skip to Main Content
 
Home » News » Economics » China crisis: in or out in year of change for Middle Kingdom?

China crisis: in or out in year of change for Middle Kingdom?

*

China used to be a darling of emerging markets investors. Back in 2022 I recall allocating almost 15% to China in my personal portfolio, I was that convinced of its longer term growth prospects. Those are not off the table by any means, but it seems that 2023 could be a rocky year for the Middle Kingdom.

Investors will be wondering when to time their re-entry to Chinese assets after three years of zero-Covid which has severely impacted the economy. China fund managers are naturally urging investors to get back in quickly, but we think risks still remain and they need to be given time to play out.

“Our investment horizon is typically five years and beyond, focusing on bottom-up stock picking," explains Sophie Earnshaw, manager of Baillie Gifford China Growth. "China’s recent relaxation of Covid control measures indicates a potential reopening in 2023. However, the path to reopening and economic recovery will be gradual and bumpy. The continued policy focus on quality of growth instead of quantity of growth will provide long-term opportunities in areas such as green transition, hard technology, consumption upgrade and industrial automation.”

Even Nicholas Yeo, who is the co-manager of abrdn China, expresses caution, saying "it is still early for the Chinese economy to show strong signs of recovery." And the Jupiter Asian Income Fund has apparently cut its China exposure to zero due to the concerns of fund manager Jason Pidcock.

But at the same time China has become the factory district of the world, and it was the growth of China dragged the world out of the global recession caused by the Great Financial Crisis in 2008. Here are some key factors to consider before pushing the button on a China investment in 2023.

 

Want to read more? Sign up for your free 30 day trial below or find out more about Armchair Trader Plus+ here.


Log In or Sign Up to Armchair Trader+

Already a member? Log in here:


Not a member yet? Sign up for your free trial or check out the benefits of membership.

Further content of this article is not available as it is for members only. Please visit the registration page for Armchair Trader+ for further details on the benefits of becoming a member.

Like this article? Sign up for a free email subscription to our regular newsletter.

This article does not constitute investment advice. Do your own research or consult a professional advisor.

The Armchair Trader's 'How to' Guides

Stocks in Focus

We think these smaller companies represent significant growth stories. Read our in-depth reports.

Thanks to our Partners

Our partners are established, regulated businesses and we are grateful for their support.

Pepperstone
FP Markets
IG
WisdomTree
ActivTrades
Back To Top