Citi har analyset sin globale aktieportølje og har reduceret aktierne i Emerging Markets. Men samtidig har banken øget kinesiske aktier en smule trods de store kursfald i Kina. Når banken øger Kina-andelen, skyldes det en positiv vurdering af den kinesiske regerings indgreb over for tech-sektoren den seneste tid, og desuden har Kina trods alt en meget stærk global position. Kinas aktier er kun halvt så dyre som amerikanske, og siden 2009 har kinesiske aktier givet et gennemsnitligt afkast på 9,2 pct., inklusiv kursfaldet i 2021.
Learning to Stay the Course
Last month, Citi’s Global Investment Committee (GIC) continued on a path of gradually reducing aggregate portfolio risk globally. Citi analysts made a net reduction in emerging market equities overall.
Yet within this move, Citi analysts added back a small overweight to China after the nation’s share markets had dipped significantly into the red for the year. Following which, China’s broad equity market dropped more than 13% at the last week of Juli. Shares dropped as much as 31% from their February high before recovering slightly.
The proximate cause of the rapid correction was a state decision in China to demand that private education providers operate on a non-profit basis. This led many, particularly foreign investors, to expect the same treatment for much larger parts of China’s economy such as the property and healthcare sectors.
While recent actions from Chinese authorities have scared off foreign investors, their actions and statements argue for a continuation of competitive internationalization. National priorities within technology and clean energy seem highly unlikely to see similar treatment as the education sector.
Locally-listed China shares have fallen to a trailing price/earnings multiple of 13X, or just above half the valuation of US shares on the same basis. China is at the center of the world’s most rapidly growing region, with the economic development powering an unprecedented surge of new middle class incomes.
Since 2009, Chinese equities have returned 9.2% even after 2021’s decline, slightly exceeding 30% since February. In the past 3 corrections exceeding 30%, returns 12-months ahead have averaged 11%, and 17% after 18 months.
Past performance is no guarantee of future results. Real results will vary.
To build more resilient portfolios, Citi analysts have long argued for diversification from idiosyncratic country risks. Regionally-diversified equity portfolios have a history of stronger results than “home-only” portfolios when a crisis hits. For global investors, it is important not to look backward at strong gains in markets, but forward when corrections present opportunity.
