Are Asia and China in particular overtaking America?
Asian countries are strong growth markets. For the coming decade, a clear shift in weight from Western markets — North America and Europe — toward Asia is emerging. Asian regions and China are often significantly underrepresented in portfolios. Is it time for a rethink?
The balance of power in the world seems to be shifting. The way China sees itself in relation to the USA is evidence of this. But an America that is increasingly focusing on its own continent again also leaves open questions. What does this mean for the investment strategy of an asset management company? This is a topic that will certainly occupy us more and more in the coming years. A conclusive assessment is not possible at the present time. We recommend a few simple guidelines for strategic considerations.
Economic growth is not the same as equity growth
If you look at the impressive growth figures for Asian countries and China in particular, it is easy to conclude that investing in companies in these countries pays off particularly well. However, this is far from being the case. Despite high economic growth, the stock market performance of Chinese companies, for example, is significantly worse than that of their Western competitors.
Will Western companies remain successful in China?
So far, American and European companies have managed to sell their products successfully in China. Accordingly, it was mainly Western companies that were able to benefit from growth in China on the stock market. The legitimate question for the future is whether Western companies will succeed to the same extent. China's efforts to increasingly position its own products have not been overlooked in recent years.
Questionable property protection in China
An additional hurdle for investments in listed companies in China and Asia in the past has often been the low level of protection against state intervention. If there is a risk that the state can intervene in companies at will, this weakens the property rights of shareholders. As long as there are no clear signs of improvement, this risk remains an important factor that foreign investors must be aware of.