As China’s markets suffer, what alternatives do investors have?
Optimism about the world’s second-largest stockmarket is a distant memory
Every day brings more misery for China’s foreign investors. Some are most worried by China’s souring relations with Western governments. Others fret about the unprecedented slump in the country’s property market. Many are simply tired of losing money. On January 22nd the csi 300 index of Chinese shares dropped by 1.6%; it is now nearly a quarter below its level of a year ago. Meanwhile, Hong Kong’s Hang Seng index fell by 2.3% on the day, and is more than a third below its level at the start of 2023. Rumours that officials are considering steps to stabilise the market have brought brief respite. But heady optimism about China Inc. is an increasingly distant memory.
Just five years ago investors clamoured for exposure to the country’s growth miracle and sought diversification from rich-world markets, which often move in lockstep. Providers of the world’s most important stock indices—ftse and msci—were making adjustments accordingly. Between 2018 and 2020 Chinese stocks listed onshore, known as a-shares, were added to the benchmark emerging-markets index.
