Fear can be paralysing, and this may go some way to explain the reluctance of European investors when it comes to Chinese and Asian equities and bonds.
Foreign investors held just 2.3% of China’s US$8 trillion equity market and 1.6% of the fixed income space in 2017, according to Bloomberg’s analysis of data from the People’s Bank of China.
Investors worry about the ability of China’s economy to keep growing, about the lack of liquidity in the market, about the accuracy of economic data and about debt levels. More recently, fears about a potential trade war have been added to the list, as the US moves to protect its domestic industries.
These fears will never completely disappear. But China is making steady progress in rebalancing its economy away from an export-led model and towards a consumption-led one to harness the spending power of its growing middle classes. At the same time, it is addressing many of the underlying structural issues.
All of this leads BlackRock to believe that now is the moment to reassess China’s potential.
Read more to find out why