Chinese equities increasingly finding favour with foreign investors, says new NTree research
The majority (75 per cent) of European institutional investors and wealth managers expect foreign investment into Chinese equities to increase in Q1 2021, compared to Q4 of 2020, while one fifth expect it to remain the same.
That's according to a survey of 150 investors and managers with a combined AUM of USD292.8 billion by NTree International 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.
However, there are some mixed views when it comes to the current valuation of Chinese equities, with 41 per cent of investors saying that they represent a fair valuation and 48 per cent hat they are slightly overvalued. Just 9 per cent regard them as undervalued.
When looking at the wider market and the most attractive features of investing in Chinese asset classes, 42 per cent say the positive returns from Chinese bonds when many other bonds around the world are providing negative yields is the most important, followed by 30 per cent who favour the ‘normal’ economic, monetary, and fiscal policies in China compared to other global economies.
Some 8 per cent cite positive economic indicators in the market as most important, followed by strong capital growth in Chinese equities (7 per cent) and the fact that the Chinese market has become more liquid (7 per cent).
Timothy Harvey, CEO at NTree, says: “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.”
Danny Dolan, Director at Market Access, says: “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 per cent over the past 12 months and continues to attract investment from overseas institutional investors.”