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Magazine Issues » November 2022

China's wide disruption of returns

China, CAMRADATA,The wide gap in returns – or rather, ‘negative’ returns – for investors in China recently highlights the volatility there and globally. Sean Thompson reveals what CAMRADATA Live tells us about the realities of investing in China.

Although China’s economic growth has slowed in 2022, some of the market risks seem to have begun to reduce over time. In CAMRADATA Live, search activity for Chinese Equity by institutional investors has been increasing since July. Most searches have focused on vehicles investing in companies of any size and/or those defined by style as either Core or Growth.

There are more than 50 Chinese Equity vehicles in CAMRADATA Live, of which 85% are in USD. These 50-plus vehicles are managed by nearly 30 asset managers listed in CAMRADATA Live, with some managers offering more than one type of style (Core, Growth, Value, etc.).

China, CAMRADATA

At the time of writing, not all asset managers had updated their returns to the end of September 2022; however, those that had showed there had been quite a diverse range of returns in Q3 2022. Of the 33 that had updated their returns, all had produced negative returns in the quarter. The best-performing vehicle delivered a negative return of -7.29%; the worst, -26.85%.

Looking at the 12 months to September 30, 2022, it also shows that all of these vehicles except one had produced negative returns. Performances for this period ranged from +17.48% to -44.60%. This is quite a dispersion in returns and highlights what a challenging period it has been for the China equity market.

China, CAMRADATA

CAMRADATA’S proprietary IQ scores show the top manager, with an IQ score of 0.91 over the one-year period in the Chinese Equity (USD) universe, was Fidelity International with its vehicle FF China Focus Fund. ClariVest was second, with the ClariVest All-China product.

To download the full IQ reports for this and other asset classes, please log in to CAMRADATA Live.

CAMRADATA, ChinaLooking ahead… China’s economic growth is expected to be halved in 2022 when compared to 2021. Many factors have affected economic growth in China, including the country’s ongoing real estate downturn, the government’s ‘zero-Covid’ policy, and increased regulation affecting certain sectors.

However, after a turbulent few years, we might be hopeful that markets are now looking at a period of relative stability.

Perhaps with a reopening of China, resurgent policy support, lower inflation and a better growth environment, some observers could even argue that asset managers will make the most of this turning point and recover some (if not all) of the losses that investors have had to endure.

China, CAMRADATA

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