Allianz Global Investors, one of the world’s leading active asset managers, announced today the appointment of Matt Christensen as Global Head of Sustainable and Impact Investing. In this role, he will accelerate the growth of Impact Investing as part of the company’s growing private markets platform; lead the continued integration of ESG factors across AllianzGI’s existing range of public markets products, including stewardship activities; and support the development of new SRI products.
A-shares are easy to buy and sell, and provide fertile ground for stock-picking
This market tends to be driven by local retail investors who trade frequently and generally have a short-term outlook. That makes A-share annual market turnover (the total value of stocks traded in a year) among the highest in the world, which provides two key benefits:
It’s a highly liquid market, so it’s generally easy to buy and sell shares.
The volume of trading done by retail investors can cause entire sectors to rotate in and out of favour, and cause individual stock prices to diverge significantly from their underlying long-term fundamentals. This allows stock-pickers to use in-depth research to uncover and exploit pricing discrepancies.
A-shares experience significant sector rotation, which can have unintended consequences if not carefully constrained
Performance of sectors within MSCI China A Onshore Index by calendar year
Source: Allianz Global Investors. Data as at 30 June 2020. Investment involves risks. Past performance is not indicative of future performance. Individual performance will vary.
Focus on stock selection rather than rely on large market swings
One persistent feature of the retail-driven A-share markets is a high degree of sector rotation: investors move frequently from one sector and into another, sometimes in anticipation of economic news but also to seize upon momentum. In this environment, it may help to focus on individual stock selection, rather than over- or underweight sectors vs their benchmarks. That can help make sure performance is driven more by fundamental factors that can be managed more easily (such as the ability to choose stocks) rather than those that can’t be controlled (such as large swings in sector performance).
Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.
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