Active is:
Seizing the China opportunity

China: active opportunities

China is on course to be the world’s largest economy by 2030, which could be the most transformative development in financial markets in the coming decade.
In our view it is the right time to get one step ahead of this opportunity – by investing actively with the right partner to help you navigate a changing market.

Click the button below to jump to our latest investment insights about China, and explore the rest of this page to learn more about this dynamic region.

China – the investment opportunity

Already the world’s second-largest economy, China is set to become the biggest global economy by 2030. Reforms are shifting its focus to high-value sectors such as robotics, biotech and tourism.

Given the scale of the opportunity, we think investors’ current allocations to China underrepresent the potential rewards – and we expect investors to increase their exposure steadily.

As more investors look to China, “buying the index” may not provide the right kind of access, since China is widely underrepresented in benchmark indices. An active, selective approach may provide better exposure.

China’s markets have been volatile, though their institutionalisation and transparency are improving. Yet it’s still an unfamiliar market, emphasising the need to invest with conviction – and the right partner.

Investing with conviction and the right partner

Allianz Global Investors has more than 25 years of experience investing in Chinese equities.

With our Shanghai office and strong presence throughout the region, we are well-positioned to conduct in-depth research, meet with management teams and understand the regional context.

China A-shares:
7 key facts investors need to know

Once largely out of reach to foreign investors, China’s stockmarkets have opened up, attracting USD 146 billion of investor capital in the last six years through the Stock Connect programme alone. China A‑shares have grown increasingly accessible, and they give investors more direct access to China’s compelling growth story.

Source: Wind as at 28/04/2020.

Lower correlations can help benefits to portfolios

China A-shares have a historical correlation of 0.21 with global equities, and 0.58 with Hong Kong-listed China stocks. This suggests that investing in A-shares could bring additional diversification benefits to portfolios. The gradual institutionalisation of China A-share markets is expected to result in a higher correlation with their offshore counterparts – though this process could take many years.

China A-shares have low historical correlations with major equity markets

A-shares have low historical correlations with major equity markets

List of benchmarks

Bloomberg Ticker Index name Proxy for:
MXCN1A Index MSCI China A Onshore Index China A-shares
MXCN Index MSCI China Index HK-listed China stocks
MXAPJ Index MSCI AC Asia ex-Japan Index Asia-Pacific ex-Japan equities
MXEF Index MSCI Emerging Markets Index Global Emerging Market equities
TPX Index TOPIX Index Japan equities
SPX Index S&P 500 Index US equities
MXEU Index MSCI Europe Index European equities
MXWO Index MSCI World Index World equities

Source: Bloomberg, Allianz Global Investors as at 31/1/2020. Correlation data is calculated based on historical return of respective MSCI indices for the past 10 years, using weekly USD return.

Recent insights

China insights

Despite the impact of the coronavirus pandemic, and continuing tensions with the US, China remains on course to become the world’s largest economy by 2030. This could represent the coming decade’s most transformative development in global financial markets – and a major opportunity for investors.

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China insights

The coronavirus pandemic applied a sudden brake to China’s growth story, as it did to most economies around the world. But there are signs that China could be ready to lead the way out of the downturn and resume its long-term growth trajectory.

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China insights

The opening of the China A-share market to foreign investors – and the subsequent growing inclusion of a much larger number of Chinese companies in widely used equity indices – is poised to be, in our view, one of the most transformative events in the financial markets over the next decade.

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There is no guarantee that actively managed investments will outperform the broader market. Foreign markets may be more volatile, less liquid, less transparent, and subject to less oversight, and values may fluctuate with currency exchange rates; these risks may be greater in emerging markets. Equities have tended to be volatile, and do not offer a fixed rate of return.

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    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

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