Investing beyond China: how to buy into wider Asian markets

There are several reasons to be sceptical about China’s development, says Max King. What’s more, there is vast potential in other regional emerging markets. Here’s how to buy in.

Xi Jinping
China’s President Xi Jinping is determined to absorb Taiwan
(Image credit: © Alamy)

The three investment trusts specialising in China were among the 20 best-performing trusts in the whole market last year. And if you believe the managers, there is much more to go for. JPM China Growth & Income Trust (LSE: JCGI) returned 96%, Fidelity China Special Situations (LSE: FCSS) 69% and Baillie Gifford China Growth (LSE: BGCG) 56%, although it only switched to Baillie Gifford in September, having previously been called Witan Pacific. FCSS shares trade at net asset value (NAV), but the other two at a premium.

Roddy Snell, co-manager of BGCG, points out that “China accounts for 19% of global GDP at purchasing power parity, 18% of global market capitalisation and 31% of the world’s listed stocks, but only 5.5% of the MSCI All Countries World index. The allocation of most global funds is just 2.5%”. Catherine Yeung of Fidelity International draws attention to the Middle Kingdom’s strong economic fundamentals, such as “a 37% savings ratio, 2.3% growth in 2020 and 8%-9% this year, falling to 5.4% next. Household debt is low, the labour market tight and credit growth is decelerating as monetary policy is normalised”.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More
Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.