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China Equity Markets: Pockets of Opportunities, Fundamental Research Is Key

By Advisor Perspectives
Capital Markets, Financial Services

Following a substantial run-up in 2017, China’s stock markets experienced notable volatility in recent quarters. The MSCI China Index was down roughly -9% year to date measured in U.S. dollars as of September 30, 2018, while China’s mainland, domestic A-shares were down nearly -20% measured in U.S. dollars for the same period. Valuations among A-shares in particular are reaching the point at which we believe some of the higher-quality stocks within that universe are starting to look more attractive. While sentiment has been weak amid trade concerns and worries about a possible economic slowdown in China, fundamentals remain sound. Larger industrial firms reported 16% earnings growth through August, demonstrating solid footing across even some of the less dynamic segments of the economy. For active managers employing an all-shares approach to investing in China, our current environment provides an array of attractive choices, but caution and due diligence are required.

Where Chinese Equities Trade

A-shares and H-shares represent the largest portion of Chinese equity markets. Here’s a brief primer of their definitions.

Read more at Advisor Perspectives.

Photo: sung ming whang

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