Concerns about Chinese economic growth and geopolitical issues have led many investors to prefer companies capable of providing stable cash flows. Here are three of them.
In recent decades, China has experienced such rapid economic growth that participating in the stock market seemed sufficient to make profits. However, recently, the landscape is undergoing a significant transformation.
Claire Liang, senior managing research analyst at Morningstar, says that just three years ago, investors using the value investing strategy in China were experiencing a successful period, but the situation has since changed. A combination of regulatory crackdowns and slower economic growth have begun to impact investor sentiment. Concerns regarding Chinese economic growth and geopolitical issues have led many investors to prefer companies capable of providing stable cash flows.
Liang points out that despite the challenges, many portfolio managers still believe there are opportunities to be seized in the Chinese stock market. Some try to identify promising stocks through careful research and select the best investment opportunities.
This year, only three of 29 funds tracked by Morningstar have surpassed the 5.5% decline in the MSCI China index at the end of June. Among them, BOCIP China Value Fund Class A and Fidelity China Focus A Dist USD, both with a value investment style, not only beat the MSCI China index in the first half of this year but also in 2022, according to Morningstar. However, it is important to note that short-term success does not necessarily guarantee long-term profits. Avoiding losses is a fundamental principle of investing, as emphasized by Benjamin Graham.
Claire Liang highlights that focusing exclusively on one investment style, value or growth, may not be sufficient. For example, Morningstar’s fund rating, based on factors such as the management team involved, the investment process, and the expertise of the asset manager, gives gold ratings to Schroders ISF China Opps and FSSA China Growth for the assessment process.
The choice between value or growth investments is important, but investors should pay attention to detail and careful valuation of companies can also make a difference in an ever-changing market environment.
Original article published on Money.it Italy 2023-09-12 08:00:00. Original title: Tre fondi per investire (e guadagnare) in Cina
