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New research with 150 European institutional investors and wealth managers with a combined AUM of $292.8 billion has highlighted the positive sentiment towards Chinese equities.

Three quarters (75%) expect foreign investment into the asset class to increase in Q1 2021, compared to Q4 of 2020. One fifth expect it to remain the same.

The study was carried out by NTree International Ltd on behalf of investment manager China Post Global, which promotes a family of Exchange-Traded Funds (ETFs) providing access to commodities and emerging markets through its brand Market Access. NTree, which has expertise in investor education and the distribution of ETFs, promotes the Market Access ETFs in Europe.


Mixed views on the valuation of Chinese equities

However, there are some mixed views when it comes to the current valuation of Chinese equities. Some 41% of investors said that they represent a fair valuation and 48% felt that they were slightly overvalued and 9% said that they were undervalued.

When looking at the wider market and the most attractive features of investing in Chinese asset classes, 42% said the positive returns from Chinese bonds when many other bonds around the world are providing negative yields were the most important, followed by 30% who said the ‘normal’ economic, monetary, and fiscal policies in China compared to other global economies.

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Some 8% cited positive economic indicators in the market as most important, followed by strong capital growth in Chinese equities (7%) and the fact that the Chinese market has become more liquid (7%).

Timothy Harvey, CEO at NTree, said: “Our research shows the positive sentiment towards Chinese equities this year which is being driven by favourable conditions in the market and the fact that China has sustained relatively normal economic and fiscal policies during the global coronavirus pandemic.”

Chinese equities have performed extremely well during the global pandemic, demonstrating again China’s low correlation to other major markets. China’s equity market has risen 30% over the past 12 months and continues to attract investment from overseas institutional investors.

Market Access ETFs combine intelligent index selection, optimal replication, transparency and liquidity. They are diversified investment solutions for investors across Europe, who use Market Access ETFs to implement their investment strategy in the commodity and emerging markets space.

The survey data came from 150 professional investors, including institutional investors and wealth managers, in the UK, Switzerland and Germany. It was conducted in February 2021.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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