Investing in the world’s second-largest economy has brought little joy in recent years. China has not been a profitable investment due to all the doubts surrounding its economic growth due to slowing consumption and problems in key sectors like real estate. On numerous occasions, the country’s government has attempted to regain trust; the last one just a few days ago. The new recovery plan and the announced measures are still in progress quarantine For many experts, it is essential to delve deeper into budgetary issues, but the truth is that, for now, it has served to restore capital flows to their financial markets. The Chinese stock market experienced its most bullish day since 2008 on Monday and THE investment funds are already benefiting from the strong rebound.
The nearly 40 Chinese equity products, in euros, marketed in Spain that Morningstar already includes They add profits close to 20% on average over the year (with data at the end of September). This figure is perhaps not surprising in 2024, when the world’s main stock markets are seeing strong increases. To put the data in context, just a few weeks ago mainland China’s benchmark index, the Shanghai Shenzhen CSI 300, was negative for the year. And this caused 65% of these funds will suffer losses until the end of August. This is why many investors have seen a rapid recovery in their portfolios.
Janus Henderson: “With additional policy support likely, investors may reconsider their allocation to Chinese stocks”
“The latest stimulus package marks a pivotal moment for the country’s economic trajectory and stock markets. As global investors seek stability amid uncertainty, the Chinese government’s decisive shift from controlling debt to supporting growth could be the catalyst needed to restore confidence and unlock value. “With the likelihood of additional policy support, investors may reconsider their allocation to Chinese stocks, as they present an attractive and strategic investment opportunity,” said Victoria Mio, director of China equities at Janus Henderson.
Investors who already had funds from the asian giant in euros, they are now at least getting returns above 10% over the year in the worst case, while others have more than doubled this figure until September 30. This day is the last that the CSI 300 was rated, as the rest of the week was closed for what is known as Golden Week, which celebrates the founding of the People’s Republic of China and the Midsummer Festival. autumn. On the other hand, the Hong Kong stock index, the Hang Seng, recorded no stop, and there are funds that have more recent data and in which returns above 35% are already seen.
The most profitable products
Between the funds sold in Spain which benefit the most from the rebound of the Chinese stock market are Nordea 1 – Chinese shares BC EUR, HSBC GIF Chinese Equities ACEUR, DWS Invest Chinese Stocks LC And LO Funds China High Conviction EUR; all with more than 25% profitability until Monday. In addition, in the first three there are already data until Tuesday and with them they would add between 33% and 36.9% per year. They are also one of the few products that ended the summer on a positive note. The four vehicles hold their two largest positions in Alibaba and Tencent.
Other featured funds which stand out are: GAM Multistock China Evolution Eq EUR B, EdRF China to EUR either BGF China A2. GAM’s investment vehicle is precisely one of those that recovered the most ground last month, erasing losses and adding 37.7%, only behind a product of JP Morgan, JPM China D (acc) EUR.
The GAM fund is also one of those which will have performed the best within three years, when the decline in Chinese stocks began (it lost 3.13% at an annualized rate). Even if there is a fund that maintains its leadership since 2021, it is good Fidelity China Focus A-Acc-EUR. It is the only one to achieve a positive annualized return over three years (4.88%).
Long-term losses
Almost all funds still made losses over the past three yearsin which the stock market is moving further and further away from the levels it reached in February 2021 (close to the historical figures of 2007). The Chinese government must now demonstrate the effectiveness of its measures and that its intentions also include delving into other issues to ensure the return of many investors, domestic and foreign, who have been absent from the country for some time.
“It will take some time to see the effectiveness of these measures, but we are encouraged that the Chinese government is focused on growth and its implications. While this indicates a commitment to solving the problems, both the timing and scale of these additional measures will be key to reversing the structural problems facing China’s economy. We believe that strong fiscal measures are necessary to stimulate the economy.” says Ross Cartwright, chief strategist at MFS Investment Management.
Yingrui Wang, a China economist on AXA IM’s macro research team, highlighted another key factor in a report released Thursday. “US elections pose a risk for the fragile prospects of the Chinese economy, whatever the outcome. However, the scale of the tariff increases proposed by Trump poses the greatest risks,” said the economist, who warns: “An increase in US tariffs could trigger capital flight out of China. The yuan is already weak due to the strong U.S. dollar and China’s economic slowdown. “Domestic and international investors may seek more stable and profitable opportunities elsewhere.”
