory progress is the driving force behind the entry of global investors into the Chinese market (41%). For example, progress has been made in corporate reporting, legal protection, market surveillance and financial intermediaries.
Respondents participating in the specialized exhibition in China pointed to numerous reasons for their investment. First, portfolio diversification (87%), then, “the acquisition of experience for internal teams” (69%) and finally, the search for profits (62%). 77% said they had achieved these goals, while 21% said it was too early to say. Only 1% finally stated that the targets had not been met.
Thematic investments in China: tech
In line with China’s growing role as a global leader in technological development, 58% of respondents indicated that innovation (i.e. artificial intelligence, robotics, etc.) is the main investment theme most likely to attract investment from their respective organisations.
Financial services follow at a short distance with 51% and the services of the “new economy”, such as health, IT and education in third place with 41%. The renewable energy segment is another important issue, especially in North America: for 39% of respondents, it is equal to the services of the “new economy”, in terms of probable investment.
US-China trade war: not a major problem
The answers to this question are mixed. On the one hand, 43% of respondents said it will have a negative impact on investment decisions. However, 42% responded that it will have a positive impact. North American respondents are the most optimistic, with 53% citing “some” positive impact or “significant” positive impact. Apac investors are the most pessimistic ones, with almost 50% expecting a “moderate negative impact” and another 8% expecting a “significant negative impact.”
Nevertheless, respondents still said that they expect to “significantly increase” or “moderately increase” exposure to China. In the Apac and Emea regions, more than 67% of the respondents expect to increase exposure to China, while in North America 71% expect to increase exposure to China in the next 12 months.
(Featured image by Lian Rodriguez via Pexels)
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First published in WEWEALTH, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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