This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.
At times of high uncertainty, such as that which we now face, it is natural for investors to retrench from taking risk. However, for those investors who can stomach it, it has been proven time and again that capital should be deployed when investor confidence is low. While we don’t want to try to call the bottom, we highlight Chinese equities as a market where there could be attractive opportunities emerging after a year of underperformance. We take a look at what has driven the underperformance and argue that valuations have become attractive. We also argue that investors have traditionally under-allocated to China and that long-term drivers of secular growth warrant a larger allocation to China.
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