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Monday, December 5, 2022

US/EUROPEAN INVESTORS POUR INTO CHINA #426

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Mr Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

GOOD MORNING FROM LONDON

The FT reports that Western investors pumped a record amount into Chinese equity exchange traded funds in June as the mainland stock market surged ahead of its major rivals. The flood of cash into the Shanghai + Shenzhen bourses came as the country’s harsh Covid lockdowns were eased + regulators publicised a less severe approach to policing China’s tech sector almost a year after kicking off an unprecedented crackdown. Both US/ European investors invested a combined total of $5.8bn, which comfortably exceeds the previous record of $4.3bn set in January. A clear riposte to the Henry Jackson Society policy of De-Coupling from China.

Phillip Wool, head of investment solutions at Rayliant, an emerging market-focused asset manager, said two things had changed in China. First, a view that Chinese technology companies had become “oversold” coincided with “a lot of signalling that the regulatory crackdown that started a year-and-a-half ago has reached its peak and Chinese regulators want to become more collaborative with these tech companies”.

Second, Wool also said Covid lockdown had eased in May enabling China to reduce interest rates, promote fiscal stimulus + higher infrastructure spending, As a result, China’s stock markets outshone rival bourses in June, with the CSI 300 index returning 9.6 per cent even as virtually every other stock market fell amid gathering fears of stagflation.

So often China surprises its critics who portray China’s managers as “political hacks wedded to an outdated  Marxist outlook”. In fact the Chinese managers are educated + world-aware as they are increasingly exposed to overseas training + the workings of Western markets. Not for the first time, critics of China allow their anti-communist prejudice to blur their analysis and judgment. The West thinks it understands China, its philosophy + its growth plans. It doesn’t.

China has problems + faces challenges going forward. No question. But China is content to allow the West to consistently underestimate the significance of the changes in China under President Xi Jinping. The scales will fall from their eyes – eventually.

US/EUROPEAN INVESTORS POUR INTO CHINA #426

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