A recent setback in global equities does not diminish an optimistic outlook for China in the Year of the Dog.
Although the National People’s Congress in March creates the potential for uncertainty, the inclusion of A-shares in the MSCI China index in May should provide a boost to the market, said Sean Taylor, chief investment officer for Asia Pacific at Deutsche Asset Management.
“For the year ahead we are still expecting low teen earnings growth for MSCI China – no change here, with the recent market correction offering buy opportunities as valuations look cheaper for global investors,” he said.
Josh Crabb, head of Asian equities at Old Mutual Global Investors, said investors were rightly excited to invest in Chinese technology firms in sectors such as artificial intelligence and the internet of things.
But he said that “investors need to be selective here and not pay fancy multiples for the dominant players in this area, but look at lesser known names such as Primax Electronics and Advanced Wireless Semiconductor”.
“Despite the recent rout in global equities, economic fundamentals look sound,” he added. “Those investors who thought they had missed the rally in Asian equities at the start of the year would do well to pick up some bargains.”
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