GLOBAL - Schemes should invest in China as growing investment in the manufacturing sector will provide considerable opportunities, Isis Asset Management claims.
It believes the growth of China as an emerging market will have major implications for the global economy, as local firms will eventually become huge multinationals.
Chief investment officer Robert Talbut – who recently returned from China – said growth would be driven by the exodus of rural people to the cities in search of jobs and China’s lack of major brands or technology, which the government was keen to address.
“China has a limitless cheap employment pool, some leading technology and world scale operating facilities and changes in the market will have major implications on a global scale. But the country needs economic stability to facilitate migration to cities and to retain the current political status quo,” he added.
Standard Life Investments head of global strategy Andrew Milligan said investors needed to decide whether they were looking at China for long or short-term returns.
He said: “A lot of people are understandably launching China funds but investors must be aware that – as with all emerging markets – share prices will fluctuate. Standards of corporate governance and accounting are not yet at the highest levels and should be treated with some caution.
“But the prospects for investors are good – particularly in the longer-term of 20 to 30 years – and the Chinese market will be very important on a global scale. We are already seeing increases in the commodity and shipping markets with mineral companies increasing production to meet needs in China.”
Standard Life Investments predicts that by 2050 the Chinese stock market will have grown to become the second largest in the world (25% of the world economy) behind the US (45%).
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