investire-in-cina

From emerging market to global powerhouse

This century looks set to belong to China – which should be viewed as an innovative, advanced member of the global economy rather than an emerging market. As China completes its economic transformation, we feel that now is the time for investors to rethink China’s role in their portfolios – whatever the asset class and wherever they’re investing in the world.

If you’re among the many investors who feel they don’t fully understand investing in this region, that’s where we can help. At Allianz Global Investors, we have the experience, research capabilities and insights to help investors understand – and invest in – this dynamic country.

Inside China’s appeal: key facts

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Significant growth potential

China’s economic and financial might have expanded markedly in recent years.

The economy is expected to grow 8%-9% during 2021
China’s equity market cap has reached approximately USD 19 trillion – almost double that of the euro area
Its bond market is now the second largest in the world – approximately USD 15.5 trillion
China’s equity market liquidity is among the highest in the world, making it easy to buy and sell shares

Portfolio diversification benefits

China as an asset class has the depth and breadth to help a wide range of portfolios.

Equities are available in a range of exchanges – from Shenzhen and Hong Kong listings to the Nasdaq-like STAR market
Bonds can be accessed in onshore and offshore markets, and denominated in US or Chinese currencies
China’s markets exhibit low correlations to other major markets – meaning they frequently move in different directions. That brings diversification benefits.

Easier access for global investors

It’s increasingly easy for non-mainland Chinese investors to access China’s markets.

Extensive reforms have simplified the investment process – though some outside investors must still work with qualified institutions to access the full opportunity set
Benchmark stock and bond indices have steadily increased the amount allocated to China, reflecting its economic importance
Yet investors may want to consider allocating more than the benchmarks do, given that China accounts for almost 16% of global economic output

Investing in China: are you taking the right approach?

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Not invested?

If you’re not already investing in China, it may be time to view China as its own asset class – one that may warrant a dedicated, standalone allocation. Moreover, our research has shown that even a small shift into Chinese stocks or bonds may be able to help improve risk/return profiles.

Already invested?

If you are investing in China, you may already know that some of the biggest global benchmarks (the stock and bond indices against which many portfolios are measured) have been increasing their China allocations in recent years. But given how important China is to the global economy, the benchmarks may not be investing enough in China. You may want to allocate more to China than the benchmarks do.

Passively invested?

Investors who only use passive, index-tracking vehicles for their China allocations may be missing out on the value that active management can add. For example, trade disputes, political disagreements have raised tensions between China and other nations. Active managers add a layer of risk management into every investment decision.

China equities have been steadily added to major benchmarks

November 2019: 4.1%
August 2020: 5.1%
Future (projected): 7.5%

(MSCI China weightings in MSCI All Country World Index)

Timeline of China bonds’ inclusion in major benchmarks

2019: China bonds included in Bloomberg Barclays index
2020: China bonds included in JPM GBI-EM index
2021: China bonds included in FTSE WGBI index

Learn more

For more about how to approach investing in China’s equity markets, read “10 things to know about China equities”

Lean into our investment experience

China is still an unfamiliar market to many, which reinforces the important of investing with a partner who understands this dynamic market. At Allianz Global Investors, we have a wealth of research capabilities across our investment platform, including our “boots on the ground” Grassroots^® Research team that gives us proprietary stocks and sector insights.

China expertise infografic

Tap into China’s potential

We believe the China opportunity is just too big for investors to ignore – and too important to warrant an insufficient investment. Yet given the fast pace of innovation and change in China, investors can benefit from teaming up with the right partner. Get to know some of our most compelling investment strategies that can help you tap China’s potential.

Grassroots® Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate Grassroots® Research reports are received from independent, third-party contractors who supply research that, as far as permissible by applicable laws and regulations, may be paid for by commissions generated by trades executed on behalf of clients.

Infographic sources:
1. https://www.emarketer.com/content/china-ecommerce-2020
2. https://www.statista.com/statistics/263770/gross-domestic-product-gdp-of-china/
3. https://www.statista.com/statistics/270183/countries-with-the-largest-proportion-of-global-gross-domestic-product-gdp/
4. www.worldstopexports.com
5. OECD, AllianzGI Global Economics & Strategy
6. World Intellectual Property Organization. Data as at December 2019
7. Goldman Sachs, July 2020
8. Hurun Research Institute and Nikki Asian review 2019
9. Belfer Center for Science & International Affairs
10. https://www.imf.org/en/Countries/CHN
11. Shenzhen Stock Exchange, Shanghai Stock Exchange, Hong Kong Stock Exchange, Bloomberg, Allianz Global Investors, as of December 31, 2020. The total figures
are for comparison only, the stocks included may be listed in more than one exchange. Offshore China stocks are defined based on companies with ultimate parent domiciled in China. Suspended stocks, investment funds and unit trusts are excluded.
12. AsianBondsOnline, Data as at 31 December 2020

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