SSGA: Investors would be well-served by a dedicated China portfolio allocation

SSGA: Investors would be well-served by a dedicated China portfolio allocation

China

Some investors have started reassessing their portfolio allocations to China as the country faces headwinds from the government’s COVID lockdown policy, regulatory actions, friction with US regulators, and geopolitical positioning. According to Chris Carpentier, Senior Investment Strategist at State Street Global Advisors, investors would be well-served by a dedicated China portfolio allocation.

“Given China’s idiosyncratic path, the ongoing evolution of its growth story and associated return opportunities, and the unique risks involved, we believe that investors would be well-served to give particular consideration to a dedicated China portfolio allocation — one which would allow them to tailor and adjust their China exposures to meet their particular return and risk objectives over time. Within China, we find appeal in quality companies, new economy sectors, and priority industries declared in the Made in China 2025 plan.

In addition, the low correlation profile of both equities and bonds are particularly appealing from a risk perspective,” Chris says in his latest article, where he outlines the strengths of Chinese equities and bonds while emphasizing the necessity of active management of Chinese securities.