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Investment trust insider on China

Investment Trust Insider on Perpetual Income and Growth

Investment trust insider on China – James Carthew: The China trust I might add to my mix

I have just survived my first brush with Covid and, presumably thanks to the vaccinations I have had over the past year or so, was fortunate that the symptoms were mild. I know there are people who worry about the UK’s new complacency about coronavirus, but it does feel as though things are returning to normal.

In China, however, the pandemic has become a serious problem once again. A zero-Covid policy, sustained perhaps by an acknowledgement that the Chinese vaccines are not as effective as they need to be, has translated into lockdowns in many cities and not just Shanghai and Beijing. Public dissent seems to be growing and the policy is having meaningful knock-on effects on manufacturing and transportation, which will weigh on the economy.

The government has been trying to stimulate growth with increased infrastructure investment, focusing on areas such as digital infrastructure and renewable energy, which will have long-term economic benefits. It has also been lowering interest rates, which is putting downward pressure on the currency.

China-focused trusts have been amongst the worst-performing of all investment companies over the past 12 months. Abrdn China’s (ACIC) one-year track record is still flattered by its previous incarnation as Aberdeen Emerging Markets, but the other three trusts have all seen over 40% drops in their share prices.

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