Despite recent market volatility, China has been performing well in 2020. The Chinese economy returned to growth and the CSI 300 has generated a strong return over the year to date, significantly ahead of the S&P 500.
Could China’s strong performance continue and what impact is the political fallout with the US having on investment opportunities in the region?
Ian Hargreaves, Co-Head of Asia and Emerging Market Equities and Manager of the Invesco Asia Trust, said, “The relationship between the US and China is likely to remain tense for the foreseeable future. While we need to consider the potential impact of trends such as deglobalisation, we seek to ensure that companies’ supply-chains are less reliant on China.
“We are also cognisant of the fact that the contest between these two superpowers may have positive effects on growth, innovation and productivity. For example, with both sides determined not to give up an opportunity to take a lead in science and technology R&D, there is likely to be even greater levels of government investment in these areas.
“Innovative Asian companies stand to benefit, and these are well represented in the portfolio at present where valuations permit, but we also remain alert to undervalued opportunities in more cyclical areas where expectations are less demanding.”