China’s economy grew more than expected in the third quarter, potentially creating a floor for the country’s beleaguered stocks. But investor wariness about geopolitics—on top of concerns about China’s economic trajectory—could hinder a sustainable market recovery.
The data could help stem further losses in Chinese stocks in the near-term, as the iShares MSCI China exchange-traded fund has fallen 8.3% so far this year. However, for an actual stock market upturn, Beijing will need to deliver stronger stimulus, and economic activity will have to show continued momentum on multiple fronts, analysts say.
Of the investors surveyed, 38% said they were underweight China, meaning they hold less in the country than the amount allocated in their benchmark indexes. Another third said they aren’t currently invested in China. Among those targeted include Beijing Biren Technology and Moore Thread Intelligent Technology, two of China’s leading companies making graphics processors. Paul Triolo, who leads China and technology policy at advisory firm Albright Stonebridge Group, warned in a tweet the move could lead to China retaliation later in the year.
Such wariness about China is leading many asset managers to roll out new products all together, including a spate of emerging market exchange-traded and mutual funds that exclude China.
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