Keep investments modest, say experts

MOST investment experts believe it would be foolish to ignore the Chinese market altogether.

‘The long-term case for investing in China’s growth story remains intact,’ says Dzmitry Lipski, head of funds research at wealth manager Interactive Investor.

‘Growth of the middle classes and the recent refocusing of China’s economy towards domestic consumption rather than exports are expected to be key drivers of future economic growth and the stock market in the coming years.’

However, it is important to be wary, investing only a proportion of your portfolio in Chinese stocks and picking the right sectors and companies. ‘It pays to be selective,’ says Abrdn’s Pruksa Iamthongthong, adding that investors have ‘indiscriminately sold off the broader market’, meaning there are opportunities to be had.

Jason Hollands agrees that Chinese equity prices now look compelling. He says: ‘Sentiment towards China has been severely impacted in recent weeks and this has depressed company valuations, particularly in sectors like technology. This clearly creates some buying opportunities for long-term investors. But it is important to be prepared for bumps in the road.’

He says that regulatory interventions should be seen as an ‘inherent risk’ and that investors should take an approach that is ‘both selective, but sufficiently diversified’.

China should only be a ‘modest component of an overall wealth portfolio,’ adds Holland.