Foreign fund managers are questioning whether China is losing its pragmatic approach to managing the economy. We explain why
is just one recent conundrum that has led foreign fund managers to question whether China is losing its pragmatic approach to managing the economy.backing for Russia’s war
Onshore markets were one of the linchpins in China’s relations with the outside world. The belief that they would continue to open up and yield high returns helped to maintain links with powerful, Western financiers hoping to strike it rich. Even as relations between America and China soured during the Trump years, and a trade war dampened global sentiment, an exuberance for onshore securities took hold of many of the world’s biggest financial groups.
Some top investment groups are becoming more public about these views. BlackRock, a giant asset manager that has been expanding rapidly in China, said on May 9th that it had shifted its 6-to-12-month view of Chinese equities to “neutral” from “modest overweight”. This is mainly because of the bad economic picture, but also reflects China’s ties to Russia.
Many investors see 2022 as a bellwether year for the future direction of policy. The optimistic outlook, says the regional head of one global asset manager, is that this gloomy period of ideology, policy missteps and beleaguered growth is part of the preparation for the Party congress in the autumn. Once that passes, pragmatists will have more control of policy. Zero-covid will be wound down and support for the economy and tech firms will be ample.
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