Investors looking to add a dose of growth to their portfolios may want to consider China ahead of the new year. While the country is working out its current economic issues with the help of its government, it offers investors a window to extract value.
“I think when we look at China and when you think about the macroeconomic problems, the main conclusion that we came to is that a lot of this was self-inflicted, because you had a real estate crackdown, you had a technology regulatory reset; and of course, you had the grand looming issue of COVID zero,” said JPMorgan’s Howard Wang in an interview with Morningstar.
Given this, the government has been taking the necessary steps in order to alleviate these issues. For example, to help stimulate the real estate sector, China’s government has been asking lenders to relax their underwriting standards and provide access to capital for real estate developers in order to stay afloat.
A surge in COVID-19 cases forced more lockdowns in China, which hampered the growth of the economy. To address the economical side of the problem, lockdowns were scaled back, and the country is once again re-opening.
“Because all of these problems were self-inflicted or self-created, you can also unwind them and that’s exactly what we’re seeing right now, which is that post the party Congress, the Communist Party is moving very, very quickly right now to actually unwind all of these policies which have created a tremendous overhang in terms of investor perception of China and in terms of the GDP growth rate,” Wang said further. “And just specifically, for instance, on the local government debt, which you mentioned, the local government debt issue is really a function of the finances at the local government level, which are disproportionately contributed to by land sales for the real estate market.”
As China Re-Opens, Check Out ASHR
Governmental support is vital for an emerging economy (despite China’s status as the second-largest economy) to grow. In the case of China, the government’s continued efforts to revitalize its economy can only open up more opportunities for investment.
As such, exchange traded fund (ETF) investors will want to consider China as a potential growth opportunity during this economic healing process. One fund worthy of consideration is the Xtrackers CSI 300 China A-Shares ETF (ASHR )+, which offers exposure to the largest Chinese companies that can experience upside as the country gets back on track.
ASHR seeks investment results that correspond to the CSI 300 Index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market.
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