UK - investing in China offers occupational pension funds massive potential for strong returns, emerging markets fund managers claim.
They point out that China – which has the world’s largest population at 1.26bn – is the world’s fastest growing economy with GDP forecast to grow at 7-8pc this year and next.
They believe China’s plans to join the World Trade Organisation by the end of the year and its current economic reforms will increase deregulation and accelerate its economic growth.
Govett Investments Asian investment arm chief investment officer Christian Dangerfield said China was basing its economic development model on Japan’s from the 1950s and 1960s.
He said: “China is emerging as a major exporter in its own right and since 1990 its share of total exports to the US has risen from 3pc to 9pc. Significant progress is being made to improve regulatory standards in Chinese stockmarkets.”
Foreign & Colonial Management Group chief investment officer Arnab Banerji said the key for pension funds investing in China was to take a long term view. Foreign & Colonial investment Management operates a £32m Activest Greater China Fund.
He said the best way for pension funds to invest in China was to acquire shares in mainland Chinese firms listed on the Hang Seng stock market in Hong Kong.
He said: “In this way pension funds will have access to the fastest growing market in the world but will also have the security of being regulated by an international stock exchange.”
Gartmore Investment Management operates a £15.7m China Gross Fund. Pacific and emerging markets team fund manager Margaret Gadow said: “China is big country, a young country and is growing fast. Because of this all stocks are going to have strong growth and our favourite is the Chinese oil sector.”
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