The golden dragon could be too hot to handle – but a bargain if you’re a brave investor
By ROSIE MURRAY-WEST, FINANCIAL MAIL ON SUNDAY
PUBLISHED: 21:52, 7 August 2021 | UPDATED: 07:56, 9 August 2021
Investors wondering whether to put some of their hard-earned cash into the Chinese stock market are faced with a paradox: the country is too big and influential to ignore, but the market is too unpredictable for anything other than a bumpy ride.
The past few days have illustrated the difficulties of investing in a country run by a political elite that tolerates a ‘form of phoney capitalism’.
An expected crackdown on online gaming, especially among the young Chinese, sent shares in Tencent – China’s largest video games operator – into a tailspin.
This followed in the wake of other crackdowns on China’s technology sector. Last month, the Chinese government announced it would be barring tutoring for profit in core school subjects to ease financial pressures on families that have contributed to low birth rates.
The news sent shockwaves through China’s vast private education sector, hitting providers’ share prices…
The Nasdaq Golden Dragon China Index has now lost more than 45 per cent of its value since February.
So, does this represent a buying opportunity or, as Hollands suggests, should Chinese investments now be treated with extreme caution?
Too big to ignore… the case for investing in China
‘If you haven’t got any Chinese exposure in your investment portfolio, you probably need some,’ says James Carthew, fund analyst at research company QuotedData.
Carthew believes there are bargains to pick up after the sharp market falls of recent weeks and months. ‘China is too big to ignore,’ he adds. ‘Its economy continues to grow and its consumers are becoming more affluent.’
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